#s-commerce

Ever since the social media era took off, people have been trying to figure out how to shop on it. While we can arguably say that the mid-1990s classmates.com was the first social site, most analysts prefer to trim the period a few years to include Friendster (2002), Myspace (2003), and Facebook (2004). Those are the three pillars on which everything we know today is built.

It took until 2009, though, before 1-800-Flowers became the first company to use their Page as an online shopping portal. They were followed soon by JC Penney. Alas, neither did very well, because they basically viewed their Page as a secondary website, and all they did was display products like they would on their own site.

Companies and social media sites then went into a major funk for a decade, trying to figure out how to do s-commerce effectively. But by 2020, in the middle of a pandemic, the pieces started to fall into place. Facebook Shops was launched, with companion versions on Instagram, WhatsApp, and Messenger. It took a while, but an under-baked idea was suddenly ready for Prime Time.

Now rival TikTok has raised the bar once more. It partnered with Shopify last year as a third-party turnkey solution for individuals and businesses trying to sell on its platform, and has launched TikTok Shop in Indonesia and the UK. And here’s the latest: they are advertising for professionals to build order fulfillment centers from the ground up in the US.

This can only mean one thing: TikTok wants a piece of Amazon. What a surprising turn of events, because for the last few years, it has been about all the others trying to duplicate TikTok’s success, and social couldn’t have cared less about Amazon. Until now.

It remains to be seen exactly what TikTok plans to sell, but warehouses mean storage and order fulfillment, not offices. This is huge, and already has the wheels turning in my head, because if they could also take on other capabilities—like print-on-demand of photographic artwork, I would be standing in line tomorrow. Or this afternoon.

The idea is to more perfectly integrate e-commerce into the social platform. I have a hard time wrapping my mind around smaller sellers bringing their inventory to a TikTok warehouse in Seattle, though. But anything that could be produced on-demand would work perfectly, from books to wall hangings.

I realize that Amazon already warehouses other peoples’ inventory, and fulfills their orders. There is always the task of getting said inventory to Amazon, though, which can be problematic, unless the seller has its merchandise shipped directly to an Amazon warehouse.

Of course, larger sellers could overcome this issue a lot more easily. It’s the sole proprietors I am thinking about, the folks who truly need turnkey solutions so they do not have to hold massive amounts of inventory, and also be able to oversee their business from anywhere as long as they have internet access.

I am aware of one art print company that provides a total solution, but it is still separated from the social graph. This leaves it to the artist to help steer traffic away from a social page to the art page, and then hope no one falls through the cracks. But to be able to do it all within the social platform? Priceless.

TikTok is apparently limiting this foray to just a Seattle location for now, which, ironically, is where Amazon started. I suspect this will be rolled out nationally in short order.

The academic in me sees lots of good things happening here. By offering e-commerce, it will enhance the stickiness of its site. It will keep us around longer. It also has the potential to be viral, because people can easily share a store with their friends. And when people come together, whether in the physical space or virtual, it can become magnetic. It reinforces itself.

Better yet, TikTok has landed on another revenue stream, because it’s not just going to do all of this for nothing. Whereas Facebook and Instagram stores are free to set up, I am certain that sellers will hit paywalls at every turn. Unless those paywalls aren’t too high, it will still be worth it to have the reach that TikTok provides. You could never do this on your own.

Yes, I’ve got my eyes on you, TikTok. We might just have a relationship in our future. I want to sell my art photos, but I do not have time to do much more than shooting and editing the photos. I do not want to spend my evenings packing boxes and running to UPS the next morning.

This. This could be the future of s-commerce. Wait for it.

Dr “Let’s Get This Party Started“ Gerlich

TikTok’s user base will increase by triple-digit percentages in some countries

TikTok’s growth in 2020 has been, in a word, extraordinary. While the pandemic helped stoke user gains for all the major social platforms, it lit a particularly large fire under TikTok.

In 12 of the 13 countries we currently forecast, TikTok’s user base will increase by high double-digit, or in some cases triple-digit, percentages in 2020.

