Transcript
Reva Bhatia: You’re listening to Next in Consumer Products from Publicis Sapient. The podcast that shares insights on unlocking what’s next in digital and consumer products. In the COVID-19 era, how we shop and, more specifically, how we engage with brands has evolved rapidly. Chief among the changes we have seen is the recent trend towards social shopping. In May of 2020, Facebook formally announced the launch of their third-party online shop. We’ve also seen Instagram and Pinterest develop products that would allow their users to easily shop products. All of this begs the question for consumer products firms: how should this emerging ecosystem fit into their distribution strategies? In today’s episode, we dive into the role that social commerce will play in the months and years ahead. Today, I’m joined by Kristen Groh, North America Industry Lead for Consumer Products and Kendra King, VP of Consumer Strategy. I’m your host for the session, Reva Bhatia. Now let’s dive in.
Kristen, I’m going to kick things off with a question for you. Can you describe to us exactly what social commerce is and touch on why the news around Facebook social shopping feature should matter to consumer products brands?
Kristen Groh: Sure, Reva, so social commerce has a pretty broad definition and this idea, the notion and the term has been around since about 2005, and at the time was really used to refer to some of the more collaborative tools, such as writing reviews and other user generated content that kind of enabled shoppers as they were going along their purchase journey. But as the technology capabilities have advanced and consumers have become increasingly more comfortable with online shopping, social commerce has really kind of advanced itself to include direct links to ecommerce such as kind of buy now buttons embedded within pins on Pinterest or images on Instagram, and as of recently the advancements have gone even further to allow for in-situ purchasing, where the consumer can actually make a purchase right within the platform that they are currently engaging. And we’re starting to see platforms such as Twitch, Instagram, TikTok, WeChat in Asia…all have various levels of these social commerce capabilities. And so Facebook just recently stood up Facebook shops and they’ve really pitched it as a way to kind of help small and mid-sized businesses create an ecommerce channel during the early days of the Covid crisis when their shops were shuttered and they just really couldn’t be there for their consumers. But the opportunity for brands of all sizes is actually pretty significant. We’ve really seen a dramatic shift by consumers to online commerce, in fact I think the recent data we’ve seen AIC worldwide reported an increase of 74% in online transaction volume globally over last year, so that’s fairly significant. And, first it was out of necessity obviously as consumers weren’t able to go into the shops, but now as communities around the world are starting to open we’re actually seeing that many of these consumers are continuing to buy online and just even anecdotally we’re getting brand new consumer sets; my 70-something parents are now shopping online and getting their groceries delivered and things like that, and so the shift has been pretty dynamic and when you think about social this is the place that even prior to COVID, it’s probably increased I haven’t seen recent data, Internet users are spending 2 1/2 hours per day on social media, so it really does make sense for these brands that want to reach their consumers to be right there in the place where consumers are spending their time. And, I think you know when you think about consumer products companies being able to be responsive to these shopping behaviors that are starting to trend towards online and being present where those consumers are already spending their time this is an area even if you think about Facebook a lot of users are already expressing their brand preferences, their product preferences, so the brands have access to that to help kind of personalize and get the right kind of products and content out to their consumers in that, in that space. So I think the opportunity for something like Facebook shops is huge up and beyond even those small and midsized companies.
Reva Bhatia: So, next question is going to be for you, Kendra. Your team has done some analysis on the role that social media plays with shopping, specifically impulse shopping. Can you highlight what your findings have shown and how social plays a role in the world of impulse shopping as a whole?
Kendra King: Yeah, so first let’s talk about impulse shopping. Kristen mentioned all that online buying that’s happening right now, so if you’re anything like me you’ve gotten lots of boxes delivered to your doorstep.
Reva Bhatia: So many.
Kendra King: So many that you wonder what exactly is in this box, when did I order this, and so if that’s the case, you may be an impulse shopper. And so when we think about impulse shopping, it’s really defined as buying goods or services without planning in advance. On average, consumers spend about $5400.00 a year or $450 a month on impulse purchases, but what’s happening when people are no longer in the stores and everyone’s shopping online? And so we wanted to understand how do you drive impulse shopping online, but then also when you think about the role that social media plays, we needed to explore the differences between instore and online shopping and then thinking about how social commerce is really a driver of online shopping.
