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BW Businessworld

From E-Commerce To Social Commerce – The Evolution Of Shopping

Considering 90% of Instagram users follow at least one brand on the platform, there’s no denying the potential for social feeds to drive sales.

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Pandemic has caused several retailers to change and evolve in unprecedented ways, in line with the rapidly modifying consumer preferences for shopping channels that will support social distancing. Although, not a new concept, the idea of shopping online therefore has gained acceptance now, more than ever before.

With the need to stay at home and away from the crowds, online shopping is growing another tributary – social shopping. You might recall the “Shop Now” tabs on Instagram or Facebook when a relevant brand or product pops up on your feed. Social shopping is blurring the lines between social media and eCommerce, just like e-commerce blurred the lines between offline and online shopping. A recent study by Clear Sale pegged the rise in first-time online buyers across 5 countries including the US at 12%, in March and April alone.

Considering 90% of Instagram users follow at least one brand on the platform, there’s no denying the potential for social feeds to drive sales. Premium furniture brand Riviera Maison, for instance, effectively used existing customers’ social content for pitching to potential customers and got better results than desired.

Truth in numbers

A recent study by Shopify, which analyzed well over 500,000 orders originating from social traffic, clues us in to the booming state of social commerce. Some notable figures from the study include:

· With the highest average order value recorded at $65, Instagram is the biggest social media platform among Facebook, Twitter, and Pinterest.

· Facebook, Instagram, and YouTube are the only major social platforms with a conversion rate over 1%

· Over two-thirds of the visits to Shopify stores can be tracked to Facebook, as per the study.

These figures reiterate the increased acceptance by customers of social media as an effective channel to shop, and to stay updated on recent product trends. No wonder why brands are diligently mapping the daily active customer base of their social media handles to garner additional users.

Social shopping has gained in popularity due to the following factors:

  • Improved shopping experience
  • Quick access to new and exciting product information
  • The convenience of shopping together with connections and loved ones
  • Reviews from previous buyers help in better buying decisions

Seeing this gain in popularity among users, sellers are also working with the social media platforms to provide the best of the shopping experience, ensuring:

  • Instantaneous direct-to-customer reach worldwide, enabling higher sale probability
  • Access and a better understanding of customer buying behaviour
  • A cost-effective tool to resolve any customer queries

The earliest traces of social shopping can be found since the year 2018 when Instagram and Facebook launched their own Marketplace. These are today flourishing and have come to challenge the eCommerce giants like Amazon and Etsy, in a short span of time.

Facebook-owned WhatsApp’s shopping cart feature is also a step in the same direction. The streamlined process will give businesses an E2E solution from tracking inquiries to selling the product. While it’s an addon for large to medium businesses, social commerce is a godsend for small business to reach out to customers, without putting in heavy investments to manage a full-fledged web- or mobile-based platform.

Potential threats

With higher projected sales for brands, social commerce is also susceptible to cyberattacks and retail fraud because of undefined standards for adequate identity verification and fraud detection.

Cyber frauds are expected to cause losses of more than $12 billion in the US alone by the end of 2020, according to a 2019 study by Signal Science. Such financial losses are not only detrimental to a brand’s earnings, but bad customer experiences and damage also impacts the company reputation for potential users.

The major frauds that have been uncovered in the sales fulfilled through social platforms include the following:

Vendor Impersonation:

Impersonation fraudsters imitate a legitimate link to direct user payments to an unintended recipient.

Counterfeit Product: Such vendors bait customers with high-quality product descriptions and advertisements, complete with fake reviews and luring discounts, but deliver lower quality, or counterfeit products.

True fraud:

It is the most common form of online fraud where the perpetrators steal the personal and credit card information of the users to make unauthorized purchases. Sometimes you might encounter identity thieves on your site that would seem like legitimate consumers. Imposters can trick users to disclose their account credentials through phishing and social engineering tactics. Once the fraudsters get account details, they can easily make illegitimate purchases that can also result in chargebacks.

Interception fraud:

Perpetrators of this kind of fraud often step in after a legitimate purchase is made and intercept the order to modify the shipping address leading to loss of parcel for the end customer

The frequency of such frauds has increased amid the COVID-19 crisis. Fraudsters would typically become active around the holiday season, but with higher access and lower firewalls, fraud incidents are occurring all the year-round. Account Takeover (ATO) attempts alone saw a jump of 179% in 2020.

Social shopping, nevertheless, is an attractive, low-cost medium for businesses to increase sales, that much we have established. It’s now time for the entire ecosystem – governments, law enforcement organizations, fraud detection specialists, relevant corporate entities, and the general public – to safeguard the medium with necessary fraud controls so that this dynamic and new sales medium can usher a new era in the area of social business.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


Srishti Bansal

Senior Analyst- Knowledge Services

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Anand Chandrashaker

Senior Domain Principal for Digital Transformation Services

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