E-commerce Goes Multiverse
E-commerce is on the rise. Its growth is driving the rapid development of new ways for e-commerce sellers to engage with their customers and, in turn, the rapid rise of technological changes to meet these needs. The next key opportunity is how to support e-commerce sellers to improve and manage their businesses and drive more sales across multiple platforms.
The convergence of social media and technology
With the shift to multiple selling venues, and especially direct to consumer (DTC), sellers are coping with a new set of challenges primarily around fulfillment and the need to own customer relationships. Leveraging the power of social media is an obvious way to tackle customer acquisition and retention. Until recently, this was accomplished mostly by sellers placing ads on social media platforms. However, a closer collaboration between the sellers and the social media platforms holds even greater potential.
Here comes social commerce. According to eMarketer, social commerce, the process of integrating the shopping experience directly into social media channels (not just displaying adverts) is expected to rise by 35% in 2021 to $36 billion. This follows similar growth in 2020, surpassing previous projections.
Social commerce enables e-sellers to leverage social media platforms’ ability to personalize the experience, which translates into higher conversion rates. Social media platforms benefit from valuable consumer data while keeping the customers on their platform. This has led these platforms to prioritize payment and shopping options for consumers to increase customer demand. But it is also driving increased competition among the platforms: Instagram, TikTok and Pinterest have all announced new e-commerce features for DTC brands to attract sellers to onboard with them.
Social media platforms are partnering with e-commerce platforms to attract more sellers and to help them target potential customers directly via social media. A notable recent announcement is Facebook’s launch of Facebook Shops. Facebook is partnering with Shopify, among others, to facilitate its 1.7 million DTC sellers to seamlessly sell via Facebook.
Social media’s partnership with e-commerce platforms will result in increased revenues for all players because of an easier, better experience for consumers and an operational ease for the sellers.
Google becomes a marketplace
Social media platforms still lack one very important feature – strong search functionality. This is where Google steps in. Its unique ability to combine user data with search functionality and strategic thinking is driving increased revenues via advertising. In the quarter ending 2020, Google’s search and ad revenue was $31.9 billion, up from $27.2 billion the previous quarter.
Google is leveraging its technology and strong relationships with consumers to overcome its biggest challenge – attracting e-commerce sellers. While Amazon currently has the largest share of product searches, with 54% of the market, Google has 1 billion daily shopping searches and 3 billion Android devices around the world and is rapidly implementing partnerships and solutions. In 2020, Google slashed all commission fees for merchants who list with Google Shopping, leading to a sharp increase in seller activity. Similar to Facebook, Google also partnered with e-commerce merchants’ platforms to bring more merchants to Google Shopping, and it has announced partnerships with Shopify, WooCommerce, GoDaddy and Square.
Google is also improving its offering for merchants and their customers. Earlier this year, it announced new ways for brands to personalize their listings, including lifestyle imagery and video. This is on top of its planned augmented reality virtual try-on feature for fashion products. With these recent moves, Google is becoming a major e-commerce marketplace – without actually officially becoming one.
The jury is still out
Amazon, naturally, is working to stay relevant and keep its sellers in this highly competitive market. After last year’s acquisition of Selz, a Shopify competitor, it reduced transaction fees to 5% from the typical 15% for brands that direct the shopper to Amazon instead of the brand’s e-commerce website.
Yet Amazon, Google and Facebook might be more restricted in their activities in the future as they are all under unprecedented attack from governments and regulations in the US and Europe.
E-commerce sellers as customers
Marketplaces and other providers are shifting their attention to sellers. The decade of the buyer is giving way to the decade of the merchant.
The experience and convenience for the seller will become increasingly important as consumers become less loyal to the platforms and more interested in the shopping experience. Platforms that adapt to the needs of the seller in terms of marketing, technology, payments, logistics and multi-channel integration will differentiate themselves. Google, Facebook and other social media platforms are set to redefine the world of online shopping, capturing market share from established players such as Amazon and Walmart as they capitalize on their massive consumer bases and integrate innovative technology that helps both e-commerce sellers and their customers.
Article originally appeared in Payments Journal