This is a recap of the first virtual event in our new series, The Checkout. In the next installment, we'll define what 'sustainable retail' actually means with the help of leaders from Cuyana and Rothy's. RSVP here to tune in on May 6.
Last Thursday we kicked off our virtual event series, The Checkout, with a conversation about social commerce’s evolution from product discovery → purchasing.
For the event, Halie spoke with Layla Amjadi, director of product management for Instagram Shopping, and Jason Wong, founder and CEO of Doe Beauty. Check out the full replay below, and keep scrolling for our biggest takeaways.
Frictionlessness
Wong said he’s generally noticed two buckets of Doe Beauty shoppers: people who take their time browsing, and people who “just want to see a product, add to cart, and check out in five seconds.”
Doe’s preferred platform: Instagram, which makes up about 38% of Doe’s overall revenue. There are fewer points of friction, versus if shoppers had to “go on our Instagram, click the link in bio, and then go on our website,” helping serve the shoppers who want to quickly check out.
- Other platforms like Snapchat and TikTok also have social commerce features, but Wong said he prefers Instagram and Facebook Shops because they have native storefronts.
Barriers to higher adoption
Despite the buzz and convenience, only 4.3% of US e-commerce sales will come from social commerce in 2021, per eMarketer. And from a usage standpoint, Amjadi said Shops, the storefronts tool powering commerce on Instagram and Facebook, is used by one million brands and 250 million monthly users.
Amjadi says one reason sales aren’t higher is that “we haven’t nailed, as an industry, proper attribution.” It’s hard to track how many purchases actually result from social discovery—if you see a dress you like on Instagram but you don’t buy it until a month later, that may not be counted as a social commerce purchase.
Another issue is that brands haven’t been explicit enough about making the sale, Amjadi said.
- In order for social commerce to really move from discovery to a sales channel, brands need to accept that “it’s okay to be a little bit clear about the sale—and that’s actually what people want.”
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And social commerce has limitations for retailers with 50+ skus, Wong added, because tools like Instagram Shops don’t “give you the categorization and filter capabilities that larger storefronts do.” That makes it so larger brands can only display “a fraction” of what they sell.
Reality check: From Wong’s POV, 4.3% of total e-commerce is actually a solid number, because it takes time for shoppers to build habits around new forms of shopping.
- “It’s honestly not a bad number—it sounds bad right now, but you have to zoom out and look at the bigger picture.”
Brands most likely to succeed
Wong thinks small businesses have the advantage here because they’re more nimble and typically have a more intimate relationship with followers. “You’re not going to go on Instagram and look at Home Depot, you’re not going to go on Instagram and look at the Targets, you know?”
- Amjadi agreed, saying that on Instagram, brands that engage their followers more also see higher sales conversion rates.
Lightning round
Live-stream shopping or in-feed?
- LA: Live-stream shopping “just seems to address the full-funnel experience that people need when they are trying to make a decision on the types of products that sing well on Instagram, which is in fashion, beauty, and home decor.”
- JW: “Live-streaming is great for specific products...but for the majority of people I think I’m still bullish that feed posts will come out on top.”
Will social commerce ever become the predominant e-commerce channel?
- LA: “I think social commerce, for specific categories, and specific segments of brands, will be the predominant source of sales.”
- JW: “I think at least in the next ten years...it will be just a quarter or a fraction of overall e-commerce sales, just because it’s so difficult to change consumer behavior in that short time window.”