Norway leads with 248.7% year-over-year growth in 2020, followed by Russia (140.9%) and Italy (104.5%), we estimate. South Korea will have the lowest increase at 20.9%, partially due to the significant popularity of local social media app Band.

Social commerce will stall at checkout

Despite the hype, most US consumers won’t make a purchase via social media in 2021. Discovery and consideration, rather than direct transactions within social apps, will remain key opportunities for brands next year.

“The major social platforms worked hard in 2020 to make social checkout happen,” said Jasmine Enberg, eMarketer senior analyst at Insider Intelligence. “While there was already plenty of commerce-related activity on social media before 2020, it was mostly upper-funnel.”

“As the pandemic elevated ecommerce adoption – and temporarily slowed social ad spending – Facebook, Instagram, and others quickly expanded their social commerce offerings to help drive conversions within their apps,” she said.

We don’t expect most users to check out on social in 2021, at least not regularly. In our June 2020 “Facebook Flash Survey” conducted by Bizrate Insights, only 18.7% of US social buyers said they paid for their most recent social purchase directly through a social app’s checkout process versus 57.8% who completed the transaction on the retailer’s website. Those figures likely won't change next year without the pandemic-related conditions that spurred much of the growth to begin with.

Social media will continue to shine (and grow), however, in product discovery, browsing, and consideration. New features like livestreaming shopping and shoppable ad formats from creators and brands will also help increase the number of customer touchpoints.

Here’s what marketers should do:

Focus further up the funnel. Social media’s role in generating brand awareness and demand for products isn’t going away. In fact, it will become only more important as media, entertainment, and marketing continue merging.

Experiment. New tools mean new opportunities. Social checkout may not be a mainstream activity in 2021, but that doesn’t mean it won’t be later on. It’s part of providing a frictionless checkout experience, whether on social or elsewhere – another important trend for 2021.

Learn from abroad. Social commerce (including checkout) is already a big business in China, thanks mainly to the popularity of catch-all app WeChat. Our latest forecast, completed in May 2020, showed that China will generate RMB2.180 trillion ($315.50 billion) in retail social commerce sales in 2021 versus $31.35 billion in the US.

Learn from the experts. Some categories, such as fashion and beauty, have already been successful at driving conversions on social, particularly for limited-edition product launches that shorten the path to purchase.

Pinterest Launches Virtual Make-up ‘Try-on’ Feature

A new Pinterest feature will allow users to virtually try on products, starting with lipstick. [...] To use the new feature, Pinners will first open Pinterest’s smart camera, “Lens,” while in Search, then click “Try it” to explore the different lipstick shades available. To shop the products, you just swipe up.

Another way to access Try it is by typing in lipstick-related terms into Pinterest’s search engine – like “plum lipstick” or “red lips,” for example.

Pinterest says that it won’t alter your photo using skin smoothing or other techniques, so you can be sure of what the lipstick looks like on the real you. In addition, the feature has been integrated with Pinterest’s existing skin tone range feature, so users can shop for similar lip shades on skin tones that match their own.

While makeup and beauty is a topic that’s often featured on platforms like Instagram and YouTube, Pinterest is also a top destination for those who are shopping for beauty and personal care items. According to Pinterest, more than 52m people search and engage with beauty content on its platform in the U.S. every month.

In addition, a 2018 study from GfK found that 87% of beauty and personal care Pinners come to Pinterest when actively considering what to purchase, the company says. Pinners also regularly turn to the platform to seek out particular lip styles, whether that’s something more traditional like “glossy lips” or “pink lips,” or trendier styles like “ombre lip” or “black lipstick,” for example – all of which were top lip searches in 2019.

The company says it started “Try on” with lipstick because it’s one of the most searched beauty-related items on the site. We should point out, it’s also easier to develop technology to virtually try on lipstick than some other makeup items, though. Pinterest says lipstick will be followed by more try on-enabled beauty products and categories in the future.

