How social commerce is fuelling online retail

Whether via Instagram, TikTok, online games or brand websites: Many companies have long since discovered the potential of social commerce for their own purposes. In addition to visibility and branding, the focus is increasingly shifting to purchase preparation and direct purchase transactions in the sense of a seamless shopping experience: social commerce has great potential – both for consumers and for companies. This is shown by the Consumer Barometer of KPMG AG Wirtschaftsprüfungsgesellschaft and IFH KÖLN, which has analysed the relevance and opportunities of social commerce in its latest edition. Conclusion: 87 per cent of consumers are generally48 open to the concept and 75 per cent have already made a purchase via social commerce. The most popular product categories – similar to traditional e-commerce – are fashion and accessories (23%), consumer electronics (16%) and leisure and hobbies (14%).

“Social commerce as a form of e-commerce has reached the masses of consumers since the coronavirus pandemic at the latest and has incredible potential. Retailers and manufacturers should definitely get to grips with this complex topic and investigate the extent to which social commerce concepts can be useful for their business as an additional sales channel,” says Dr Kai Hudetz, Managing Director of IFH COLOGNE.

Positive effects through transparency and authenticity

If a social commerce strategy is appropriately aligned to the target group and channel, it has a positive influence on company perception, brand loyalty and customer satisfaction. For example, 82 per cent of consumers believe that transparent communication via social commerce is part of responsible corporate behaviour and more than half (53%) consider companies that are active via social commerce to be particularly authentic. Products recommended via social commerce are returned less frequently and are met with greater satisfaction (58%). Companies can use an authentic brand and product presentation in social networks, online games or on their own websites to circumvent the weaknesses of traditional e-commerce, in particular a lack of trust in providers (37%) or insufficient product information (30%).

“Whether spontaneous or planned, buying is always an expression of trust. Social commerce is a catalyst for trust and not only promotes the purchase of products, but also loyalty to brands. It will therefore significantly boost e-commerce once again. Social commerce offers retailers and manufacturers the opportunity for more authenticity in individual customer communication and an enhancement of their brand in the eyes of consumers,” says Stephan Fetsch, EMA Head of Retail and Consumer Goods at KPMG AG Wirtschaftsprüfungsgesellschaft.

Potential not yet fully utilised by companies

The great market relevance of social commerce is also reflected in the average spend: Four out of ten shoppers spent more than 50 euros on their last purchase. Consequently, two thirds of consumers currently see sales promotion and sales growth in particular as reasons for corporate social commerce activities. Companies should also utilise the opportunities that social commerce offers in terms of customer loyalty (38% of consumers agree). Other advantages of social commerce include the possibility of creating a seamless shopping experience (23%) and more social interaction (18%).

Sources: www.ifhkoeln.de • www.kpmg.de/consumergoods

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