Is Social Commerce the Right Approach for Small Businesses?

Helping your clients grow their businesses means staying up to date on the latest trends in eCommerce. 

One of the most important decisions they’ll make is where to sell their products, and while website builders with integrated eCommerce functionality are solid and the preferred choice, social commerce can be used as an additional sales channel. With more consumers shopping directly through social platforms, understanding this space can give your clients an edge.

This topic will cover social commerce and why small businesses should (or shouldn’t) consider it. It’ll also delve into various social commerce platforms and their benefits for small businesses. Additionally, it’ll share a few statistics on the state of social commerce in different parts of the world to keep in mind.

• What Is Social Commerce?
• Social Commerce in Different Parts of the World
• Why Social Commerce?
• Social Commerce vs. Traditional eCommerce: What’s the Difference?
• Reasons Social Commerce Might Not Be Right for Your Small Business

What Is Social Commerce?

Social commerce is a blend of social media and online shopping. Native social commerce tools offered by platforms like Facebook, Instagram, TikTok, and Pinterest play a considerable role in this growing market. Users can browse, engage, and purchase various products directly from social platforms. 

Facebook, Instagram, TikTok, and Pinterest are just a few examples of platforms that have incorporated these features, allowing businesses of all sizes to list and sell products directly on these platforms.

Instead of redirecting customers to an external website, social commerce keeps them engaged within the platform. This also works both ways, helping the platform by tracking data from the user’s customer journey and also helping the brand increase sales.

Social Commerce in Different Parts of the World

Social shopping is really taking off in Latin America, with lots of people using platforms like Facebook Marketplace and Instagram Shopping. In Europe, it’s been a bit slower to catch on, but things seem to be changing.

And in North America, where people have high expectations and a strong digital setup, there are both big opportunities and challenges for businesses getting into social commerce.

Latin America

Pros:

• High engagement rates: Over 70% of consumers in Latin America are more likely to shop on social media, indicating a strong market potential. This high engagement creates opportunities for businesses to tap into a vibrant consumer base eager for online shopping experiences.
• Adaptability: Social commerce is very flexible as it lets businesses cater to different tastes and needs while tackling any logistical hiccups. Companies can quickly pivot their offerings to match local trends, making it easier to stay relevant, especially in that region.
• Community trust: Social networks are all about building connections; that’s a big deal in Latin America. By engaging with customers on platforms they already use, brands can foster trust and make people feel more comfortable buying from them.

Cons:

• Trust issues: There’s a bit of a “trust gap” going on. Many consumers prefer sticking with brands they know rather than taking a chance on new sellers. This can be tough for smaller businesses trying to make their mark in the social commerce world.
• Logistical challenges: Delivery can be tricky, and in some areas, inconsistent infrastructure makes shipping and payment processing a bit unreliable, which can leave customers frustrated.

Europe

Pros:

• Diverse markets: Europe is a sum of different consumer preferences due to the condensed population from different countries. This variety means businesses can craft tailored social commerce strategies that resonate with specific audiences across countries.
• Strong digital infrastructure: With high internet usage, shopping through social media is a breeze for consumers. This makes it easy for them to dive into social commerce without any hassle.

Cons:

• Regulatory hurdles: Different rules in each country can make it very difficult for businesses to navigate cross-border sales. Keeping up with data protection laws and varying consumer rights can be a real headache.
• Saturation of traditional eCommerce: Many shoppers are used to traditional eCommerce, so getting them to switch to social commerce can be a challenge. It’s like trying to change someone’s favorite pizza place.

North America

Pros:

• Established online market: Consumers in this region are generally more open to trying new shopping methods that integrate social media, and the infrastructure certainly helps.
• Innovative tools: Advanced technology adoption allows for plenty of marketing strategies through social media. Brands have features like live shopping and influencer partnerships to increase their visibility and engagement.

