E-commerce is dominated by big companies spending heavily on traditional advertising and selling their products on established online platforms. However, the tide is turning. Social media is now a popular online shopping platform as savvy consumers are becoming more socially conscious and are now more conscientious of how and where they spend their money. By Lee Kok Leong, executive editor, Maritime Fairtrade
Basically, social commerce means selling products on social media networks. The sellers are usually someone in a community or group sharing a similar interest, and selling products on their social media account where followers and friends can directly make a purchase. Social commerce is gaining traction among online shoppers and is giving other forms of e-commerce a run for their money because of two factors.
Firstly, it is a matter of trust. Nowadays, when face with buying decisions, consumers put more trust on peers’ reviews than on advertising. Statistics from the recent Nielsen Consumer Trust Index showed that 92 percent of consumers trust other users’ opinion more than they trust traditional advertising.
In this regard, social media turns strangers into friends, and friends into customers. Assuming that a product genuinely helps consumers solve a problem, then it is so much more easier to trust a friend’s recommendation than a hard sell in the form of advertising. Consumers nowadays are more than savvy enough to recognize that advertising serves only the interests of the advertiser.
The good old word of mouth from a connection/follower/friend can be a powerful testimony. Moreover, it is more fun and fulfilling buying from someone you know, with the personal touch involved and also knowing that your money is actually supporting a real individual.
The second factor that is driving social commerce is the spending habit and behaviour of millennials. There are now two billions millennials in the world. They are one of the biggest spenders with purchasing power projected to reach US$1.4 trillion in 2020. And they happen to be the most active and engaged on social media.
Social commerce equalizes the playing field
Here are some global statistics to put things into context. There are 1.47 billion daily active users on Facebook alone. It is the most popular sales channel, outside of China. In China, it’s WeChat. 60 percent of Instagram users say they find new products on Instagram. 30 percent of online shoppers say they would be likely to make a purchase from a social media network like Facebook, Pinterest, Instagram, Twitter or Snapchat.
According to a recent study by Paypal, which surveyed over 1,400 sellers six Asian countries (Singapore, Thailand, Philippines, Indonesia, India and China), 92 percent of the sellers believe social commerce is vital to their business growth. Another report from consulting firm Bain has found that approximately 30 percent of online sales in Southeast Asia can be attributed to social commerce platforms.