Social shopping: How social commerce is changing retail

In 2018, 66% of brands invested in social commerce, the process of selling direct to consumers via social media platforms like Facebook, Instagram, and Snapchat. That statistic shows us that brands recognize the potential in selling products directly to consumers in the digital space. Those in the CPG industry may be concerned over what social commerce will do to the traditional retail environment. However, this new medium could offer a way for brands to connect with a wider pool of consumers and grow their market share in the physical space.

Social retail speaks to a growing need for brands to establish marketing strategies which provide unique, personalized advertisements for consumers. A consumer choosing social commerce often wants a closer connection to the brands that serve them. These individuals are influenced by things like customer reviews, in the moment advertising, and simplified shopping. Social platforms and mobile apps allow brands to guide consumers throughout the shopping journey from the discovery of the product to purchase, all in a single space.

The Potential for Personalization in Social Commerce

Social commerce essentially takes a step out of the path to purchase by encouraging consumers to buy products directly from promotions on social media. As many social media sites are highly targetable, this makes them an ideal platform for creating a personalized experience.

how social commerce is changing retailThrough an online purchase using traditional e-commerce, brands often have very little information on the customer outside of their name, address, and purchase history. Through social media, brands gain access to more information to target messages appropriately, like the individual’s family status, interests, hobbies, work history, and more. This deeper insight allows brands to craft their advertisements based on that individual rather than spamming a mass audience with messages.

This direct to consumer (DTC) model is growing more critical for CPG brands competing in the digital space. It’s also a category primed for growth. Conventional retail sales for CPG brands only increased by 2% in 2018. Meanwhile, e-commerce sales for CPG products are expected to grow by 50% through 2025. In preparation for this and to manage CPG industry challenges, brands should invest in social commerce to guide consumers to products online. Meanwhile, mobile apps will provide them with an opportunity to reach consumers in the store.

Connecting With Shoppers via Mobile Apps

While online sales will continue to grow for CPG brands, in-store shopping will still account for the majority of their business as these are items picked up during regular store visits. Brands must still consider mobile options which will assist and engage consumers during these shopping trips. For these brands, there are a variety of third-party apps to consider.

  • Retailer-specific rewards programs: Many of today’s retailers offer mobile apps for in-store use which can help consumers gain product information and locate items. Brands should look into the requirements of such programs to help increase their product’s prominence in the shopping aisle. This research should also include reviewing online retailer rewards programs, like Amazon Prime as an example, to connect with online shoppers and leverage emerging platforms like voice- and image-based shopping.
  • Social media: All major social media sites have apps consumers can use while they travel, and brands should consider increasing advertising efforts in these spaces. While this may not impact sales in the store directly, having a strong social media presence will help build brand awareness for these users. Focusing on app users can also provide location-specific insights, which works to pinpoint popular locations where advertising enhancement would be beneficial.
  • Shopping apps: Shopping apps that incentivize consumers to seek out products in the store are ideal for boosting engagement. Shopkick, as an example, rewards consumers with points in exchange for scanning a participating product’s UPC. This strategy guides consumers to products in the store and gets them to handle them, which increases sales potential. It also incentivizes purchase, which creates positive brand affinity.

Social commerce represents significant opportunities for CPG brands, as much of the growth for the industry will result from e-commerce.

Mobile apps can connect the physical and digital store experiences and improve a consumer’s connection to a brand. These programs provide a necessary service to consumers, by offering product and brand information which they can use to make purchase decisions. These apps also enhance the in-store experience and improve brand affinity through incentives.

Social commerce represents significant opportunities for CPG brands, as much of the growth for the industry will result from e-commerce. Adding a DTC model allows brands to cut out the middleman and build a more intimate relationship with consumers. Brands should consider building their social presence to cater to this trend, but should also look to mobile apps to create the same sort of relationship at brick-and-mortar locations.

Shopkick helps our partners reach consumers as they shop via our intuitive app with a highly active user base. To connect with our users and improve in-store sales, contact us.

Image courtesy of Diego Cervo