Cons:

• Intense competition: The super crowded market can make it difficult for new entrants to gain visibility. With numerous established brands already leveraging social commerce, standing out requires remarkable effort and investment.
• Consumer expectations: High expectations for customer service and product quality may pose challenges for smaller businesses. Consumers in North America often demand quick shipping, easy returns, and excellent customer support, which can be difficult for smaller players to provide consistently.

Why Social Commerce?

Most people nowadays have accounts on social media, and they use them not just to check their friends and relatives but also to stay informed and check for updates from their favorite brands. Research by Kepios showed that almost 63.7% of the global population is on social media, accounting for almost 5.17 billion people!

The average person spends 2 hours and 20 minutes a day on social media (source), which shows its huge potential for lead generation, prospect finding, and business promotion across various social media channels.

Social Commerce Benefits for Small Businesses

The list of benefits is indeed long, but we’ve narrowed down the list to a few interesting ones.

1. Increased engagement: Social commerce gives businesses the means to interact with their audience in real-time, respond to questions, and build relationships through comments, direct messages, and live streams on social media.
2. Targeted advertising: Most social media platforms provide detailed data about users (with the user’s consent most of the time), allowing businesses to target specific demographics, interests, and behaviors, maximizing their ROI or return on ad spend.
3. Boosted conversions: With social commerce, the buying process becomes streamlined, reducing the chances of cart abandonment as customers can purchase directly without leaving the platform. The reason is that the customer has a wonderful offer in front of them they don’t want to lose!
4. Building brand loyalty: By nurturing communities and offering personalized interactions, social commerce helps small businesses build loyal customer bases that can lead to repeat purchases.
5. Taking advantage of social commerce trends: Popular skits and content on social media can boost engagement with a brand, increasing the likelihood of converting potential customers. Using social media trends is a common strategy for small businesses, but it’s important to choose something engaging and non-offensive to avoid potential harm to a business.
6. Utilizing social commerce tools: These tools are a requisite for retailers to facilitate sales directly through social media platforms. They strengthen customer experience, drive engagement, and help brands capitalize on the expanding market value of social commerce

To learn more about Hostopia’s services and how you can become our partner, schedule a free consultation today. Contact us via our toll-free number: 1-800-322-9438

Social Commerce vs. Traditional eCommerce: What’s the Difference?

While both involve selling products online, the two approaches differ considerably in how they engage customers, promote products, and generate sales. In any case, a smart choice is to have a solid social commerce strategy in place in order to engage customers effectively and drive sales through various social media platforms.

To help you find the best approach for small businesses, let’s go over the differences between social commerce and traditional eCommerce. So, we’ll be focusing on specific angles like the customer journey, customer engagement, how they find a business, and what is convenient for them.

1. Sales Channels & Customer Journey on Social Commerce Platforms

Social commerce: Social commerce doesn’t need a website to start, as it happens directly on social media platforms like Instagram, Facebook, or TikTok. On there, users discover, engage, and purchase products without leaving each app.

For example, a Facebook Shop enables businesses to showcase their product catalogs right within users’ feeds. People can engage with product listings via Facebook Messenger and streamline the purchasing process through the Facebook platform since the latter can securely store all payment information. On a Facebook Shop, the customer journey is easy and often integrated with content they’re already consuming.

Traditional eCommerce: Traditional eCommerce, on the other hand, typically occurs on standalone websites (a business website) or online marketplaces like WooCommerce based on a WordPress website or Amazon, where you can have a business account for selling their products.

Customers usually discover products through search engines, ads, or social media links, but they’re then redirected to a company’s website or an app to complete the purchase. While traditional eCommerce websites provide more control over the entire customer experience, the buying process often requires more steps, such as navigating product pages, sometimes creating an account, checking out, and filling in shipping information.

2. Customer Engagement & Interactivity Through Influencer Marketing

Social commerce: One of the defining features of social commerce is its interactive nature. User-generated content (UGC) adds to customer engagement and builds trust by showcasing authentic content created by real users. A prime example of that tactic is GoPro. They mainly use user-generated content in their marketing, and for that reason, they’re very popular and offer engaging content on social media.

