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Are retailers ready for the rise of social commerce?

The Facebook-owned social media site Instagram has added a shopping tab to its ‘Explore’ page, is allowing retailers to tag products in ‘Stories’, and is even rumoured to be preparing the launch of a standalone shopping app.

Over the years, social commerce has had many false starts, which begs the question of whether this time will be any different.

In the past Twitter introduced and then withdrew a ‘buy’ button, while Facebook has also struggled to make social commerce work on its core social network.

Nevertheless, analysts are forecasting steady growth in social commerce. Last year, Technavio’s analysts predicted the social commerce market would enjoy a compound annual growth rate of 33.9% between 2017 and 2021.

Instagram tagging

Meanwhile, Instagram says that over 90 million accounts are tapping to reveal tags in shopping posts every month.

Instagram began allowing UK businesses to tag photos in the feed back in March. Users can tap on the tags to take them directly to the relevant product page on the retailer’s eCommerce site. The social media site does not take commission from any subsequent sales.

Gord Ray, brand development lead at Instagram, says the feature was introduced as a result of user demand.

“It came from the community telling us they are seeing products they like and it was a little cumbersome to try and then contact the business or find out where they were located on their website,” says Ray. “We wanted to make it easier to make that connection.”

Ray was not able to comment on the rumoured standalone Instagram shopping app, and said there are “no plans” to introduce a buy button within Instagram.

He added that Instagram would look to change any potential features that threatened the user experience with over-commercialisation.  

Russ Powell, head of marketing at search agency Red Hot Penny, believes Instagram has the greatest chance of making social shopping succeed.

A study of the UK’s top retailers by Red Hot Penny found that they enjoy the highest levels of engagement on Instagram.

The average engagement rate for UK retailers is 0.78% per post on Instagram, compared to 0.08% on Facebook and 0.06% on Twitter.

“With brands driving engagement with customers on social the next logical step was always going to be to try and shift product via Instagram,” says Powell. “It is slightly strange that Instagram would want to spin off an entirely different app just for this purpose however.

“Are they looking to go down the route of WeChat where anything and everything can be done within the app?”

The average engagement rate for UK retailers is 0.78% per post on Instagram, compared to 0.08% on Facebook and 0.06% on Twitter

Pinterest product pins

Another major player in this space is Pinterest, which is vying with Instagram for retailers’ attention.

“Where Facebook still largely serves the consumer function of building and maintaining social relationships, platforms like Instagram and Pinterest are used by many consumers to get inspiration, and show off their lifestyle,” Jenny Barthe, strategy director at We Are Social. “These platforms are a much more natural fit for inspiring purchases and with their growth in reach, they are turning into a real force to be reckoned with.”

Pinterest does not think in terms of “social shopping” because it considers itself as a “visual discovery engine” rather than a social network, according to Pinterest product manager Tim Weingarten.

“We’re in a good position to help people discover things to buy,” says Weingarten. “With this type of eCommerce, we’re still at the very early stages of what it can offer and the impact it will have on the retail industry.”

"We’re able to reach [customers] on Pinterest when they’re more open to possibilities for products they may not yet have considered"Eva Bojtos, social media lead, John Lewis

Pinterest has a number of features aimed at helping users go from “inspiration to purchase”. It has recently launched ‘product Pins’, which link directly to the retailer’s site and appear in the home feed, search, and recommendations.

These are flagged by a shopping tag icon and trials have already seen a 40% increase in clicks compared to the old ‘buyable Pin’ format.

The ‘product Pins’ use dynamic pricing and stock information and were introduced after users told Pinterest they wanted an easier way to buy things through the platform after finding the old ‘Buyable Pins’ often led to a bad link or an out of stock product.

“We’ve found that as consumers increasingly become multichannel shoppers across online and in-store experiences, we’re able to reach them on Pinterest when they’re more open to possibilities for products they may not yet have considered,” says John Lewis social media lead Eva Bojtos.

The Conran Shop has also begun collaborating with Pinterest and its early activity has already seen an uptick in sales.

“Before this project we’ve often overlooked Pinterest and considered it as a bit of an after thought, but actually it is not, it is used very differently by its users,” says Rachel Morris, head of eCommerce at The Conran Shop.

Social store

Interestingly, The Conran Shop has so far been using Pinterest to enrich the in-store experience rather than bolster its digital marketing operation.

It has done so with in-store ‘pincodes’ that customers can scan with their Pinterest app to reveal additional content about the product.

Morris believes the ‘buy button’ could have been a “bit of a false start” for social commerce and argues it is important that social media sites take care its users do not get “overwhelmed or annoyed” by the introduction of new commercial elements to social networks.  

The Conran Shop has used Pinterest ‘pincodes’ which customers scan to reveal additional content about the product
The Conran Shop has used Pinterest ‘pincodes’ which customers scan to reveal additional content about the product
“The threat is already there because if the brands we stock wanted to sell direct to consumer online they can do it already, so I don’t think social increases that threat"

The possibility of being able to buy product straight from a social media site does raise the possibility that traditional retailers could get disintermediated by brands selling direct to consumer.

However, Morris dismisses the potential of social commerce providing an additional threat to retailers.

“The threat is already there because if the brands we stock wanted to sell direct to consumer online they can do it already, so I don’t think social increases that threat,” says Morris.  “It is up to us managing our relationships with our partners to make sure we are growing together.”

The social media sites have clearly learned from the missteps of the past within social commerce and are taking a much more soft-touch approach.

With concerns about data and privacy very much at the fore, a WeChat-style app with credit card details baked into a social media experience could be hard for UK users to stomach.    

But it is likely social media will play a greater and greater role in the customer journey. Retailers that do not make social media their friend now are in danger of losing out to their competitors.  

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