What’s next for Singapore’s marketers as social commerce grows
Amid the increasing use of social platforms to buy and sell products and services, Essence’s Aniket Basu examines the opportunities across social commerce platforms in Singapore.
Essence’s research shows 50% of those surveyed have purchased or intend to purchase through social platforms.
Social commerce is replicating the seamless experience of marketplaces, integrating shopping, messaging and payment.
Opportunities brands can leverage on include platforms like YouTube, Facebook, Instagram, Twitter, Snapchat and TikTok.
This article is part of a Spotlight series on how brands can further leverage the social commerce opportunity in Southeast Asia.
Why it matters
As the potential for social commerce grows and both big brands and micro merchants explore the space, they should note that seamlessness is an imperative and establish a multi-channel presence to ensure high brand visibility and interact with consumers along the non-linear purchase journey.
Essence research indicates that 66% of Singapore consumers are very likely to purchase using social media.
Consumers are not just driven by price but also factors such as promotions and discounts, ratings and reviews.
New and innovative formats like livestreaming, conversational commerce and AR push consumers towards purchase.
Singapore recorded overall e-commerce revenue of US$2.6 billion in 2020 and the revenue is expected to show an annual growth rate of 10% (CAGR 2021-2025), resulting in a projected market volume of almost US$4.7 billion by 2025.
One of the growing avenues of e-commerce is social commerce. Singapore had a high social network user penetration of around 86% in 2020, projected to reach almost 93% in 2025.
Essence recently surveyed consumers in Singapore to better understand social commerce behaviours in the country and of those who had purchased goods or services via social platforms, 62% spent US$38-149 (S$51- 200) per social commerce transaction in the last 12 months.
With a self-perpetuating cycle of increased popularity of social platforms, increased commerce functionality for brands and growing numbers of products and services listed, the potential for social commerce to capture an ever greater share of wallet is high.
The use of social platforms to buy or sell products and services has also accelerated with the COVID-19 pandemic. Based on Essence’s research, 50% of those surveyed have purchased or have the intention to purchase through social platforms.
While necessity may have pushed some consumers to explore social commerce due to the lockdown and closure of brick-and-mortar stores, many transactions now begin organically as people are exposed to new and innovative products while browsing. As platforms improve the safety and convenience of consumers’ shopping experiences, spending is expected to increase, bolstered by the “network effect” of recommendations from friends and family.
Leveraging platform opportunities
Social commerce is replicating the seamless experience provided by marketplaces by integrating shop, messaging and payment features. The process of browsing, reading product details, adding products to cart and proceeding to checkout has been greatly expedited with all of these functions occurring within the same platform.
Here are some opportunities across social commerce platforms in Singapore:
YouTube: YouTube is a high-reach medium by Google. Consumers browse and watch content for hours, and while the user journey is non-linear, Google has created a seamless experience.
YouTube’s Video action campaign format is connected with Google Merchant Center, empowering brands to create more opportunities with customers. This provides brands with full control of product imagery and details directly from product feeds.
While brands can leverage the video platform and convert shopping catalogues to incentivise users to convert, actual purchase happens outside of the platform. Brands will deep-link products with their e-commerce stores on their brand.com account or marketplaces.
Facebook and Instagram: Facebook Shops recently launched in Singapore and brands that fulfil a set of eligibility requirements can enable shopping features on their brand pages. This is a lucrative proposal for brands as they are now able to reach out directly to their followers and platform users.
Facebook Shops’ features provide sellers with a myriad of functions and, most importantly, they are now able to directly list and manage their product catalogue, connect with customers using Messenger, and obtain valuable insights on sales, products and customer behaviour.
Prominent brands in Singapore are using Facebook Shops and Instagram Shop features to list their product catalogue and connect with customers. Sellers are creating brand stores that live inside the apps, making it easy and seamless for shoppers to browse, search and buy their products.
While these features are available, the adoption in Singapore is currently still limited, with brands instead integrating their commerce stores on the app. This is due to a number of factors influencing the decision to set up a store on social media:
Commission on sales
Access to data
Control of customer experience or user experience
Ease of setup
Hence, careful consideration and evaluation are required before defaulting to official storefronts on Facebook Shops and Instagram Shop, which are similar to e-commerce marketplaces’ shop-in-shop concept.
