Blog

Social commerce is a trend that has enjoyed consistent growth since the adoption of Web 2.0, over 14 years ago. Although it is not a new topic, it continues to experience expediential growth. The process has evolved from user reviews and blogs to the ability to sell products directly to the consumer through social medial channels using a selection of services available to businesses or by directing them to an e-commerce website. In addition, it has changed the way users search for products and share that information with friends, family and potentially a worldwide audience.

This blog aims to develop an understanding of how social commerce has become a formidable force today by taking a look at where it all started, how it has evolved, the importance of the area today and threats that may affect the future of digital marketing.

Where it all started

Social commerce is a topic that emerged during the adoption of Web 2.0; a series of new technological improvements were made to the internet. The advancement of Web 2.0. in 2014 meant people were able to interact online. Blogs became an online portal for people, or ‘bloggers’, to share their thoughts, interests and professional knowledge, thus disrupting media and changing the internet landscape. Social media platforms were invented, where sites like Facebook and MySpace became a familiar online location for thousands of online users. People would visit these social sites to communicate with friends using their profiles and re-connect with acquaintances from years gone. Over time, these channels were used by brands to showcase products and highlight benefits.

In the early days, social commerce’s design processes and economic benefits were relatively unknown, with research undertaken to help understand how this new landscape would and could look. Brands reworked their business models to adapt to this change and harness new opportunities. As a result, users found a place to interact with businesses online like they haven’t before. User generated content stood at the forefront of opportunity for brands to harness Word of Mouth marketing; this is discussed further in this blog.

Social commerce and its importance today

In today’s world, social commerce can be found in many places across the internet. It dominates Facebook, Instagram and Pinterest, where businesses harness capabilities to offer product insight, raise brand awareness, build consumer confidence and minimise the interaction needed by the user to find a product for sale on their website. Video, images and copy offer an excellent way for users to experience products according to interests. Social platforms and other online tools use algorithms to suggest items of interest by using third party data, a topic discussed more later in this blog.

Social commerce now offers substantial growth opportunities, including financial, for any business that deals in e-commerce. However, it is different in approach as e-commerce is solely seen as a website or app that provides the user with the ability to browse a selection of goods by using product categories and artwork prompts created by the brand. However, social commerce can still act as the instigator of such browsing, should you user land on the website through a call to action button, social media post/video, or have searched for the website following recommendation.

In a 2021 Statista report (Figure 1), the value of social commerce is forecast to continue to rise in value to over $2,900 billion by 2026, from 560 Billion US dollars in 2020. However, Hootsuite predicts a total value of $604.5 billion by 2027.

Reviews, social media images, posts, and videos are left by customers who have tried products that offer transparent insight into quality and value.

In a Stackla Survey, 92% of marketers believe most or all of the content they create resonates as authentic, whereas only 51% of consumers think brands created authentic content. The same Stackla survey identified the importance of UGC, where 79% of consumers say it strongly impacts purchasing decisions. Modern-day consumers want to see authentic content produced by users, friends and family, or peers that have experienced the product instead of what marketers want them to see and hear. It is for this reason UGC remains an integral part of social commerce.

Key issues affecting social commerce

Despite the term’ social commerce’ lacking a stable definition, the area has gained momentum rapidly. Businesses can nurture new relationships and build brand confidence and awareness with the publication of various content types, videos and broadcasting streams. Communities of followers and brand advocates have developed, and peers are recognised as influential stakeholders. However, data needs to be collected, stored, and evaluated to gain insight into what users interact with and enjoy. Data security has been an ongoing concern for internet users for a substantial period.

• Data privacy and security

Data Privacy and Security remains a significant key issue affecting social media and social commerce from a browsing and purchasing point of view. Consumers have trust issues surrounding data security being ‘leaked’ to organisations with less than favourable intentions. Historical events also play a significant role in trust between the potential customer and brand when buying online. Incidents such as Facebook’s Cambridge Analytical Data error that made worldwide headlines in 2018 resonates in peoples mind’s long after the event itself. Privacy issues continue to evolve as technological advances offer marketers even further insight into buyer behaviour, leaving the users’ information vulnerable to interception. Relationship marketing has been identified as a building block for building consumer trust, yet negatively impacted privacy concerns.

