The Shift To Social Shopping And What It Means For Brands

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The Shift To Social Shopping And What It Means For Brands​

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By Charles Nicholls, CEO SimplicityDX Inc and Chair of The DX Academy, a think tank that researches how consumers buy online.

Since the first tentative transactions more than 30 years ago, e-commerce has grown to be a $5.8 trillion industry worldwide. Despite its size, it is still an immature industry, evolving as consumers change the way they find information online. The last big change has happened in the past decade with a shift to smartphones and more transactions happening on mobile devices.

Today, more than three-quarters of e-commerce site traffic and two-thirds of transactions happen on mobile devices. The next big shift is underway now, and this time, it's to social media.

Every year, my company surveys 1,000 U.S. online shoppers to understand attitudes to shopping with social media. Our latest report, The State Of Social Commerce 2024, showed that a widespread shift to "social first" shopping is underway. Today, the majority of consumers start their shopping journey on social media.

Approximately eight out of every 10 U.S. online shoppers use social media for shopping. Almost 70% use it either daily or multiple times per week. Looking specifically at Generation Z, those born after 1997, we found that 40% use social for shopping every day, and 41% start every search on social, even if they're looking for something like a nearby café.

The Two Sides Of Social Commerce​

Social commerce is really two things, based on where the transaction happens. While the shopping journey starts for many on social, a purchase can happen either on the social marketplace or on a brand’s e-commerce store.

Most consumers prefer to buy directly from the brand. Our research found that almost three-quarters of respondents prefer to buy on brand websites, a pattern that has been steady for the past three years. This strong preference for direct brand relationships is driven by a desire for authenticity. Social media remains a place where consumers are wary of scams and buying from third parties, including influencers.

Hubspot's 2024 Consumer Trends Report (registration required) underscores these findings. A survey of more than 700 U.S. consumers in January found that many people were concerned "companies aren't legitimate" when social shopping, and less than half of respondents were comfortable buying in a social media app.

Implications For Marketing Teams​

The shift to shopping starting on social media has significant implications for marketing teams. It’s no longer sufficient to focus only on ranking your pages on Google; visibility on Facebook, Instagram and TikTok is now important as well. These channels also reward storytelling over straight product promotion. Social media is part information, part social and part recreation, and storytelling can slide into consumers' social feeds more seamlessly to entertain, inspire and inform.

Short-form storytelling is key.​

Short-form video storytelling can be time-consuming and expensive to create, but it's also impactful. For some platforms, like TikTok, getting the content right so that it spreads virally is hard to do but critical for success. This is, of course, another reason why brands are increasingly turning to influencers and creators who have a track record of producing highly engaging content and an audience of followers to start the process.

Influencers have a trust problem.​

However, our research also showed that while 50% of online shoppers value influencers for product reviews, only 11% "trust influencer content completely," compared with 57% who trust content from other customers. Part of this is a lack of transparency. Only 8% think social media influencers are always transparent about being paid to promote a product. There’s also a small percentage of consumers who believe influencers provide zero value.

Authenticity is critical.​

Those brands and retailers with influencer programs should remind themselves of the importance of authenticity, especially about remuneration transparency. As if the reputational damage wasn’t enough, a federal court case in Illinois against the makers of Blue Ice Vodka is raising the stakes even higher. The class action suit claims Instagram influencers and the vodka maker "engaged in false advertising about the 'handcrafted' drink’s 'health benefits' and failed to disclose their paid relationships," according to the Information (paywall).

Implications For E-Commerce Teams​

There are also significant implications for e-commerce teams. I've found e-commerce systems have often been designed with the assumption that shoppers will land on the homepage and explore the brand before progressing down a well-optimized selling funnel. Then, they'll click through to the category and product detail pages before reaching the shopping cart. This doesn’t work for social media traffic.

E-commerce has a multi-funnel future.​

In a recent three-way split test we ran for a fashion brand, the home page performed worst for traffic landing from social, generating only $1.52 per click compared with $4.08 for traffic sent to a product detail page. The test also included a different type of selling funnel optimized for social traffic, which generated $6.12 per click, a four-fold improvement over the traditional homepage.

I believe this signals the end of the "single funnel" for e-commerce, where all traffic follows the same path from the homepage to the shopping cart. In its place, teams need to think about different selling funnels tailored to the source of traffic.

Organizationally, I've found brands often struggle with a multi-funnel future. Building and maintaining web experiences is a time-consuming process, so much so that many teams shy away from having more than one selling funnel. Artificial intelligence (AI) and automation are making strides in this area, however, brands not using AI can still build additional selling funnels using a landing page-building tool.

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One example of this kind of approach might be a holiday gift guide where a series of pages are built around a particular topic or theme. Once built, these pages will need testing using an A/B or multivariate test to optimize the content and drive sales. While time-consuming, results should be significantly better than sending traffic from social media onto standard product pages.

Conclusion​

As more consumers start their shopping journeys on social, consumer-facing businesses need to adapt to this new way of shopping. Marketing teams need to tell more engaging brand stories, especially using short-form videos. E-commerce teams need to change the way social traffic lands on e-commerce sites to carry the storytelling into the shopping experience.

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