[...] In Pinterest’s case, however, the idea is to capture shoppers’ attention before they know what brand or shade they want to buy, then let them experiment with different shades until they find the right fit. The larger goal is to attract shoppers to Pinterest before they’re ready to type in a brand name on Amazon or Google, so they’ll instead find their way directly to the retailer’s site through Pinterest instead.

However, Try on is not an advertising product for Pinterest nor is there a revenue share on sales it inspires. Instead, Pinterest will continue to monetize through advertising. That said, the new feature is meant to draw in users who are ready to shop. And this, in turn, drives engagement for those brands investing in ads on Pinterest.

Participating brands may receive insights on the performance of their shopping features, like Try on. But they’re not collecting personal data. We understand the information about engagement and conversion is used in aggregate to make relevant recommendations to Pinterest users. (And users can also disable personalization from their Settings, if they choose.)

The new Try on feature is launching [in FEB] on Pinterest in the U.S., on both iOS and Android mobile. The feature will later expand internationally as well as to more platforms.

Adidas, Levi's, Michael Kors Test Product Launch Alerts On Instagram

Adidas, H&M, Levi's, Michael Kors and Warby Parker are among the brands testing a new Instagram feature that lets consumers set reminders for when products are available to buy, according to an Instagram announcement. Brands can show previews of product sales and let customers tap on a digital sticker in an Instagram Story or launch tag in their feed to set a reminder.

Users will receive an alert 15 minutes before a product drop, giving them time to log into the image-sharing app and make a purchase before the product sells out. Anastasia Beverly Hills, Balmain, Highsnobiety, Huda Beauty, MAC Cosmetics and SoulCycle are also participating in the test, which is only available to U.S. Instagram users.

Instagram also introduced a branded account called @creators to urge aspiring social influencers to create content for the platform, including Stories that explain how to get a verified account, access to special features and details about how to get further help.

Instagram's test of an in-app reminder feature for new merchandise comes as brands, especially in fashion and beauty, use product drops to build excitement for limited-edition items. The reminders can help brands to drive direct sales after promoting their product drops among their most dedicated followers. Instagram has become a platform for product discovery, with about 60% of users following a new brand after seeing an appealing ad in the app's vertical feed or in Stories, per a September study by video technology startup VidMob.

Facebook Pilots 2 Ad Features to Streamline Social Commerce

Facebook announced that it is testing two ad formats to support direct sales for marketers while helping to eliminate an estimated $213 billion lost to friction during online checkouts, Marketing Land reported.

The first ad format adds in-app checkout features for dynamic ads placed in Facebook's news feed. The feature lets users buy products they see in ads without leaving the social networking app. The test format is currently limited to a small group of advertisers.

The second format lets marketers turn shopping posts on Instagram into ads by using the social network's Ads Manager dashboard. Shoppers who tap on the ads will see a product description page within the Instagram app and can make a purchase from the advertiser's mobile site. Instagram is testing the format over the next few months and plans to later test a checkout feature as part of these ads, per a company blog post.

[...] Social commerce is the top new retail technology among U.S. internet users, ahead of visual search, augmented or virtual realty (AR/VR) and voice commerce through smart speakers, per a Bizrate Insights survey cited by eMarketer. More than one-third (34%) of adults said they had made a purchase through social media, up from 29% last year, while another 27% said they were interested in social shopping, the survey found. [...]

How Much Are Brands Paying Influencers?

Some influencers accept free products as payment for endorsements, others charge thousands of dollars for a single post. While the compensation scale varies by following and content type, some marketers are concerned that teaming up with social media influencers is getting expensive.According to a January 2019 survey by influencer marketing service Mediakix, more than one-third of US marketers said the rising cost of influencers was a leading marketing challenge in this space.

Klear, another influencer platform, surveyed more than 2,500 influencers between January and March 2019 to find the average payment per post based on platform and follower count.

