Tarun Bhasin

Social Media eCommerce: A New Contender in “Shopping Wars”

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When asked what he thought the top tech trend of 2021 would be, former Apple CEO John Sculley told FastCompany:

“Platforms like TikTok, Shopify, and YouTube have aligned as a third-party eCommerce fulfillment platforms system to compete versus Amazon. In fact, Facebook and TikTok are both expanding into social-media eCommerce.”

The way we see it, the opportunity is undeniable. But do social platforms have what it takes to take on the eCommerce giants like Amazon, Google, and Shopify? Let’s take a closer look at the opportunities and challenges these platforms are likely to face along the way, and what they might do to overcome them.

What Is Social Media eCommerce?

If popular social platforms in other countries are any indication, Facebook and Instagram Shops are poised to ride this growth. Social media accounts for one-third to one-half of all e-commerce transactions in Thailand. In China, WeChat and Little Red Book have already demonstrated the potential of social media eCommerce, and the results could be bigger in the U.S.

Compared to other countries, consumers in the U.S. tend to buy directly from brands more often. Amazon owns 37% of all US eCommerce sales, while 50% of all retail eCommerce in China goes through Alibaba.

If American shoppers continue to spend directly with brands more than they spend on Amazon, that’s a good sign for social media eCommerce. Brands can cultivate an online presence and build customer relationships on social platforms. When users are ready, they can make a purchase without ever navigating away from the place where they connect digitally with friends and family.

Social media eCommerce brings online connections and the shopping experience together.

Other social media platforms are poised to join this trend. People already use Pinterest to “pin” photos of things they like, for instance—and 40% of Pinterest users have an annual household income of over $100,000.

Adding eCommerce is a no-brainer, and Pinterest knows it. The platform’s “Complete the Look” feature recommends relevant home decor and fashion products based on what a user is looking at, linking users to product pages where they can buy what they see in-app.

Are Social Platforms Equipped for the Challenges and Opportunities that Lie Ahead?

As Facebook and TikTok prepare to square off in an era of shopping wars, it’s important to consider what hurdles the social media giants will face.

For example, social stores are sure to increase the number of messages merchants receive in-app. Offering chatbots that use AI to handle simple questions and requests would go a long way to ensure merchants can easily manage their store’s communications.

According to Azoya International director Franklin Chu, the biggest obstacle is actually a lack of easy mobile payments.

Payments are still largely driven by credit cards, which users have to input manually for mobile payments. This creates friction and room for errors. In China, mobile payments are simpler: customers simply authorize a card transaction by inputting a 6-digit code they’ve memorized.

What social media platforms need to overcome this challenge is a payment solution that streamlines in-app checkout. Facebook is introducing its own cryptocurrency, Libra, which may serve to meet this need in the future. In the meantime, however, an on-the-ground solution ideally would leverage digital wallets, virtual cards, and/or other secure in-app card storing options.

For social media providers looking into how ecommerce fits into their business model, the right partner makes all the difference. At Kunai, we build payment solutions to meet complex needs and provide smooth user experiences. Reach out to learn about how we can add payment functionality to your platform today.