By Cristian Bustos. Originally published at ValueWalk.
Direct sales on social media channels are growing at an astounding rate in Asia, Europe, and North America markets.
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Numbers show that nearly one-tenth of all eCommerce spending is done through social commerce these days, which will grow to 17% by the time we reach 2025. With increasing sales potential, more and more brands, small and big alike, are trying to pull the most out of these channels.
The number of people making money from social media in China alone is 463 million, and these people are not only influencers, network stars, or celebrities. Ordinary sellers are also doing well. Yet, increased competition drives brands to explore newer strategies each day to stay ahead of their games.
Stryze is helping brands in over 20 countries to excel in this market with their direct-to-consumer marketing strategies. With expertise in working across international D2C value chains, Stryze aims to create, operate, and scale D2C brands on Amazon and social commerce. They work with many brands and cater to industry segments such as lifestyle, outdoors, and animal food.
I talked to Stryze CEO Sebastian Funke about the potential of social commerce and what it means for the European market and worldwide.
What is social commerce, and how much momentum has it gained so far?
“In precise terms, social commerce is shopping via social media. Yet, there is a difference. It is not only about making the final purchase on social media. Social Commerce includes the entire shopping experience of the customer.”
“It goes from discovering the product and knowing about it more to completing the checkout all happening on social media. Almost all social media platforms have provisions to facilitate such end-to-end sales life cycles, including Instagram, Tiktok, Facebook, Pinterest, and other similar platforms. Social commerce is thriving on all of them.”
“Speaking about the momentum, traction, or digital footprints it has garnered, its spread has been phenomenal. According to forecasts made by Accenture, the revenue from social commerce globally is slated to witness nearly 300% growth between now and 2025, from US$492 billion to US$1.2 trillion in 2025.”
Social Commerce In Europe
“Studies on social commerce and social media buying trends show that these phenomenons are growing in Europe. Live streaming and in-app purchasing concepts have been popular in the Asian markets, especially in China, for some time now. It is becoming popular now in the US and European countries as well. Direct marketing through social media is also fast becoming a norm in these countries.”
What is the demography of the buyers getting inclined to social commerce the most, and what are they buying?
“Generation Z spends most of their time online. Their digital behavior makes them a natural choice for the primary target group of social commerce. Consumer-wise, they are usually the first segment to locate brands and products through social media.”
“On a broader scale, social media inspires the purchasing behavior of young customers worldwide across all product groups. But some product segments do better than others. The 2025-focussed study of Accenture shows that the most purchases will be in clothing (18%), consumer electronics (13%), and textiles (7%).”
What do you think is causing the rise in social commerce, and is such growth sustainable?
“The rise stems from a fundamental shift in how we consume media. The traditional channels are slowly becoming redundant, and new avenues are coming up. The shift is even more prominently evident among the younger generation. This demographic segment is fast shifting away from magazines, television, and billboards.”
“Video-on-demand and social media are replacing them. Even between these two, the advertisers and marketing people are skewed more towards the latter as video-on-demand excludes advertising options usually. Time spent by the younger generation on social media platforms is also considerably high. Apart from advertising provisions, social media also empowers brands with tools to reach out. Push marketing channels, for instance, serve perfect for building a brand from the ground up.”
“As more of these social media channels develop their direct checkout options, the growth will accelerate exponentially. As far as their longevity is concerned, brands building themselves on these platforms from scratch would always be at an advantage. They would benefit in terms of their positioning in the market, their grip on the value chain, understanding of the cost structure, and their price optimization efforts.”
Will these avenues be democratic in terms of benefits meted out to large and small companies?
“One of the most uniquely enticing aspects of social commerce is that its potential has historically been leveraged better by the smaller brands. On platforms like Instagram or Youtube, the younger brands have done well. Smaller brands get a level-playing field in social commerce.”
“Smaller brands put a lot of effort into these channels as they can not afford a multi-level distribution and marketing system like the traditional ones. Yet, suppose you ask about a segment that has done exceedingly well in leveraging social commerce. In that case, affordable luxury goods have established an impression of singularity and exclusivity.”
“In other words, one can even speak of democratization of e-commerce commerce through D2C. Nowadays, anyone can build a successful brand through digital sales channels without entering into any contracts with the platforms. Anyone can start small and build a global brand. And every day, someone stands up and does just that.”
What strategies do you think would help brands succeed in this area in the days to come?
“From our experience at Stryze, the most vital strategy to succeed is to have multiple strategies for multiple marketing channels. Our experience tells us that a brand working well with one strategy on Amazon does not necessarily mean the same would also succeed on Instagram.”
“It is also crucial to see and measure the value chain in its entirety. For a direct-to-consumer strategy to succeed on the ground, each part of the process is equally vital. Development is as crucial as ideation.”
“The development should be such that you can quickly scale it up to production, and then comes the actual implementation on the ground. Every new brand can not get all of it right in the first instance. It will be a case of continuous process optimization.”
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