Today, when almost everyone has a social media account, it is not surprising to see that more and more brands are active on platforms such as Instagram or Facebook. What’s more, retailers no longer only use these platforms for increasing brand awareness and staying in touch with their customers, but also for promoting and selling products and services and for adding value to the shopping experience. That is how social commerce, which is not necessarily a new concept, emerged – and today it is booming already, providing many advantages for companies and customers alike.
To learn more about this growing trend, we sat down with Michael A. Renz, Head of Sales DACH/KAM at Lowell Financial Services GmbH – Lowell Group, who tackled the most relevant factors driving the popularity of social commerce, its relevance for merchants, and the road ahead.
As ecommerce picked up steam, the concept of social commerce arose. What are some of the most relevant factors driving this trend?
Ever since the first ecommerce hype at the beginning of the 2000s, it was clear that a change in communication and consumer approach would take place. Today, we are right in the middle of it, with all the social media platforms that emerged and irreversibly changed the way we communicate. Gen Z grew up with them, and now the COVID-19 pandemic has persuaded the other generations as well to head towards the online space, for a number of different purposes.
While Facebook used to be for the younger generation, it is now used by the older generation. Millennials are more likely to use Instagram, and TikTok seems to be the preferred choice of the youngsters of today. These preferences are also mirrored by the top 3 brands by the number of followers on each platform. Estimates suggest that Facebook has reached roughly 2.85 billion monthly users, and among the brands with the most followers on this platform we see Samsung, Coca-Cola, and YouTube. Instagram, the second-ranked social media platform according to this criterion, has around 1 billion monthly users, and Nike, Chanel, and Victoria’s Secret are among the most popular brands here. TikTok also has around 1 billion monthly active users, and some of the brands with the most followers are Guinness World Records, Red Bull, and Fortnite.
If we look closely, we will also notice that all these new social networks are getting licenses, for example as a payment service provider, in order to be prepared for any form of trade.
Another factor driving this trend is the nearly borderless trade around the world. Even if it’s a bit blocked by COVID-19 for the moment, I think it will rise soon – and everyone will be connected again, being able to buy and sell goods around the world. In this context, the language barriers start to fall, as the automatic translation programmes are highly developed as well.
How important is social commerce for merchants when it comes to increasing their revenue?
Today, it's no longer about displaying ads. The customer experience counts the most – and it should drive all efforts in order to increase sales since social commerce provides a unique opportunity to do so.
One of the main benefits of social commerce for merchants is the fact that companies can reach a larger target group and acquire new customers, thus increasing sales via well-thought marketing campaigns. Moreover, thanks to social commerce, companies have the opportunity to enrich and personalise the shopping experience, which on the long-term has a positive effect on the customer-merchant relationship, increasing sales. And it’s not just about selling a product anymore, it’s becoming more and more a matter of connecting with the consumer by tackling aspects such as sustainability, lifestyle, healthy choices, and much more.
Additionally, after expensive advertising times via radio or TV, the social media channels are a good substitute for brands, and the added bonus is that the customer can actually be reached around the clock, in almost any location.
Can you share some best practices in keeping an overview of customer interactions across different (social media) channels?
For Lowell, this means, above all, addressing the customer where he prefers to stay. It does not matter if it is via Instagram or a different platform. Today, the approach via artificial intelligence (AI) and risk models ensures that the customer experience is optimally accompanied and supported – also for a successful debt collection. For example, we use a sophisticated persona concept in which we can address the customer individually and always in a targeted manner, in conjunction with scientific findings from behavioural research.
In your opinion, what lies ahead for social commerce?
Shopping via the Internet has not only been popular since the COVID-19 crisis. However, social distancing helped to ensure that online shopping will continue to flourish in the future. Thanks to social commerce, there are new opportunities for companies to transform the shopping experience, making it more personal and interesting for customers. And companies like Lowell can benefit as well, as leading specialists in receivables management, coming up with new tools to make credit work better for everyone in the long term.
After this long period of COVID-19, not only the big trading companies and platforms increased their sales – the producing industry started to sell directly to consumers too. What was only experimental before is now more and more usual, and it will change our shopping behaviour sustainably. Social commerce will push us rapidly away from old producing and selling processes. So, it will be interesting to see which players will thrive in this new context.
This interview was published following a collaboration between The Paypers and E-commerce Berlin Expo, the key media partner of the Cross-Border Payments and Ecommerce Report 2020-2021. Over 9,000 visitors and 200 exhibitors are expected every year, and visiting the trade fair is free of charge, requiring only prior registration on the website. Register for the 2022 conference now!
About Michael A. Renz
Michael A. Renz, Head of Sales DACH/KAM at Lowell Financial Services GmbH – Lowell Group, is an expert in the field of customer management and debt collection and brings more than 30 years of expertise. In his career he has advised numerous companies in mail order and ecommerce, as well as well-known companies in the payment sector in matters of risk management, billing, and dunning processes.
About Lowell
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