Due to the influence of the new coronavirus, all aspects of daily life have suddenly become online. Additionally, as people spend more time at home, it is said that many people are spending more than 60 minutes a day using their smartphones compared to before the coronavirus. It is thought that the time spent using SNS, which has become indispensable in daily life, is also increasing, especially among the younger generation.
Here, we will introduce a system called “social commerce” that allows you to purchase a product you are interested in or find good on SNS (social networking service). This convenient system, which allows you to make purchases directly using the SNS you use on a daily basis, is expected to have an increasing number of users and become an important presence for companies.
We will introduce the basics of what social commerce is, as well as the types, advantages, and disadvantages of each.
What is social commerce?
Social commerce is a method that combines SNS (social networking services) and online shops to promote product sales by having users go directly to product purchase pages from SNS posts.
Traditionally, SNS was used not for the purpose of selling on SNS, but as a
marketing
measure to increase awareness, attract customers to physical stores and online shops, and improve brand image. Nowadays, with the spread of smartphones and the use of SNS as a place to gather information, the importance of companies’ use of SNS in marketing is increasing. Many companies have established official accounts as an important communication platform between companies and customers.
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Therefore, rather than using SNS to attract customers to an online shop or visit a store by asking customers to search the web themselves, companies adopt a system that allows them to purchase products on SNS. are now being seen more often. This system is called social commerce.
Although customers cannot actually hold the product in their hands, they can read customer reviews on social media. Word of mouth from buyers is said to be more reliable than company evaluations, and it is said to be able to encourage purchase intent. Customers can obtain a lot of information through SNS that they could not get from a company’s online shop. Also, due to the characteristics of SNS, if you have any questions, you can feel free to ask them, so it is said that it is easy to interact with customers and build relationships.
Differences between social commerce and your own online shop
The difference between social commerce and your own online shop is the direction of communication.
For your own online shop, the mainstream is one-sided information provided by the company. Therefore, customers receive information released by companies. Customers need to search on their own to obtain information about the company, and since the approach is to customers who are already interested and aware of the company, it is difficult to convey information to customers who do not yet know about the company’s existence. .
In this respect, social commerce enables communication between companies and customers, and from customer to customer. For many SNS users, SNS is a way to enjoy their personal hobbies and interests (sometimes information related to their own work or work) and communities. Instead of communicating products and services unilaterally, it becomes possible to continuously build friendly relationships with customers by incorporating the worldview and story of the products and services.
Additionally, there are many ways to obtain information from close friends and influencers. Not only from companies, but also from people who think the product or service is good, by posting it on their own SNS, they themselves take on the role of advertising, creating a system in which the information reaches more people. If you can effectively utilize SNS, you will be able to spread your company’s products and services from many directions.
Market size of online commodity trading in Japan
According to the “Market Survey on Electronic Commerce (July 2020)” released by the Ministry of Economy, Trade and Industry, the market size of Japan’s BtoC-EC (product transactions between companies and customers) will increase to 1.7 billion in 2018. In fiscal 2019, it amounted to 19,360.9 billion yen, an increase of 7.65% from the previous year. CtoC-EC (product transactions between general customers such as flea market apps, online auctions, handmade markets, etc.), which is attracting attention as a new business form, was 1,589.1 billion yen in fiscal 2018, but it increased by 9.5% from the previous year. % increase to 1,740.7 billion yen.
This data shows that the number of online product transactions has increased significantly over the past year, with internet penetration reaching nearly 90%. It can be said that the Internet has become an essential part of our lives. The number of product transactions using SNS, which has become a familiar place for acquiring information, is expected to continue to increase in the future.
6 types of social commerce
Social commerce can be divided into six types depending on the platform used and the relationship with the seller. Here, we will introduce each one in detail.
①CtoC/C2C type social commerce
It refers to product transactions conducted between ordinary consumers, and is an abbreviation of “Consumer to Consumer.” The CtoC type refers to product transactions between ordinary consumers rather than companies using SNS such as flea market apps, online auctions, and handmade markets.
②SNS/social media type social commerce
Product transactions are carried out using SNS (social networking services). Typical SNS often used for social commerce include Facebook and Instagram.
③Group purchasing type social commerce
Group purchasing stands for “group purchasing coupon service” and refers to a system where you can get cheaper prices by purchasing items with someone else. You can receive a discount by meeting a specified number of customers, and it works when multiple users who are customers jointly purchase products. In Japan, it will be in the form found on Groupon etc.
