Social Commerce
The term social commerce was first introduced by Yahoo in 2005.
Simply put, its leveraging social networks to influence e-Commerce transactions.
Shopping has always been a social experience. Families, friends and couples spend time at the malls over the weekends trying out new outfits and shoes, window shopping gifts, inquiring about home decors and show it to each other for approval.
Some customers feel good when they buy something and others feel good they get complimented for their purchasing decision. At the end of the day, it is an important feel-good-factor for every buyer to feel the buy matched their personality, need and desire.
Instagram, Facebook and Pinterest have introduced new tools and services on their platform to help brands and e-tailers target audience on the platforms.
A big segment for brands, e-tailers and social commerce companies is tapping into the millennial market. In May 2016, Pinterest introduced 2 million buyable pins exploring new monetization techniques. The trick is to do it without direct advertising, as millennials feel it’s old school and not trustworthy.
Per recent article on Forbes, only 1% of millennials believe that traditional advertising builds a brand’s loyalty. This poses a fundamental question for brands and retailers to rethink traditional advertising models and fix the trust deficit existing with Generation Y.
Key insight: 90% of the millennials have phones on the bedside.
This can be a huge hint for retailers to study millennials closely enough, and devise techniques to convert inspirational browsing to digital buying patterns.
Per assurant, millennials spend 8 hours a day online contributing to $600 billion spending per year.
Facebook partners with a Thailand based fintech company, 2C2P for users to make payment while browsing Facebook pages. This can potentially simplify the entire cart checkout process. Displaying a right product to the customer on a social platform with a ‘buy button’ eliminates the need for a customer to visit the site, enter the right key words, find the item and click through the payments page.
Conversational Commerce also has a purchasing synergy with Social Commerce. Where the customer shopping is blended with an supplementary experience such as chatting or networking. Uber and Hyatt leveraging Facebook messenger is an ideal example for this use case.
The scale with conversational commerce can get dangerous if leveraged correctly.
In fact, a July 2015 report from the firm indicates that more than 94 trillion digital messages will be sent worldwide this year. That number includes email, IM, MMS, SMS, and social media — Juniper
Below is an example of conversations commerce from Shopify:
In the above example, Dima’s needs is trying to be converted into a purchase.
One game changer in social commerce that retailers must start paying immediate attention is the Chatbot.
A Chatbot is an interactive app with artificial intelligence behind the scene to simulate human conversation. Facebook reported 33,000 Chatbots on its Messenger platform, where users can interact with retailers, brands, stores and various businesses. What makes Chatbot special and unique is the personal engagement, content distribution with on-going specific conversations.
Madison Reed is a fast-growing hair care startup, based in San Francisco leverages Facebook messenger with image recognition technology and is powered by algorithms to accurately match a snapshot of the person’s hair with suggested products. First time users take a 12-question survey for the app to learn various preferences of the user, next time onwards the users can start expecting product recommendations from the App. So far 1.4 million users have taken the color quiz, since they launched in July 2014.
1–800-flowers also uses the messenger platform to collect customer orders. “It’s pretty ironic: To order from 1–800-Flowers, you never have to call 1–800-Flowers again” he said. Chris McCan, the president of 1–800- flowers told Digiday that more than 70% of the orders are from new customers. Millennials seem to like the flexibility. The flower e-tailer took 3 months to build this App which serves two core functions: Ability to collect orders and connect with a virtual call center agent. And so far, customers responses have been positive.
Scale is the biggest advantage with a Chatbot.
Retailers can start interacting with more consumers with this wide-reaching technology on mobile devices. Business Insider predicts Chatbots to be as powerful and lucrative like how apps now have becomes new money making mechanisms for developers. And retailers need to start preparing themselves for messaging platforms as consumers are spending most of the time there.
