Solving Social Commerce’s Conversion Problem

Solving Social Commerce’s Conversion Problem

The potential of social commerce – consumers transacting directly through their various social media channels – has been talked up for the better part of the last decade. The logic is simple and compelling: Consumers are already hanging out, being prompted with ads and, in many cases, are contextually ready to take part in commerce. After all, what better time to push someone with a vacation package than when they’ve just spent the last 45 minutes looking through photos from a friend’s tropical jaunt?

The last two or three years have seen that effort leveled up, as big names like Facebook, Google and Instagram have looked to boost their commerce game to make transacting a more focal use of their products. But despite a lot of expensive efforts, social shopping has not quite lived up to its billing. As it turns out, finding the right context for commerce – a moment when a customer is perfectly primed to buy a good or service, if they had an easy way to do it – is not as easy as it looks from the outside.

As such, direct social shopping has not exactly soared. On a record-breaking Cyber Monday, for example, social channels were only responsible for 2.6 percent of digital sales. But indirectly, it seems the story is a little more complicated. Social media is clearly a powerful discovery channel – and is, in fact, consolidating its influence in that regard. As of today, over 80 percent  of Instagram users say the app helps them make purchasing decisions, and according to Adobe, it was the fastest-growing driver of eCommerce referrals from 2016 to 2018.

“Up-and-coming brands are poised to see the most success through Instagram [Shopping],” Evy Lyons, VP of marketing at influencer marketing firm Traackr, told Glossy. “While brands’ existing consumers might not immediately switch to shopping through the app, they are more likely to shop there for a newly discovered brand. The goal for new brands setting up shop on Instagram is to add ease to the shopping process.”

Moreover, various retail experts note, Instagram – and, to a lesser extent, Facebook, Snapchat and video-centric YouTube – offers a solution to the problem created by the rapid rise DTC brands. A la carte works well, noted Laura Kennedy, lead analyst at CB Insights – until it doesn’t, because consumers have more options than they can easily ferret out on their own. Instagram serves as a sort of digital department store that creates the home base for all those brands.

But given that its buy button is still in the testing phase on the site – and the majority of commerce happens through links back to brands’ eCommerce sites – it’s not quite there yet.

“I think Instagram could be a successful marketplace, but I do think it would require big changes to make it feel like a marketplace,” Kennedy wrote.

Those changes will be bigger than just sliding in a buy button more broadly and waiting for consumer habits to align. Instagram as a platform has developed a very specific type of usage from its users, who undoubtedly leverage its potential as a discovery channel. The problem, however, is that the connection from discovery to direct conversions remains a bit twisty, and often ends without a sale.

“I click on ads a lot. For a lot of fashion brands, I’ll click on their Instagram ad, go to their website and see the prices of things. A lot of times, I’ll see something and want it right away, but it’s sold out and then I forget about it,” noted 16-year-old Fionna Frills, an amateur influencer with about 87,000 followers.

But Frills followed up – she’s also found plenty of opportunities to make the connections and then follow through on the buy. Recently, she discovered a new brand she’d never seen before, which prompted her to spontaneously shell out for “like, five pieces” that she reports she immediately put into heavy wardrobe rotation.

So will social commerce ever make it over the finish line, and make the transition from discovery channel to digital shopping marketplace? And perhaps more importantly, does it have to? Or does it need to find a better way to monetize discovery and cement itself as a consistent step in every commerce journey?

It seems 2020 will be the year that an answer will emerge one way or the other.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.