④Recommendation-based social commerce
This refers to the purchase of a product based on its reputation, reviews, and word of mouth. As often seen on Amazon, when you click on a product, recommended products are also displayed, which is also a recommendation type. Customers who are thinking of purchasing a product can not only obtain information from word-of-mouth sections and SNS accounts, but also receive recommendations for the products they have selected.
Some stores offer discounts and special benefits to users who post reviews or post on SNS. Reviews from customers who have actually used the service tend to give readers more credibility than information from the company, and can be said to be an effective method for marketing.
⑤User participatory social commerce
User participation is a method in which customers not only purchase the product in general, but also participate in the investment and planning of the product, which has traditionally been the responsibility of the company (seller), in the form of crowdfunding. is. Crowdfunding companies that are often seen in Japan include Makuake and CAMPFIRE.
⑥O2O/On2Off type social commerce
O2O stands for “Online to Offline” and refers to measures that encourage customers to visit and purchase offline (physical stores) based on information such as reviews obtained online. Companies often post discount coupons online to encourage customers to visit their stores, and when customers are unsure about making a purchase at a physical store, they ask other users for opinions online. Included.
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What is O2O? We also explain the success story of UNIQLO and the difference between OMO and Omnichannel.
Social commerce is also used in areas other than typical SNS such as Facebook, Instagram, and Twitter. Regardless of the format, compared to the traditional format of searching for, confirming, and purchasing products online, there are differences in the magnitude of the influence that SNS has on customers and the relationship between sellers and customers. .
Benefits of social commerce
As mentioned earlier, in-house online shops mainly involve one-sided transmission of information from the company, whereas social commerce allows for communication between companies and customers, and from customers to customers. Therefore, while using SNS, we do not only communicate products and services unilaterally, but also communicate the worldview and story of the products and services to our customers. It will be possible to continue to build a friendly relationship with.
In addition, there are many routes for obtaining information from close friends and influencers, so those who think the product or service is good can play a role in spreading the word by posting it on their own SNS. A system will be created to carry the message and communicate it to more people. Unlike traditional word-of-mouth, the information comes from close friends and influencers that the person trusts, so there is a certain level of relationship between them, and the influence increases accordingly.
Additionally, being able to obtain user information as data will be a major benefit for companies. Being able to obtain data on the people who are actually interested, such as the age group of the users you follow and the communities they belong to, is a great weapon when considering marketing measures. Based on that data, you can think of measures to turn users into fans and get repeat customers, which is a big plus for companies.
Furthermore, since there is no need to build your own online shop, you can eliminate the cost and time required to create an online shop,
the SEO
measures required to operate it, and the work of posting web advertisements. Building your own online shop requires a certain amount of money and time. Since you can use an already established platform and eliminate the work that was previously required, it becomes easier to start social commerce.
Disadvantages of social commerce
The disadvantages of social commerce are the increased work involved in updating information and the time it takes to increase sales.
On SNS, it is necessary to regularly post information about products and services. You will need the ability to convey information in short sentences in an easy-to-understand manner, and the creativity of photos and videos to convey the appeal of the product or service at a glance. Furthermore, old information is buried one after another, so regular posting is necessary. If it were a traditional advertisement, it would have been announced after a certain amount of preparation time, but with SNS, you need a lot of information, so you have to decide what kind of information to upload regularly and how long it will take to update the information. Time tends to increase.
Also, when opening an official SNS account, the number of followers is important. In order to increase the visibility of a company, it is necessary to increase the number of followers, but this often requires a certain amount of time. Therefore, it is difficult to earn money immediately after opening an official SNS account, and it requires time and effort to steadily post. Many companies are running campaigns that incorporate exclusive discounts and benefits for buyers on social media, and it would be a good idea to implement new measures to make customers aware of the new sales method called social commerce.
summary
Due to the influence of the new coronavirus, the amount of time individuals spend using their smartphones has increased. SNS has become indispensable in daily life, especially among the younger generation, and it is expected that it will continue to be used even more in the future. Among these, “social commerce”, which is a method of promoting sales of new products that takes advantage of the characteristics of SNS, is likely to be used by an increasing number of companies.
Although it takes time to update information and increase the number of followers to increase sales, social commerce is a long-term corporate strategy that allows you to continuously build friendly relationships with customers. Considering this, I think it will become indispensable for companies.
More and more companies are using social commerce in China and the United States, and it is thought that it will become more widespread in Japan. There are various forms of social commerce, so I hope you will choose the form that suits your company.