The going rate for YouTube videos is higher than any other platform, no matter the size of the influencer’s following, per Klear. Nano-influencers, which Klear defines as having between 500 and 5,000 followers, make an average of $315 per YouTube video, while “power” influencers (with followings between 30,000 and 500,000) make $782 per video, on average.

Brands are willing to pay a premium for video posts on Instagram, too. Nano-influencers make an average of $114 per video post on Instagram, compared with $100 for an image post and $43 for a story. Power users make an average of $775 for an Instagram video, $507 for an image post and $210 for a story.

But not all brands are shelling out the big bucks for influencer campaigns. Many marketers have shown significant interest in Instagram Stories and are focusing on working with microinfluencers, who have smaller but dedicated followings. According to an August 2018 Econsultancy survey, 56% of US and UK marketers work with microinfluencers because they are more cost-effective than working with top-tier talent.

Podcasts are another avenue marketers are exploring as another alternative.

"Brands are eyeing podcasts as the next frontier of influencer marketing," said Lauren Fisher, principal analyst at eMarketer. "They're seeing great performance and value from host-read ads, which allows brands to tap into the trust and influence that many of these podcast hosts have with their listeners."

Drop, an app designed to help consumers earn rewards from their shopping, is one company that has started to explore new audio channels outside of social platforms. Catalina Lee, director of marketing at Drop, said that the company had a lot of success leveraging influencers on Instagram and Facebook, but over time, "these channels have been getting more competitive and more expensive. The podcast space is growing, and people go to podcasts because they're really interested in a topic, and because they're into the storytelling and conversation that happens within this format. As a result, you're reaching a highly engaged audience who connects not only with the topic being discussed, but also with the podcaster in a meaningful way so there's a great deal of familiarity and trust that gets built there."

Instagram Shopping Used By 39% Of UK Gen Zers

About 39% of U.K. online shoppers ages 16 to 24 have used Instagram Shopping to buy a product, indicating the image-sharing platform's power to drive impulse purchases, per a survey by data and analytics firm GlobalData. That percentage of Instagram Shopping users is higher than for older age groups, such as 25 to 34 (34%), 35 to 44 (21%) and 45 to 54 (8.4%).

GlobalData's research indicates that Instagram has gradually transformed itself from an image-sharing app into a transactional platform. Instagram Shopping, which lets retailers tag items featured in their posts to indicate that they're available for purchase, has the power to drive direct-to-consumer sales among consumer groups who use the app to find ideas and inspiration in such product categories as fashion, beauty and interior decorating. An Instagram presence that includes shoppable tags is becoming essential to sell to young adults who are typically more comfortable than older generations with completing transactions on mobile or social platforms.

As part of its effort to promote social commerce, Instagram this month created a special account called @shop that brings together shoppable posts from online merchants. The curated account aims to showcase top shopping categories and highlight up-and-coming brands that haven't received much exposure elsewhere. The @shop account was the latest step in a series of advancements to Instagram's shopping features in the past year. Instagram in March rolled out a native checkout feature with 23 U.S. brands that let shoppers pay for products without leaving the app, and extended the tool to 55 creators and five publishers for testing last month.

Brands are recognizing the power of social commerce, especially on Facebook-owned Instagram. Adidas CEO Kasper Rorsted said in a quarterly conference call that the brand's 40% jump in online sales in Q1 2019 from a year earlier was largely attributed to Instagram's direct-selling features. Adidas in the past year has been active on several social media platforms, including Twitter and Snapchat, but Instagram had the biggest effect on direct sales.

Instagram is especially popular with teens, not only in the U.K. Ninety percent of U.S. teens reported using Instagram at least once a month, according to Piper Jaffray's semiannual "Taking Stock With Teens" survey. Among the teens surveyed, 70% said they prefer brands to contact them about new products through Instagram, with Snapchat following as the preferred method for brand engagement at about 50%. As for commerce, Amazon has grown more popular in the past year, with 50% of U.S. teens naming the e-commerce giant as their most preferred shopping site, up from 44% in 2018.