Twitter, Snapchat and TikTok: There are similar propositions amongst other social media platforms like Twitter, Snapchat and TikTok.
Brands build custom shops that match their brand aesthetics and make the shopping experience native to that platform, or they can connect their online retail store to these social media platforms. The shopping experience is fast and seamless, and customers can check out with a few clicks.
From the lens of consumers
There has been a surge in online retail sellers – not just big brands but also small and medium-sized businesses, and original manufacturers have been observed to list their products on social media. This increase in supply is benefiting consumers as they can leverage better pricing through higher promotions and discounts being offered.
However, consumers are not just driven by price. Essence’s social commerce survey reveals some underlying motivations and barriers to purchase on social media, as well as social commerce shopping habits of consumers in Singapore:
Motivations to purchase: Consumers’ motivations for social commerce purchase are mainly driven by promotions and discounts (52%), as well as ratings and reviews (48%), and convenience compared to traditional shopping (45%).
Barriers to purchase: The top factors cited by consumers as reasons they have not purchased on social platforms are poor ratings and reviews (38%), and lack of trust in online sellers (39%).
Product categories: The top three product categories purchased through social commerce platforms are food delivery and takeaway (31%), household items such as for laundry, cleaning, dining and the kitchen (28%), and apparel (28%).
Payment options: Consumers prefer credit or debit cards over other payment methods. With more digital payment options, such as Apple Pay and GrabPay, the convenience is expected to drive more social commerce purchases.
The benefits of social media expand beyond reach to ratings and feedback management, the convenience of chatbots, and the option to showcase products using rich media, such as videos, photos and livestreams.
Overall, brands can create amazing experiences for customers using tools and features provided by social platforms.
Setting brands up for success
Consumers’ lifestyles have progressed, technologies have advanced and business models have evolved. Speed and convenience are becoming more critical than ever before and the fundamental truth remains the same – brands go where consumers are. Setting brands up for success requires smart decisions on strategic fit and operation requirements. Here are some key considerations:
Unit economics: Any new sales channel must be measured by the same profitability and margin expectations as for the broader business. Most social platforms charge a commission that can eat into margin or must be passed on to consumers. It is important to gauge what audiences are willing to pay when pricing SKUs for social commerce.
Branding and marketing: Social media platforms provide full funnel marketing opportunities for brands, so brands can be focused on long-term brand building, as well as engaging with customers transactionally.
Digital marketing support: Advertising solutions are the main revenue stream for most social media apps. Being visible and reaching out to intended audiences is key to driving high sales. Brands should leverage the targeting capabilities of social media to better connect with their audiences and use experiential creative to engage with them.
New formats and innovations to empower social commerce
The rise of social commerce has been a boon for small and medium-sized businesses that often do not have the resources to pursue omnichannel strategies across offline and online commerce.
For these smaller enterprises, it may not be necessary to compete with the largest brands if they can carve out a niche and grow a loyal customer base.
Engaging that customer base is a natural extension of activities on social platforms, enabling brands, whether small, medium or large, to tell their story, showcase their products, illustrate their customer service and access customer data to expand reach and conversions. The focus should be on filling in the gaps in the path to purchase.
According to Essence’s research, 66% of Singapore consumers surveyed indicated that they are very likely to purchase using social media. New and innovative formats like livestreaming, conversational commerce, augmented reality and virtual reality have pushed consumers to make the final step towards purchase.
Of the social media purchasers surveyed in Singapore, more than 30% experienced live shopping via livestreaming, while 50% experienced conversational commerce in the last 12 months.
The integration of chat apps such as WhatsApp and Messenger has improved the experience. Consumers are able to clarify doubts and ask questions about products or services before making a purchase. This one-to-one experience also contributes to building trust and forging relationships between consumers and sellers.
As multinational brands and micro merchants alike look to explore the social commerce space, it is important to bear in mind that seamlessness is an imperative. A seamless experience is crucial whether consumers are shopping in-store or online. Businesses need to work towards establishing a multi-channel presence by ensuring that brand visibility is high and interacting with consumers along the non-linear purchase journey, empowering consumers to access and purchase their products.
Above all, in order to succeed in this new era of omnichannel business driven by digital and technology, brands and businesses need to readily embrace the skills of scientists, strategists and storytellers to be successful across all channels.
This article was originally published on Warc.