[Point 1: The List]
So, one of our findings is that it’s about the list. So there are people who are strict list makers—that means they make a list when they go grocery shopping or when they go to the store and they stick to it. Whereas there are other people who they’re flexible list people and so they make that list, but if they see something usually in store that piques their interest they’re going to buy it and so that is someone who’s likely to impulse shop. But then there are the no listers, and they generally don’t have a list…in fact they just buy whatever they want and so what we found in our research is that that notion of a list is really important for people in store because impulse shopping in store is a lot about sight, so it’s what you see, but what we found is that online that’s not the case. In fact, it’s not a sight thing, instead people are motivated by different things. The motivation for online shopping that drives impulses is having access to endless products and product promotion by online influencers or celebrity endorsers, so that’s one of those places where social media is really important because that’s where the influencers are really living and how people are interacting. When people are shopping online, cost is not really the factor, but when you’re in store you see the price is right there— you’re like oh should I get that—but if you don’t have the, that barrier of cost online that’s definitely something that’s going to drive that impulse shopping. We found that certain categories are just a natural fit for social commerce and that would be health and beauty and food, because social media is actually the number one way in which Gen Z and Gen Y find out about these type of products. So, as you think about purchasing, if you’re learning about products and social then this is going to be a natural extension that you’re going to want to purchase on that channel as well.
[Point 2: Scrolling]
Something else to take into consideration that we learn, we want to understand what the shoppable social experience was and what are the features, what are things that people are really interested in. One thing was this notion of scrolling, and so when you think about social media you’re scrolling a lot, right, it’s that thumb it’s on the phone, it’s on it’s on your mouse, and that’s actually what we found is a driver in impulse shopping: that people who impulse shop are scrollers. They’re looking for the next product, and so that’s a natural marriage between social media feature with social and something that’s big with social commerce. Additionally, we found that people want to view and purchase specific products directly from the photos in the videos in their streams, so as these emerging social commerce platforms become adopted that’s going to be something that’s important. Also viewing trending or popular products, people who are social shoppers they wanna know: well what’s everyone else doing, what’s hot?
[Point 3: Influencers]
And then lastly, the ability to see a comprehensive list of products that influencers love and make purchases. That’s important. So again, that marriage between that behaviors that we see in social media are really just an extension of what we’re seeing in social commerce.
Reva
I’m learning a lot about myself too, Kendra. I have a ton of boxes, and I don’t remember buying them. I chronically scroll. I’m terrible at list making, and literally right before this call, I impulse bought a Mongolian fur pillow from West Elm for no reason.
Kendra King: You are indeed the target, and so something that we found cause we want to understand what people get out of this, and so we looked at value drivers for social commerce and social experiences and what we found is that it’s actually really easy and convenient…that scrolling, you’re already there and as the platforms continue just to make it a one click experience you’re going to see that this is just an easy way to shop and then also it’s fun. Who doesn’t want to see this random product served to them and go, you know that’s kind of cool, or hearing about something that you, someone you admire and they found something interesting—I think I’ll buy it.
Reva Bhatia: So now I’m going to actually tee up a question for both of you. How do you think brands should prioritize their strategies when it comes to engaging in this arena? And Kendra I know you started to touch on it and some of the behavioral patterns we’ve seen with consumers but really double clicking into like what are some specific strategies brands can implement to tee into that those behaviors right of not just impulse shoppers but engaging with people in the social commerce arena? I’m going to start with you Kristen.
Kristen Groh: Yeah, I think it’s some of the interesting things that came out of the survey is, Kendra mentioned one of them that stuck out to me was, this notion that impulse purchasing online is a lot more about me, whereas maybe when you’re in the store you’re dragging your kid around and they really want the sugary cereal you end up with impulse purchases that are for your family and maybe not about you. But when you’re online you’re kind of in this me moment so the nice thing about these social commerce platforms is that you can actually kind of curate the content that appears and make it very personalized. So you’re not getting your entire catalog out to the consumers, but you’re choosing a handful of things they can scroll through and choose the things that are appropriate to them. So what I see on my social feed from a manufacturer from a brand might be different than what you see or what you know a man sees or other people with different preferences. And so I think really thinking about how you customize you curate the content in the product that you’re serving out to your consumers in making that very personalized based on the data that you have about them is really an important way to look at the strategy. I think the other thing to think about is, especially for these CP companies that are maybe newer to ecommerce, is that they really need to evaluate the various methods for going direct—social is part of that as they’re thinking about that or using their brand.com or a marketplace or retail.com, all these sorts of things, they really need to assess these various methods and kind of factor in their overall business goals. What are they trying to achieve here, is it just sales or are they trying to get consumer data, are they trying to have insights about behaviors? And really factor all of those things in and then form their business in the processes and resources required to manage that around those goals and those tactics. And so getting to that right model will help them kind of adopt and continuously meet those evolving consumer needs and get the most value out of their total investment across multiple channels. Facebook shop and some of the other social commerce channels really do provide a low barrier of entry for brands that want to go direct and can enable those companies to quickly and easily begin some of these assessments and almost use it as a proof of concept or a test and learn platform to kind of understand how their various products and services are performing when they’re going direct.
