The Rise of Social Commerce
5 Things DTC Sellers Need to Know
Social commerce continues to grow, with sales in the U.S. projected to total $79.6 billion by 2025, up from $27 billion in 2020. So, what is social commerce – and why will it be a crucial channel for direct-to-consumer companies in the years ahead?
Let’s start with a definition. Social commerce is the process of promoting and selling products and services directly to consumers through social media. Ultimately, the practice will extend beyond social sharing, endorsement posts, and affiliate links to also include virtual shopping events and the processing of sales transactions within the social media platform.
As direct-to-consumer (DTC) sellers look to jumpstart growth, social commerce strategies are well-aligned with relationship-based, direct selling models while also enabling companies to expand their customer base and engage new sellers. In order to optimize social commerce sales growth, here are five key things every direct seller should know.
1. Social commerce is here to stay.
Shifting consumer behaviors during the pandemic greatly accelerated the growth of social commerce. Simply put, more shoppers got comfortable with engaging with brands – and making purchases – through social media. Worldwide, the time people spend on social media continues to increase. As of 2022, people spend an average of 2.5 hours per day on social media platforms.
But the main reason why social commerce will be a big part of the future for direct-to-consumer selling is because it’s being fueled by Millennials and Gen Z. Younger generations are social media savvy and rely on the platforms to connect with family, friends, and influencers.
2. Social commerce fits today’s world of work.
The world of work has changed dramatically in recent years as people put more emphasis on work-life balance when choosing a job. Today, nine in ten people want flexibility in when, where, and how they work, and nearly half of Americans have a “side hustle” to earn extra money. At the same time, 68 percent of those with a side-hustle report that they depend on their extra income more due to current inflation and economic challenges.
With Gen Z and Millennials leading the way, social commerce is a popular option as a flexible career or extra job. The barriers to getting started are low, requiring sellers only to have access to the Internet and a social media following. In addition, technology solutions make it easy for direct selling companies to enable customers to easily set up social commerce links and start selling.
3. Social commerce is personalized.
Interactions between seller and customer on social media can be highly targeted and even one-on-one. Social media platforms provide a unique opportunity for direct-to-consumer sales representatives to reach and connect with potential customers with shared interests. Relationships and communities built through social media can be authentic and strong, creating high levels of brand awareness and loyalty.
Integrated behind-the-scenes technology platforms enable sellers to personalize outreach, share tips, and tailor offers through social channels, with the added bonus of customers being able to take immediate action to respond with questions or make a purchase.
4. Social commerce strategies can complement traditional direct selling models.
For direct-to-consumer companies with traditional multi-level marketing strategies, selling through social channels isn’t an either/or situation. For many companies, social commerce strategies are a natural evolution, opening up new distribution opportunities that make it easy for people to connect on social media and progress to become customers, affiliates, and sales representatives.
Companies need to take a holistic approach as their distribution strategies evolve to leverage social commerce, especially when it comes to compensation models. Mapping out a seller’s journey is key. Consider how a customer could first opt into a loyalty program to earn discounts and product rewards for repeat purchases or autoship orders, and then transition seamlessly to a customer referral program.
Effective customer referral programs encourage customers to invite others to become customers. Social media is an ideal forum for people to easily share their endorsement of products and brands with their social network. Today, the direct selling company’s technology platform can make sharing personalized sales links effortless for the customer, with any sales that result from their referrals automatically attributed to them.
Affiliate sellers – also known as brand ambassadors and influencers – are the next progression customers can take, moving from earning rewards and discounts to being paid a commission on the sales they generate through social commerce. Ultimately, many affiliate sellers will then choose to take the next progression step in the seller’s journey to build a sales team to further extend their earnings.
All of these distribution channels can complement each other as long as the company does the appropriate compensation modeling up front to ensure they incentivize the behaviors that lead to growth and profitable sales margins. As with any distribution strategy, ongoing monitoring and adjustments are required as the various seller channels evolve and expand.
5. Social commerce is built on interactive experiences.
Looking ahead, social commerce is projected to continue to grow with expanding capabilities for hosting live, interactive shopping events. Already popular in China, these types of events are producing sales conversion rates up to three times higher than ecommerce.
Livestream shopping events allow sellers to engage with their communities by providing demonstrations, offering tips, and answering questions. Along with giving sellers an opportunity to interact directly with their customers, these types of live shopping events enable customers to interact with each other, further strengthening the sense of community and affinity for the brand.
As social commerce becomes a mainstream option, direct-to-consumer companies are ideal candidates to optimize this exciting distribution channel. Harnessing technology and adapting existing sales strategies will be the keys to achieving both immediate and long-term social commerce success.
you may also like
Peanut butter and jelly. Milk and cookies. Batman and Robin. Everybody knows these famous pairings work well…
Today we welcome a returning guest of this podcast: Jeff Jordan. Jeff has also written articles for…
In today’s podcast, Daryl Wurzbacher shares fascinating insights in what he sees are industry trends like customer…
Get our e-mail newsletter, with MLM.com articles & online exclusives, delivered to your inbox each week.