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Social Commerce Analytics – Tracking the Next Wave of Commerce!
Social Commerce Analytics – Tracking the Next Wave of Commerce!

December 13, 2021

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Over the past few years, we have seen a growing trend of infusing elements from social networking into the buying process as part of online commerce. Much like how we discover new restaurants to visit, activities to do with our families, places to visit from our friends’ social posts and statuses on social media platforms, we can now discover products and services to buy through Social Commerce platforms.

With Social Commerce, the shopping experience gets reinvented – the entire product discovery to checkout process takes place on a social networking platform or on a platform with aspects of social networking.

Social Commerce is, in fact, an umbrella term that can refer to many types of commerce platforms where elements of social communication, collaboration, media and networking get embedded into the buying process.

The 2 most referenced types of Social Commerce platforms are:

  • Social Network-driven sales – Sales that takes place on already established social networks

  • Socially Curated shopping – Platforms where users (led by Influencers or Ambassadors) create and share lists of products and services that others buy. The buyers and sellers are set up as a Social Network where the commerce is driven by social acceptance, likes, ratings and user opinions of products and services.

Several other types of commerce platforms are sometimes referred to as Social Commerce as well:

  • Group Buying platforms where users can buy products or services at a reduced price when enough users (typically their friends and family) also agree to make the purchase

  • Participatory Commerce platforms where users can get involved in the actual product design and creation process

  • Interactive Commerce platforms where users can initiate chat sessions with their friends or other users for advice on products to buy

  • Content-driven and Live Commerce platforms like which try to augment the store buying experience

Irrespective of which specific category the commerce platform falls into, this advancement in the way we shop is profoundly going to change the online shopping experience in the years to come.

 

Social Commerce, in some ways, re-invents the Customer Buying Experience, making it more desirable than traditional E-Commerce:

1. Improved Buyer-Seller Engagement

Social Commerce platforms not only enhance the level of communication between Buyers and other Buyers but also the communication between Buyers and Sellers as well as Sellers and other Sellers. On such channels, users are more likely to interact with content around the products such as reviews, ratings and opinions and use it for initiating conversation either with their own personas or others. This increased level of interaction directly impacts the Social Score of the platform, thereby helping it increase its orders and revenue.

2. Bridging the gap between the In-store experience and Online Shopping

Social Commerce platforms make shopping a fun and participatory experience with content and interactions that are visual by using next-gen technology like AI and Augmented Reality. This differs from the conventional E-Commerce purchasing experience, which does not allow buyers to engage with their brands, content or other buyers in real-time.

3. Reduced friction

At its foundation, Social Commerce is about making it as simple as possible for buyers to make their purchases, and also leave with a sense of satisfaction of having made the right purchase. The journey from product discovery to purchase is enhanced with social elements that greatly reduce the possibility of doubt and desertion.

 

In the coming years, we will see Social Commerce evolve at a breakneck speed. We will see traditional Ecommerce platforms turning into Social Commerce platforms and rapid growth in commerce transactions within leading Social Networking platforms.

 

The worldwide Social Commerce industry is expected to grow at a CAGR of 28.4% till 2028 and reach $3.37 Trillion in 2028 from $475 Million in 2020! It is also interesting to note that 70% of shopping enthusiasts today turn to Social Networks for product discovery.

With the phenomenal growth that is expected in this space, it is important to keep track of whether one’s Social Commerce Strategy is working, how effective it is, and what are the areas for improvement.

Social Commerce cannot be measured using traditional Ecommerce KPIs such as Conversion Rate, Average Order Value, Cost Per Acquisition, and Cart Abandonment Rate alone.

It has to be coupled with business metrics that truly indicate the effectiveness of the platform and zero in on hotspots where corrective actions need to be taken.

Some of the key drivers of performance on Social Commerce platforms that must be measured are:

1.Average user time per listing (which shows the extent to which users are engaging on product listings and the social ecosystem around it)

2.Average follower count per user (Which shows the level to which users in the network can influence purchasing decisions)

3.Average interactions per user (with other buyers/sellers based on their persona)

4.Order trends by social validation of product (Likes, Ratings, Reviews, Mentions, Shares)

5.Comparison of product sales on the Social Commerce platform vs sales of the same product on a traditional E-Commerce platform

These metrics should then be analyzed across the most important dimensions such as Geography, Product Categories, Price Ranges and User Profiles to derive Insights that can help drive actions that can impact business performance positively.

The above is just a sample set of metrics that should be measured, monitored and tracked and can indicate the health of any Social Commerce Platform. The Social Commerce Analytics field is an evolving one and in the months and years to come we will see various new metrics used by these platforms to understand user preferences, features that work and those that don’t, and the extent to which Social aspects of the platform are able to drive sales.

Many businesses have already experimented with Social Commerce, but that doesn't mean each and every business entity that sells products and services has to! Social Commerce might work for products such as fashion, electronics, home furnishings, etc. where a lot of purchasing decisions are based on social recommendations and acceptance. However, it may not work for certain other product categories like household items, groceries, musical instruments, etc. where the buying decision is based on personal preferences. In order to determine if your business will profit from Social Commerce, you must do qualitative and quantitative research to learn about your options.

Social Commerce as a primary channel for online commerce is still work-in-progress and we do not know if in its current form it will succeed or fail; but we know one thing for sure — it has a lot of potential and is bound to change the way we buy things online. It will become bigger and better as more and more people embrace social media and technology and the benefits these platforms provide.

 


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Sidharth Sivasailam
Vice President, Products

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