Reva Bhatia: Kendra, anything you want to add to that analysis from Kristen?
Kendra King: Yeah, it speaks actually, what I’d like to say is really around the operational side of it. To embrace social commerce brands are really going to have to break down some of the silos that exist internally, so if you think about there’s marketing social media falls in marketing and in the marketers really understand the power of social, they understand the features, the KPIs…they’ve got it, but what they may not be as close to is commerce. And so really when you look at the commerce folks they understand how people buy, they know the tech stack, they know exactly what needs to happen, but they may not know marketing. So what needs to happen strategically is that brands need to bring these two people together because you’re going to have to focus on consumer trends because social is all about popular culture. Most people would agree that social media shapes and it also transmits culture but now it also is the next frontier of commerce. And so that’s gonna require keeping your finger on the pulse of really what’s next and looking at these emerging platforms as they come into focus but then also as more people adopt them you want to be ready. Also, when you think about on the operation side, now that you’ve got these two teams working together really to adapt the agile mindset—like how can we get the work out or unlock value faster instead of thinking about this from a marketing angle, which they are planning cycles and yes they’ve gotten shorter, but it’s still more of a planning cycle versus thinking about this in a more like, from software development, like agile, and so we think that’s really going to be important for people to take really thinking about shortening that value creation cycle, getting your ideas out there faster when it comes to social commerce, learning, doing test and learns, not worrying about getting everything right but get out there now so that you can have first mover advantage in this space.
Reva Bhatia: I’m interested, and I’m going to throw a curveball at you both, but I’m interested to see your perspectives on like we’ve seen this proliferation of lots of different types of marketplaces, right, like Amazon’s been around for a while and it’s basically like status quo for CPs and how they engage with Amazon. How is social different from Amazon, and is there a nuance in strategy for how a CP brand should leverage selling on Amazon versus selling on social. I’m keen to kind of unpack your guys’ perspective on that? Kristen, I’m going to start with you.
Kristen Groh: I think that what’s interesting about social commerce tools like Facebook shops is that they really allow for that interaction to be embedded into the experiences and engagements that are already relevant, and consumers don’t need to go to separate sites or apps for each brand or each interaction that they’re having, like as I mentioned before, rather than displaying their entire catalog brands can really take that data and insights that they have from their partnership with those platforms to serve up the most relevant and likely to convert products and services to their target audiences. And so Facebook has that benefit of that embedded messaging platform as well, and so when you think about the fact that Facebook owns Facebook, Instagram and WhatsApp, all those things are connected and now all of a sudden you have these channels to have a much more dynamic relationship with your consumers and so if I’m in the channel and I’m shopping and I have a question about the product I can just immediately engage right through Messenger, I can start a dialogue with the brand; they may be using tools like chat bots and things like that to enable those engagements, but from a consumer’s perspective it’s all happening right there in my moment of where I’m already at. And so that engagement is really important not just to serve the consumer in the moment and help them through their purchase cycle but also to gain valuable insight around what consumers might be struggling with in their purchase journey and to get insights on what they might be looking for. So it just kind of goes above and beyond what you can get in some of the other platforms like marketplaces or even brand.com without having to add on additional features. And these features are things that are already natively part of the platform and already something that consumers are naturally engaging with, especially as you consider like getting further into Gen Z they spend their entire lives in these social communities, so there’s just more and more opportunity to really create a situation where the brands and the consumers feel very connected through those platforms.
Reva Bhatia: Kendra, anything you want to add to that?
Kendra King: Building on actually Kristen’s last point around that interaction that occurs… and so that’s really something that is going to distinguish social commerce from a marketplace. If you think that sure a marketplace has Accessibility to lots of products you’ve got the suggestive selling that could drive impulse but what you don’t have, typically, are people interacting with each other—it’s that humanity, it’s that constant flow of conversation that happens in social media that is an advantage for social commerce. One of the emerging platforms in social commerce is livestreaming, people shopping literally from a live stream and so if you have the ability to interact with your favorite fashion designer or we’ve seen in different parts of the world where people actually selling cars through live stream, but you’re able to actually interact with the salesperson. You can chat, you can talk and someone’s talking back to you, and it feels like a very natural like almost a in person type of sales experience. So that is something that would be special to social commerce, but they also I think what we’re going to see is the convergence of these spaces because there are also people experimenting with influence or marketplaces or peer to peer marketplaces, so it’s taking the traditional marketplaces step further by engaging, being able to engage and learn from those influencers and those celebrities who you already follow but now again you get to learn more about the products that are important to them and you can actually purchase right then and there. And then the same when it comes to peer to peer market places that are emerging, that’s kind of interesting when you can turn your fan into a salesperson. So again, lots of different opportunities that are going to exist in the social commerce space.
