Social Commerce – shopping for e-commerce success at Facebook, Twitter et al as social platforms eye up a long term revenue opp

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Getting on top of Social Commerce – the coming together of social platforms and e-commerce – has been an increasingly aired ambition articulated by Facebook, Twitter, YouTube and others in recent times. It’s seen as a lucrative objective with massive revenue potential for platforms with global reach. It’s also universally seen as being an evolution still in its earliest stages, but one which needs nurturing and attention now.

Take Facebook as an example. This month it makes its Facebook Pay service available on the likes of Shopify with an initial zero percent revenue sharing structure. CEO Mark Zuckerberg makes no secret of the firm’s intent to “work our way down the stack” of e-commerce layers, shaking off the Facebook-centric focus that has been on show to date:

Our goal here is to create better experiences for people interacting with businesses and to help businesses grow even more on our platform. Our approach is to work our way down the stack and build world-class services at every layer of commerce, starting from discovery at the top of the stack, all the way down to payments. And just like we want to be the best place for millions of creators to make a living, we also want to be the best place for businesses to grow as well.

We started here by building world-class ads tools to help businesses reach potential customers and help people discover new products and services that they might like, but what we found is that when these ads link off site, you often land on a webpage that’s not personalized or not optimized or where you have to re-enter your payments information. That’s not a good experience for people and it doesn’t lead to the best results for businesses either.

So our next phase here is focused on building out shops, marketplace, business messaging and WhatsApp and Messenger to create more native commerce experiences across our apps…As we bring more of this online and enable more of this, it’s going to create a superior consumer experience and it’s going to convert better for businesses. This is going to lead to more businesses investing in building out their presences across our services and that will lead to even more diversity of products for people to discover and interact with.

Adding new payment options is another key element of this strategy, he adds:

WhatsApp payments are now available to everyone in Brazil, as well as India. Lots of people are using this as a simple and secure way to send money to friends. We’re adding new payments features in Messenger in the US, like QR codes. We also just announced that we’re making Facebook Pay available outside of our apps for the first time, which means that you’re going to start seeing it as a checkout option on the web and especially in web view that you see within our apps after clicking on ads or other business content. The commerce experiences are now accessible across most of our services, and we have a full roadmap of deeper integrations that I’m excited about in the months ahead.

Long time coming

This is all, he emphasizes, a long-term play, one that’s going to “take a while” before it makes a notable contribution to the Facebook bottom line. But it’s a solid long-term bet, he insists, especially when positioned against the sheer size of the firm’s existing ad business:

The main thing to keep in mind is just that the ads business is so large that it’s going to take a long time before anything that we do with commerce is going to be particularly meaningful at scale. But I think, overall, the strategy is really to work our way down the funnel, from discovery and all the things that we’re already world-class at with ads, to making it so that those ads increasingly point to shops across our different services.

In order to do that, each layer of the funnel that we’re working on, we want to be world-class on its own, which means that basically there is this whole long tail of functionality that businesses have come to expect on the web and from other tools, and we need to make sure that that’s available for shops and business messaging and all the tools, whether we do that through partnerships with other e-commerce companies or building it up ourselves.

But I think the strategy is the right one, it’s creating a better product experience for people. When you click on an ad or when you engage with the business, it’s just going to be much better to do that natively, whether you’re in Instagram or Facebook or WhatsApp or whatever you’re using, then go to a website that doesn’t have your payment information and isn’t personalized. So I think we’re on the right path here, and we’re focused on compounding this as quickly as we can.

Shopping at Twitter

Over at Twitter, Jack Dorsey has perhaps been more articulate on the topic of Bitcoin and cryptocurrencies than shopping, but the firm has its eye on ramping up its e-commerce engagement. Twitter first tapped into e-commerce in 2014 with its “Buy Now” button, which embedded product links into tweets, but attention drifted onto other product directions for a time. Now though, the potential of linking users to products and merchandise and enabling transactions has re-emerged as a core focus of opportunity.

The firm is currently testing Shop Module, a new feature that allows users to shop directly from a brand’s profile. Users can scroll through a carousel of products and tap through on a single product to learn more and purchase without having to leave Twitter. This is currently only available for a handful of US brands on iOS devices, but it will be made available across the globe at a later stage, suggests Bruce Falck, Revenue Product Lead at Twitter, in a blogpost.

We believe in the power of the conversations that Twitter facilitates around products. With this pilot, we’ll get to explore how our engaged, responsive and chatty audience reacts to products that are emotionally charged – like a new jersey from your favorite sports team – or that provide lasting impact – like a new skincare regimen. And, fundamentally, it’ll give us the chance to keep learning about which shopping experiences people prefer on Twitter. 

The firm has also created a new Merchant Advisory Board, composed of brands that have established themselves as best-in-class examples of merchants on Twitter.  These brands will guide Twitter’s product innovation in this space, says Falck, although, as with Facebook, there’s an insistence on positioning this as a marathon, not a sprint:

Stay tuned. Though we are in very early explorations, we’re excited about the potential of shopping on Twitter and eager to learn more as we go.

Partner potential 

It’s notable also that both Facebook and Twitter are keen to talk up partnerships as a way to gain foothold in the commerce game, with Shopify an obvious BFF (for now) for both. Shopify President Harley Finkelstein is in no doubt about the appeal firms like his own hold for the social platforms:

Buyers love using Shopify to checkout. The speed and ease of making a purchase strengthens the relationship between merchants and their buyers, which is why we are bringing Shop Pay to more services. Shop Pay is available now to US merchants on Facebook and will be available to Shopify and non-Shopify merchants selling on Facebook and Google in the US later this year. We’re seeing early traction for Shop Pay on Facebook and Instagram with more buyers opting in and a larger share of GMV through these services since we announced the integration in February.

The trick for the likes of Shopify longer term will be how to balance the benefits of being close to the social giants with the inevitable risk of being squashed by them over time. Finkelstein is conscious of the need to take care in building partnerships with pragmatism:

We want to be the most important piece of software that our merchants use. We are that centralized operating system…Commerce is now happening absolutely everywhere and we want to make sure that the merchants that use Shopify can sell absolutely everywhere and the Town Squares of modern day are social media…so it’s important that wherever consumers could be potentially looking to purchase, that Shopify merchants show up there. From a merchant perspective they need feeds back into a centralized back office, where they can run their business. So whether it’s Google search or it’s on Instagram or it’s on all the other channel integrations we have, that is a really important.

Over time you’re going to see more of these surfaces show up where commerce is happening and it’s our responsibility to make sure that we’re integrated there to make sure that merchants can access those customers and, of course, as more of those services come to light, that increases the complexity of commerce and running a business, a modern day business…We want to provide what most merchants need most of the time. We want to do that at a world class level and there are some times where it’s faster and better and more effective for us to partner with another technology company. We’ve developed a really good relationship I think in the market for being a company that builds incredible software, and particularly have been really good partners. But there are other times where we just need to build that ourselves because it’s just mission-critical and we think that we can actually deliver the best product on the planet.

My take

There are many circles to be squared in the social commerce space, but this is going to be one of the most interesting evolutionary changes to track over the next few years. The potential for the social giants is clear to see; so too, are the opportunities – and risks – for established and emerging e-commerce platforms and enablers.