Security and privacy remain a threat demonstrated in users’ confidence, especially when using mobile devices.

Data shared on the internet extends beyond a user’s locations and email address, with financial details stored online for transactional requirements. User perception of payment gateways is a fundamental part that can lead to greater or lesser trust, affecting purchase intention. Academic journals have revealed that despite information on data security and sharing being available, users rarely read the offering, which seems counterproductive considering safety remains a significant concern. Does this mean the information is challenging to interpret by users, especially as technologies evolve and more significant data insight becomes available?

Mobile phones offer users convenience and ease of use for purchasing online; however, a lack of ‘take up’ has been identified, despite successful adoption of the social commerce experience and concept. A study in 2021 used demographics to determine whether there were key attributes that lead to choice in user gender (male and female), data concluded as insignificant. However, the same survey demonstrated a marginal difference between age, with Generation X (36 – 56) more likely to use a mobile phone to purchase online by finding it more convenient than Generation Y (18-35).

Critical evaluation of the impact these key issues may have on the future of digital marketing.

Coinciding with the current issues surrounding social commerce security, in 2021, Google announced the phase-out of third-party cookies, the ones used to track online behaviour of website visitors outside the hosts’ website. The phase-out won’t include a replacement offering from Google, and the process is expected to be completed before the end of 2022. The reason given for the removal of third-party cookies was that Google acknowledged the system failed to provide users with adequate data security to match development in technology. Google isn’t the first search engine to block third-party cookies as Firefox and Safari did some years ago. However, it is Google (Chrome) that enjoys the majority browser market share of 62.87%, compared to Safari at 19.3% and Firefox at 4.2%, suggesting that due to the size of consumption, Google’s phase-out will have a more substantial impact on digital advertising than that of its counterparts.

So how will this affect social commerce? Digital marketers that rely heavily on the data obtained from third party cookies to target advertisements based on user movement across the web will have to look for alternatives to source relative information to target and deliver ads to users. In addition, this data is often used to target social groups when implementing advertising using analytical tools provided by social media platforms. This, in turn, means that marketers will lose important individual data needed in measurement, which could impact the effectiveness of a targeted campaign and the budget.

Shortening insight campaigns may be less effective, resulting in more budget to rectify incorrect predictions. Instead, more emphasis will be put on group data, which will impact the personalisation of ads. Additional sourcing and purchasing data from media powerhouses such as META, which stores individual data at mass outside of the third-party cookie remit, may be an alternative way to aggregate data. However, this suggests further impact on the budget. The withdrawal of third-party cookies places even more value on first-party data. Publishers are hard at work to put a content first category in place, alongside encouraging user subscription to gather further data from users when of their websites.

Predictions and Recommendations

Despite third-party cookies tracking valuable details such as shopping preferences and device details, Forbes Council Member and industry peer Michale Caccavale predicts the issue of removal will not cause a significant problem for digital marketing. However, other industry peers have recognised it as a period of uncertainty, exemplified by the continual expansion of Googles’ end of play’ deadline associated with the withdrawal. Further to this, a recent survey undertaken with board members of The Association for Online Publishers suggests a varied understanding of how prepared they are for the demise. In addition, extensive analytical tools provided by social platforms provide businesses with data that helps marketers determine limited demographic, geographic and physiographic data. Therefore a recommendation for marketers would be to use the analytics provided on individual social platforms to target audiences based on behaviour using each social platform.

Reference list

Anaya-Sánchez, R., Castro-Bonaño, J. M., & González-Badía, E. (2020). Millennial Consumer Preferences in Social Commerce Web Design. Revista Brasileira De Gestão De Negócios, 22(1), 123-139. http://dx.doi.org/10.7819/rbgn.v22i1.4038

Beveridge, C. (2022). What is User-Generated Content? And Why is it Important?https://blog.hootsuite.com/user-generated-content-ugc/

Bond, C. (2021). Social Shopping for Beginners: How to Sell on Facebook & Instagram. https://www.wordstream.com/blog/ws/2019/04/25/social-shopping

Bump, P. (2021). The Death of the Third-Party Cookie: What Marketers Need to Know About Google’s 2022 Phase-Out. https://blog.hubspot.com/marketing/third-party-cookie-phase-out

Businesswire. (2019). Stackla Survey Reveals Disconnect Between the Content Consumers Want & What Marketers Deliver. https://www.businesswire.com/news/home/20190220005302/en/Stackla-Survey-Reveals-Disconnect-Content-Consumers-Marketers

Caccavale, M. (2021). Bye Bey, Third-Party Cookies. https://www.forbes.com/sites/forbesagencycouncil/2021/04/13/bye-bye-third-party-cookies/

Chaffey, D., & Ellis-Chadwick, F. (2019). Digital marketing. (7th ed.) Pearson Higher Ed.