Reva Bhatia: Thank you, Kendra. I’m interested to see, especially since you know we did some research on this topic, are there certain demographics that have a higher propensity to buy via social or lean towards social commerce as a tactic? You mentioned Gen Z in some of our research. I’m keen to kind of like unpack a little bit more how much demographic data we have in like who generally is purchasing products from that influencer on Instagram?
Kendra King: Interestingly, we thought because that one of the hypothesis was around Gen Z because obviously this is the first generation that’s grown up with technology that they would just be all over social commerce, and in general Gen Z and Gen Y have similar behaviors, however, what we found is that it’s Gen Y actually who may have a greater propensity towards these channels because of their life stage. And we conducted this research the ecommerce for the Next generation shopper, but we also did a study previously looking at Gen Z engine why when it comes to grocery and saw that same trend. So that notion that you are 18-24 you’re kind of more establishing yourself, you’re learning the ropes when it comes to shopping, you’re not shopping probably as frequently as you are once you have…you might get married, you might have children and then all of a sudden you find yourself shopping all the time and so you are developing your own strategies when it comes to shopping and you’re becoming quite savvy, so all these different emerging platforms they may be a little more meaningful to you because of where you are just from a life stage standpoint.
Kristen Groh: I think so anecdotally, because when we were looking at the data the social commerce was still small as compared to some of the other channels, and it makes sense…social commerce tools are fairly new and I think just the adoption is lagging there simply because the technology is new and you match that up with Kendra’s point around just disposable income or where they are in life stage and you start to project that forward and I don’t have a crystal ball here, but I predict that we’re going to see more and more of those transactions shifting towards social commerce as that Gen Z gets older and has more disposable income. So, I mean I, I see my 15-year-old already I have to kind of stop her from making impulse purchases on social all the time so they’re coming.
Reva Bhatia: They’re coming. Alright, awesome. Well you know many brands have struggled with determining whether setting up their own ecommerce and fulfillment channel makes sense for them. I feel like we’ve been talking about direct to consumer for many years now, COVID-19 obviously accelerated a lot of brands’ desire to develop a direct to consumer ecosystem. What role does social commerce play as an overlay to direct to consumer, and I know you guys touched on bits and pieces of this, but I’m keen to again just like dive a little bit deeper into how this is differential?
Kristen Groh: Yeah, I feel like brands really have to consider each of the channels that they’re engaging in commerce with uniquely and each of them has a role, and when you think about the difference between a brand.com and then social, I think largely it’s around that curation that we talked about. So brand.com may be where you have your entire portfolio or maybe where you have a certain type of offering where you can do some sort of customization… take mms.com, for example, you can go on there and create M&Ms that are personalized by color or have initials on them or things like that, like there’s a bit of an engagement there, there’s gaming content, all sorts of things like that. If you think about that brand maybe in the context of social you might be again really focused on that what transaction is my consumer going to make in that scrolling moment and what are they going to be looking for, and that might be the place where you’re really introducing a new product they had, they hadn’t heard of before like a new flavor and so you want them to make that impulse purchase in that moment or get them interested and drive them off to the site where they can have the full catalog, so I think it’s just maybe being more directed in that moment and more curated and personalized to that consumer in that space.
Reva Bhatia: Kendra, anything you want to add to that?
Kendra King: Again, if you think about the convergence between marketing, the marketing Department and the ecommerce Department coming together… that really is where this opportunity sits because it’s not just commerce. A social commerce can also be seen as an experience and so as you think about Facebook and IG with the shops, the AR filters that IG has, that’s an experience in itself. Being able on Tick Tock to have a hashtag challenge and then click through the ecommerce, like these are not just your typical marketplace or other retail channel or ecommerce channel, if you will. It’s really about social and commerce coming together in creating a unique experience for the brand but also for the consumer, so I think this is actually a special opportunity that brands really can start to explore.
Reva Bhatia: Cool. Awesome, so we’re at time, ladies. Thank you so much for joining. It was great having you both Kristen and Kendra, and stay tuned for next time. Thank you.
Kristen Groh: Yeah, thank you.
Kendra King: Alright, thank you. This was awesome.
Reva Bhatia: Thanks for tuning into Next in Consumer Products. Be sure to subscribe, so you don’t miss a beat on the future of digital in the CP industry.