Customers can engage directly with brands through likes, comments, shares, and direct messages. To create a more deep sense of immediacy, companies can also do immediate reviews, shoot product demos, or even host live shopping events.

Traditional eCommerce: Traditional eCommerce websites generally lack the same level of interactivity and social engagement and the experience is often simpler and transactional. Businesses can still engage customers through email marketing, blogs, and customer service channels, but the communication tends to be more one-sided compared to the synchronous feedback loops of social media platforms.

3. Advertising & Discovery

Social commerce: Social commerce relies heavily on visual content and influencer marketing to drive discovery. While social media marketing is about brand promotion on social platforms, social commerce focuses more on direct transactions within the social media apps, highlighting the roles they play in the online sales ecosystem.

Platforms like Instagram and TikTok offer a few well-balanced targeting tools, allowing businesses to reach their ideal audience based on interests, behaviors, and demographics. Organic content, influencer collaborations, and paid ads all work together to create a holistic shopping experience, where customers often stumble across products while scrolling through feeds and stories.

Traditional eCommerce: In traditional eCommerce, discovery typically happens through search engines or paid ads. Search Engine Optimization (SEO) plays a huge role in helping businesses rank on Google for relevant searches, while Pay-Per-Click (PPC) ads direct traffic to product pages. Unlike social commerce, where product discovery is often passive and mostly visually driven (users see a post and tap on it regardless of whether they need the advertised product), traditional eCommerce relies more on customers actively searching for what they need.

That’s why many retail stores have started creating blogs to discuss their products. By posting topics related to products they sell, businesses can generate heaps of organic traffic, increase sales, build brand awareness, and gain customer trust all in one go.

4. Purchase Experience & Convenience

Social commerce: Social commerce offers an ultra-convenient buying experience. The growing significance of retail social commerce sales is a major revenue driver for eCommerce businesses, with the market projected to surpass $6.9 trillion globally by 2025.

Customers often make impulse purchases directly from their social media feeds without ever leaving the app. This lessens the opportunity for customers to change their minds or get distracted before completing a purchase.

Traditional eCommerce: The purchase experience on traditional eCommerce websites may involve more steps, including browsing through categories, adding products to a cart, and navigating the checkout process. While this approach offers more flexibility for businesses to upsell, cross-sell, and provide detailed product information, it can also create barriers that lead to higher abandonment rates.

Pre-filled information is also widely used on mobile phones. Customers who need a ‘speedy exit’ from a (traditional) eCommerce store often have the option to repopulate their shipping information automatically, saving them precious time in the process.

5. Ownership & Control

Social commerce: While social commerce is convenient, businesses are subject to the rules and algorithms of the platform they sell on. Social proof boosts trust and authenticity for brands by leveraging customer feedback (often publicly), user-generated content, and influencer partnerships.

Nevertheless, changes to platform policies or algorithms can significantly impact visibility, engagement, and sales. Businesses have limited control over the overall customer experience, as the social platform manages everything from payment processing to customer interaction.

Traditional eCommerce: In traditional eCommerce, businesses have complete control over their website, branding, and customer experience.

The business decides how products are presented, how customers navigate the site, and how the checkout process is structured. While this offers greater flexibility and control, it also requires more effort in terms of website maintenance, security, and marketing.

Reasons Social Commerce Might Not Be Right for a Small Business

At this stage, business owners might think that social commerce is ideal for selling products online. It’s easy; you don’t have to build a website; you only list the products on a limited platform, and, most importantly, it’s free!

But, they have to consider the potential reasons why it may not be the solution for sending these businesses into orbit.

1. Products sold: The most obvious thing is that not all products can be sold on social media. While popular apparel brands place ads for social media users, luxury accessory brands or cars often rely on other means to market their products. Apple is again a great example of a brand with mainstream products that don’t market well on social media.
2. Platform dependency: One major challenge is the dependency on social media platforms. A policy change, algorithm update, or platform issue could notably impact sales, most likely for the worst.
3. Customer trust and privacy concerns: Some consumers may hesitate to make purchases on social media platforms due to concerns about privacy or trust in the platform’s security. Ensure the target audience uses social media in the first place.
4. Learning curve: For small businesses, mastering the nuances of each platform’s shopping features can be time-consuming and require serious effort.

