As consumer behavior has changed, online shopping has moved from a stand-alone task to a seamless part of the social experience.
Most social networks now support the option to buy directly on their platforms, and some brands have started selling directly on social. This is no longer just a niche platform used by early adopters — it has the potential to become a mainstream way to discover and buy products.
Almost half of US social media users bought something via a social media platform in 2021. In 2022, there are 270.1 million active social media users in the US alone.
That’s a big opportunity.
And one that has led many brands to consider their own place in the world of social commerce. Should brands sell on social media? The answer — yes, brands should sell on social media.
The caveat? Not all brands should sell the same way.
Dig Deeper > 4 minute read
Social selling strategies
There is no one-size-fits-all approach to social commerce. Different strategies fit different brands — these fit nicely into three distinct categories:
1. Sell with Social Checkout
This approach is social commerce in its simplest form, but it’s also the newest.
Brands upload their product catalogs to various social platforms, showcase products in a social shop, and include a call-to-action that takes users to an in-app purchase page. The benefit to users? They never have to leave the platform.
This strategy works well for brands that have a strong visual presence on social media and who are selling products that have a low barrier to purchase. Beauty is showing promising growth — in fact, by 2025, social commerce could take over 40% of the total beauty online revenue. We only have to look to the success of social beauty giants Kylie Cosmetics and Glossier to understand why. It's also a good option if you're looking to reach a younger, mobile-first audience.
However, all customer data is owned by the channel. If you’re not Kylie Cosmetics, this can make it difficult to build deep direct relationships with your customers.
Without consent to contact these customers outside of the social media platform, you can’t re-engage them post-purchase marketing. Recent research found that each dollar spent on email marketing results in an average ROI of 4200% — lucrative potential returns, but only if you have customer data and their consent to use it.
Profit comes from repeat customers, not from one-off sales. Consider that a quarter of conversions from returning customers generates 43% of brands’ revenue and 100% of the profit. Success lies in customer lifetime value, and isolated social commerce may potentially limit this.
For brands utilising social checkout, every transaction is essentially a first-time customer — with the full customer acquisition cost and the associated loss that results. The parallels with selling on marketplaces are striking: volumes but not margins, and no ability to market to the customer or rights to use the customer data.
2. Promote on Social, Sell on Brand Site
The second strategy for social selling is the most widely recognized, and most popular with customers.
Brands use media to raise awareness of products and offerings, directing traffic towards the brand site for purchase. With this approach, brands maintain complete control over the customer experience and the data.
This strategy works well for brands that have a strong online presence and who are looking to use social media to reach a wider audience. It's also a good option for those selling products that require consideration or social proof, as users will be able to take advantage of features like product reviews and customer service. The average value of online orders referred through social media was $81.05 — not quite the impulse value expected from native social commerce.
The downside? Friction. There’s no denying that the proposed ease of checking out natively in-app sounds like a simpler process for customers.
By referring users to the brand site, brands run the risk of poor cross-channel shopping experiences. These are unfortunately very common: When clicking through from social media to a brand’s website, 81% of shoppers complain of poor landing experiences when referred by social channels.
3. Promote on Social, sell on social.. And the brand site
There’s a third category of approach, offering a happy medium.
In this case, a brand sells through multiple channels; taking advantage of both social checkouts and direct to customer sales via their brand site.
The advantages of this strategy are that the brand has more control over the customer experience and still retains some level of customer data. They can also benefit from the volume of sales possible via social commerce.
Unfortunately, this happy medium also comes with the pitfalls of both other approaches — and the added consideration for accurate product availability across multiple platforms. In order to avoid the dreaded out-of-stock, brands need to avoid posting fast-moving, low inventory items on social and monitor all inventory stock closely.
So, where is the real middle ground for most brands?
Almost all brands should direct customers to their brand site
As a rule, most brands should direct traffic to the brand site as shoppers prefer to check out there. It's simple: this is where customers prefer to shop.
Simplicity DX's State of Social Commerce report found that 71% of shoppers still prefer to checkout on a brand website, as opposed to only 13% who preferred to checkout on social media.
Social commerce may be on the up, but many customers just aren’t there yet.
There are a number of reasons why customers prefer to checkout on a brand's own website:
- Returns and refunds. Shoppers expressed uncertainty around returns and refunds when purchasing items on social networks.
- Authenticity concerns. Shoppers may be concerned about copy-cat brand issues.
- Inventory issues. Promoted products can sell out quickly and a lack of real-time inventory can be an issue on social media.
79% of global consumers believe that the experience a company provides is as important as its products and services. Brands need to turn their focus to using social media as a discovery tool, and optimizing their social promotions and inventory interactions to provide shoppers with the best possible journey to the brand site.
By doing so, brands retain data and control over the customer experience.
We only need to look at the impact the 2021 iOS changes had on social advertising — Facebook stands to lose $10 billion in revenue. For small businesses that relied solely on Facebook ads for sales, the impact is much greater. Now, couple this with the growing cost of customer acquisition. Brands need to be able to retarget previous customers. Owned data is the best data in the current landscape.
There are two exceptions to this rule:
When influencers sell products on their own channels, the conversion stays within a trusted bubble. Fans trust these individuals more than brands. Specifically, young fans. Gen Z and Millennials are twice as likely as Boomers to trust influencers.
These influencers, therefore, have a great impact on buying decisions. It makes perfect sense to have them convert this interest to sales with as little friction as possible.
The other exception to the role includes micro-brands — these are brands that are happy to sell through a single channel.
These brands offer a limited number of product lines and have little to no back-office integration. They are also usually run by one or two people.
For example, independent beauty brand — Glow Recipe. While it’s no longer defined as a micro-brand, it first joined TikTok’s shopping program in April 2021 and sales surged 600% after a host of viral content. 90% of its sales are now to first-time buyers.
Equip yourself for social commerce success
Selling on social can be a great way to reach a wider audience and connect with potential customers. However, it's important to make sure that you're doing it in a way that makes sense for your brand and your target audience.
So, should brands sell on social media? The answer is it depends on your goals.
If capturing new subscribers and profitability are high on your priority list, then promoting products on social for customers to discover, but directing them to the brand site is likely the best strategy. But there are also exceptions. If your brand is just about to launch, you already have lots of followers and plan to go to market through influencers, then launching it on, say, Instagram first could be a really smart move. You’ll probably need to build an eCommerce store down the line and can always reevaluate at that point. It takes careful planning and execution to make social selling work, but if done correctly, it can be a very effective way to reach and sell to customers online.
For more information on social commerce, be sure to check out Simplicity DX's State of Social Commerce report.
Simplicity DX is a platform that helps brands measure and improve their digital customer experience. To learn more about how we can help you, contact us today.
Read some of our other posts on social commerce.
Shopping at The Edge – The New eCommerce Reality
Promotions at the edge: how promotions cause eCommerce shopping experiences to break
Social Commerce for Retail?
Social Commerce and the Peak Shopping Season
SimplicityDX Publishes 2022 State of Social Commerce Impact Study
Watch the Webinar - Social Commerce is Broken: How to Fix it