E-commerce v social commerce: complementary or competitive?
The digital world has made e-commerce an everyday part of our lives. Online megastores have achieved global brand recognition and with almost 4 billion(1) people worldwide now owning a smart device, we can shop almost anything in just a few clicks. In fact, the COVID-19 pandemic has only heightened this trend further, as we have been forced to adopt a ‘stay-at-home, shop online’ lifestyle.
In recent years, a new form of digital purchasing has gained traction – it’s called social commerce. As the term implies, social commerce is about selling products and services directly through social media platforms, which boast huge, captive audiences. With the average user, spending around 2 ? hours(2) on social sites per day, in-app purchasing tech (such as WeChat, LINE, Marketplace and Checkout) offers brands the opportunity to convert social media users into online buyers.
There’s another phenomenon about social commerce and that’s the power of influencers (be it peers, friends or celebrities) to guide our choices. We want our purchasing decisions validated by first reading reviews, watching videos and interacting with users before clicking ‘buy’. This two-way communication has given social platforms a unique differentiator in the world of digital commerce.
So, is social commerce set to overtake e-commerce? The answer is not yet. Firstly, social commerce technology is still largely limited to the major social media platforms such as Facebook, Instagram and WhatsApp. This restricts the choice of products and services available to buy. Also, the majority of users regard these platforms as places to socialise rather than shop, and they still need to earn the trust of consumers (remember the Facebook-Cambridge Analytica scandal?).
E-commerce platforms on the other hand, have invested billions in streamlining the end-to-end customer journey. Extensive shopfronts showcase thousands of brands, yet by using cookies, they can personalize the shopping experience through learnt behaviour and user interests. They also provide essential infrastructure to vet and onboard sellers, deliver customer support, facilitate payment processing and manage data privacy. Not to mention backend integrations which incorporate everything from centralised management platforms to warehouse and shipping systems.
The question then is, if you had a product or service to launch, where would you focus your efforts? Getting it ‘on the shelves’ of a major e-commerce marketplace or investing in priority placement on a social media platform? My answer would be aim for both, as they are complementary rather than competitive formats of digital commerce. While social commerce doesn’t have the maturity and capabilities of e-commerce, it has other draws such as immersive communication and customer engagement.
I leave you with some fascinating facts. Between 2019 -2020, global e-commerce sales grew by 24.1%, with consumers spending nearly $4.29 trillion online. And according to the ‘Social Commerce - Global Market Trajectory & Analytics’ report, by 2027, the global social commerce market alone is set to reach $604.5 billion![RG1]
(1) https://www.statista.com/statistics/330695/number-of-smartphone-users-worldwide/
(2) https://techjury.net/blog/time-spent-on-social-media/#gref