Implementing effective social commerce strategies can help overcome these challenges by engaging consumers and enhancing brand visibility on social media platforms.

These reasons are the most notable, but there are more:

Does the Target Audience ‘Live’ on Social Media?

Before a business starts its Instagram business account, for instance, they have to evaluate whether its ideal customers are even active on the social platforms where it plans to sell. Social commerce thrives on platforms where the audience is already engaging with content and brands. Asking customers to engage with the brand on social media can be achieved through strategies like branded hashtag campaigns that incentivize user-generated content.

If you’re selling customized sneakers, for example, then customers are likely on social media and following other top brands in the area.

However, if the target market isn’t particularly active on these platforms or prefers other forms of shopping, investing in social commerce might not yet yield the returns a company expects.

For example, B2B businesses or those catering to older demographics may find that their audience prefers traditional websites or marketplaces over social media purchases. These businesses would work better if you had a professional Website Design and an online listing (OneList Plus) on platforms like Google Maps.

Can a Business Survive on Social Media?

While social commerce presents an attractive opportunity, you need to consider whether a business can grow by relying predominantly on social media sites.

If the products require more education, technical specifications, or detailed comparisons, a small business might struggle to convey this effectively through quick social media posts.

Additionally, social commerce operates in a fast-paced environment where trends shift rapidly, and if the business isn’t agile enough to keep up, it could quickly become irrelevant. Having a broader, more stable eCommerce strategy beyond social media may be what you need for long-term success social media may be what you need for long-term success.

Schedule a free consultation today and check out our digital services. Contact us via our toll-free number: 1-800-322-9438

Final Words

In closing, social commerce presents a significant opportunity for small businesses to reach and engage with customers directly on platforms they already use. However, it’s vital during the sales process to ensure you are solutioning the end users’ needs before letting them fully commit.

Inspire your customers to contemplate how social commerce lines up with their audience and products; a mix of social and traditional eCommerce may offer them the best chance for continuous growth. With Hostopia’s solutions, you’re well-equipped to guide them every step of the way.

To get a glimpse of our digital services, please contact Hostopia via our toll-free number: 1-800-322-9438

Frequently Asked Questions

Is social commerce suitable for all types of small businesses?

Not necessarily. Social commerce works best for visually driven, impulse-buy products such as fashion, beauty, and lifestyle goods. Businesses that require more in-depth product information, comparisons, or a more complex purchase process may find traditional eCommerce more effective.

Are there any downsides to social commerce?

Yes, social commerce has its challenges, including platform dependency, limited control over the customer experience, and potential privacy concerns. Businesses are subject to social media platform algorithms, policies, and changes, which can impact visibility and sales.

How can I know if my target audience is active on social media?

Tools like social media analytics and customer surveys can help determine where the audience is most active. You can look at competitors selling the same products and use monitoring software and tools to research customer data.

What kind of products sell best through social media?

Products that are visually appealing, trendy, and suitable for quick, impulse purchases tend to do well on social platforms. For example, fashion, beauty, fitness, and lifestyle products are some products that perform well on social media.

When might traditional eCommerce be a better option?

Businesses selling to other businesses (B2B businesses) might find social media less effective than targeted outreach.

Technical products: Products requiring detailed information or specifications may be better suited for dedicated websites.

Older demographics: If a business’ target audience isn’t active on social media, traditional eCommerce could be more successful.

How can social commerce enhance the customer experience and boost sales?

Social commerce tools are needed for retailers to facilitate sales directly through social media platforms. These tools magnify the customer experience by making the purchasing process seamless and engaging, driving higher customer engagement, and helping brands capitalize on the expanding market value of social commerce.