Social commerce – completing e-commerce transactions in social media channels – is rising in popularity and use in Australia. However, it has been constrained by some functionality available overseas not being offered domestically.
That has meant retailers to date have often used social channels to drum up an audience that they could funnel to their own e-commerce site to make purchases. Historically, that worked reasonably well: PayPal, for example, saw a large jump in the number of people who bought something they saw on social media between 2018 and 2019.
However, as more social sites embed e-commerce capabilities directly into their platforms, they are becoming important shopping marketplaces and destinations in their own right.
On one estimate, 5.7 million people in Australia aged 14 and older will purchase a retail product via a social network in 2021.
Our own research backs up this surging demand for social commerce in Australia, where 69% of retailers say that social media and viral memes cause bigger demand spikes for products than annual retail events like Black Friday – and even Christmas.
Preparing for volatility
The replacement of predictable annual events with social media and memes exposes Australian retailers to a new force in business: extreme volatility in customer demand.
Two-thirds of respondents to our survey don’t feel they are positioned to respond effectively when faced with such unpredictable spikes in demand today.
By all accounts, they will need to get used to it: as one op-ed recently noted, “the future isn’t predicted, it’s paved” when it comes to social commerce in Australia.
Social media’s explosive nature and vagaries mean retailers should get used to sudden, unpredictable spikes or peaks in demand. They will need to become increasingly nimble to capitalise on opportunities that can’t be predicted.
In addition to becoming more short-term – even impulsive – in their buying habits, customers are becoming less loyal.
As online commerce has increased, industry research points to a greater willingness to try different sources and shop around, eroding the traditional bonds of loyalty between customers and brands.
So retailers need to be able to deal with customers when they are keen to make a purchase.
Using data to understand behaviour
The availability and usability of data is key to being able to do that.
A large majority of respondents to our survey believe they can boost sales conversion rates if they can more effectively access customer data at the point of engagement.
There is also a widespread conviction that combining customers’ real-time and historical data will increase such opportunities.
Real-time data is generated by prospects and customers using mobile, digital and web channels to interact with brands, gain information about them and ultimately buy their products and services. It also includes telemetry data generated by devices and infrastructure serving customers.
Historical data, meanwhile, is structured information about past engagements – something that retailers often have a lot of, so they can use past actions to predict future events or trends. It delivers all-important context to modern customer engagements: fitting the “now” of actions and interests driven by social and memes into a bigger picture of likes, preferences and engagements.
Australian retailers are much less likely than their regional or international counterparts to view the marriage of these two data types as being particularly difficult.
The task requires two foundational elements: one, analytics capable of working with real-time data at the speed of streaming to deliver insight and analysis when matters, and two, technology infrastructure capable of supporting this analysis work.
With these elements in place, retailers can expect to create a fuller, context-based understanding of their customers in real-time – with 59 per cent anticipating more significant opportunities for revenue growth as a result.
Read more: Don’t miss out on social commerce