Chevalier, S. (2021). Social commerce sales value worldwide 2020-2026.  https://www.statista.com/statistics/1251145/social-commerce-sales-worldwide/

Christensson, P. (2008). Web 2.0 Definition. https://techterms.com

Confessore, N. (2018). Cambridge Analytica and Facebook: The Scandal and the Fallout So Far. https://www.nytimes.com/2018/04/04/us/politics/cambridge-analytica-scandal-fallout.html

Herrman. J. (2021). Will TikTok Make You Buy It? https://www.nytimes.com/2021/10/02/style/tiktok-shopping-viral-products.html

Huang, Z., & Benyoucef M. (2013). From e-commerce to social commerce: A close look at design features. Electronic Commerce Research and Applications. 12(4). 246-259. https://doi.org/10.1016/j.elerap.2012.12.003

Llewellyn, G. (2022). Social commerce 2022 trends and tactics: Grow your e-commerce strategy through social media. https://www.smartinsights.com/ecommerce/ecommerce-strategy/social-commerce-trends/

McLachlan, S. (2020). What is Social Commerce and Why Should Your Brand Care?  https://blog.hootsuite.com/social-commerce/

Molinillo, S., Aguilar-Illescas, R., Anaya Sanchez, R., & Liebana-Cabanillas, F. (2021). Social commerce website design, perceived value and loyalty behavior intentions: The moderating roles of gender, age and frequency of use. Journal of Retailing and Consumer Services. 63. https://doi.org/10.1016/j.jretconser.2020.102404

Pidgeon, D. (2021). ACCEPT COOKIES?: THE END OF THIRD-PARTY COOKIES IS NIGH, ALBEIT SLIGHTLY LATER THAN ORIGINALLY PLANNED. SO, FOLLOWING THEIR DEMISE, WHAT WILL THE FUTURE OF ONLINE MARKETING LOOK LIKE FOR BRANDS AND THEIR AGENCIES? Campaign, , 36-41. https://www.proquest.com/trade-journals/accept-cookies/docview/2580050856/se-2?accountid=14620

Russell, N., Chang, V., Walters, R, R., & Wills, G, B. (2016). Web 2.0-The past and the future. International Journal of Information Management. 36(4). 591-598. https://doi.org/10.1016/j.ijinfomgt.2016.03.01

Statcounter GlobalStats. (2022). Browser Market Share Worldwide – February 2022. https://gs.statcounter.com/browser-market-share

Smith, L. (2022). 10 Digital Marketing Trends for 2022, According to Experts. https://www.wordstream.com/blog/ws/2022/01/13/digital-marketing-trends-2022

Vuong, L. (n.d.). User Generated Content For Social Commerce: Nearest and Dearest.https://academy.pagefly.io/guide/user-generated-content-for-social-commerce/

William, M, D. (2021). Social commerce and the mobile platform: Payment and security perceptions of potential users. Computers in Human Behaviour. 115. https://doi.org/10.1016/j.chb.2018.06.005

Wong, J. (2021). The Latest E-Commerce Trend: What You Need to Know About Social Commerce.https://www.forbes.com/sites/forbescommunicationscouncil/2021/12/03/the-latest-e-commerce-trend-what-you-need-to-know-about-social-commerce/?sh=5945ca8d753b

Wright, A, I. (2016). Security Risk and Social Presence in E-commerce. Butler Journal of Undergraduate Research. 2(30). https://digitalcommons.butler.edu/bjur/vol2/iss1/30

News Team( Editor and Founder, Everything Horse )

Author: Suzanne Ashton
Founder, Everything Horse

email: [email protected]