What Is Social Commerce, and How Does It Transform Business?

By: Adam Carpenter on May 30, 2024
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Retailers and business owners often seek to learn how to use social commerce to reach more potential customers and boost sales. Understanding social commerce and the skills needed to build an effective strategy can help businesses connect with customers and gain a competitive advantage.

Using social commerce, you can develop ways of fostering sales with customers by leveraging the social platforms they spend so much time on daily. In this article, we dig into what social commerce is, how it works, and why you should consider implementing a social commerce strategy.

What is social commerce?

A commonly accepted definition of social commerce is the practice of using social media channels to buy, sell, and promote products and services. In some cases, you can use social commerce to facilitate sales from within the platform without leaving the app or platform.

SA graphic: What is social commerce? Social commerce is the practice of using social media channels to buy, sell, and promote products and services.

For small-and-midsize-business owners, social commerce can be an efficient way to connect with customers on their terms and within a platform with which they're comfortable. And when it comes to designing a social commerce strategy, there isn't a one-size-fits-all approach. For instance, nearly 53% of businesses allocate their marketing relatively evenly across multiple platforms or apps.* At the same time, 47% choose to focus a significant portion of their resources on only one or two primary platforms or apps.

SA graphic: Social commerce can be an efficient way to connect with customers whether you market across several platforms or on just one

Whether you spread your marketing funds across several platforms or focus on just one or two, using social commerce can solve a key business problem: connecting with customers and interfacing with them in a way that blends seamlessly with their everyday lives. And because so many consumers spend time on social media, many marketers feel it's important to commit to a social commerce strategy—even if one of their channels could get banned.

For example, according to a recent study, 87% of marketers are planning to continue using TikTok in their social commerce strategies despite the fact that some are seeking to ban the platform in the U.S.**

How does social commerce work?

Social commerce works by using the varied features of social platforms to form unique connections with customers and give them personalized, convenient buying opportunities.

But, the best way to use social commerce is to do so surgically rather than invest money in the hottest platforms. For instance, Gartner's Decode the Social Commerce Ecosystem to Execute Effectively found that a successful strategy involves examining the opportunity each type of social commerce avenue offers before choosing which ones to pursue. This involves monitoring each platform or app's innovation, effectiveness, and maturity. [1]

A successful social commerce approach also hinges on allocating adequate resources to execute your strategy. Even though joining a social media platform is free, you still have to develop effective marketing collateral to entice buyers. For instance, Gartner's Design Social Commerce Features That Convince Consumers to Buy explains that you can alleviate consumer frustration with product previews by augmenting product details with 360-degree photos or video demos you post on social platforms. [2]

You can ensure a smooth social commerce implementation by identifying the resources needed to generate this and similar collateral.

Why should you consider social commerce?

Social commerce can help you diversify your approach to the market, making it easier to interface with customers. While other marketing approaches can be effective, social commerce can help pinpoint your target demographics using the data collected on social media platforms. For many companies, this is preferable to other kinds of advertising, such as printed ads in magazines, television ad spots, and even ads in industry journals. This is because social commerce gives you more control over the customers interacting with your marketing.

For example, you can leverage Facebook’s Ads Manager to advertise your offering to people who are already fans of your competitor's page on the platform. Many businesses consider social commerce because the included features simplify targeting your competition's customers and relatively narrow demographics.

How to build your social commerce strategy

Building your social commerce strategy comes down to choosing the right resources ahead of time. For example, you can focus on:

  • Pricing out the cost of executing strategies on different social platforms or apps.

  • Developing the most effective marketing materials, such as articles, demos, images, and how-to videos.

  • Budgeting for influencer marketing by researching how much influencers in your industry charge on various platforms, such as TikTok, YouTube, or Instagram.

Focusing on the necessary resources will simplify your social commerce strategy formation process. Also, targeting your ideal customers may be easier than building your resources because the ad features on social outlets tend to be user-friendly and supportive.

Another factor in developing your social commerce strategy is deciding whether to go with a tried and true channel or to give a new or disruptive solution a shot. This decision will invariably affect the resources you have to set aside. Many marketers take a more conservative approach. A survey says 70% of marketers won't invest in Twitter/X alternatives unless they could demonstrate excellent benefits.* This means that even popular choices, such as Meta's Threads, may not automatically draw marketers' funds.

Different types of social commerce

Even though there are many different ways of engaging in commerce via social channels, the following social commerce examples are some of the most common and effective for small-and-midsize-businesses.

Social shopping

With social shopping, you enable users to shop for your products, share them with others, and make purchases without having to leave the social app they're using. For instance, on Instagram, you can publish shoppable posts that make your products pop up in users' feeds and enable them to purchase without leaving the social platform.

Live commerce

Using live commerce, you give audiences a chance to purchase or learn about your products while live streaming them. For example, you can demonstrate how a new product works in a live stream, showing customers how they can use it themselves. You can also include a link customers can click to purchase that product.

In-app purchases

In-app purchases allow customers to buy your offering without leaving a mobile application. The process often leverages customized recommendations based on customers' previous purchases or other behavior.

For instance, a fast-food restaurant could recommend meals based on what customers bought previously and allow them to place and pay for their order right there in the app.

Social marketplaces

Social places provide customers with a social environment in which to make purchases. These social media platforms allow customers to interact with others, read reviews, post pictures, and more before deciding which products to purchase.

One of the more popular examples of a social marketplace is the website Etsy. Consumers often rely on Etsy for unique, handmade, or vintage products. By creating an Etsy page, you expose your offering to community users while creating unique marketing opportunities within the platform itself.

Peer-to-peer social commerce

Peer-to-peer social commerce involves selling directly to another person or business using a social media platform. For instance, a small business could set up a page on Facebook and use Facebook Marketplace to sell to Facebook users. The key to making this strategy work is to allocate human resources strategically. For example, you need to identify people with the time and knowledge to interact directly with customers within the platform, answer questions, facilitate shipping, and address post-purchase concerns.

Social commerce vs. ecommerce

Social commerce and ecommerce both involve online transactions, but social commerce is different because it focuses on leveraging the social aspects of platforms and apps. For example, your social commerce strategy may leverage the likes and shares you get on posts about specific products or services. You then target the interested users, allowing them to purchase your product directly within the app.

Ecommerce simply involves using the Internet to facilitate purchases. For instance, you could set up an ecommerce portal on your website that enables visitors to buy your product directly from your site instead of going into a physical store.

Major social commerce tools and technologies

You have plenty of options when it comes to tools that make social commerce easier, faster, and more effective. For instance, you can use:

Start building your social commerce strategy

This guide gives you a deeper understanding of social commerce, how it works, and different approaches. You can also use this to decide which resources to set aside as you build your social media ecommerce system.

Your next step is learning more about social media marketing, ecommerce analytics, and managing inventory risk. Check these resources to get started: