Social Commerce is the Future

By Simon Ensor
Social Media 22.09.2015

Social networks have been a revolution in the digital space over the past generation. Combined with smart phones they seize an almost embarrassing amount of our daily routine. We are prisoners to the news feed, forever searching for that amusing video of a cat, a birthday event invitation or holiday snaps of that hot ‘friend’ you never talk to. The power that social media has over people is an accepted fact of life in 2015, but the implications of this predicament to have a monetary value assigned to them!

The various social networks are in an arms race to claim their share of the e-commerce market. Social buying, and attempts to integrate it into their platform has been somewhat led by Facebook. With over 1.4 billion users Facebook is in a position to significantly disrupt the e-commerce market by offering ‘social commerce’. The reasons for social networks pursuing the concept of social commerce are pretty darn obvious: get a cut of the sale and put an end to the frustration of users navigating to another company’s website in order to complete their transaction. Not only would an option to buy via Facebook increase their revenue through the fees associated with this process but it would also mean just another aspect of our lives that Facebook has so graciously offered to make easier. It would simply mean another step in their plan of global domination. Some of the social networks have claimed that this is a response to e-commerce sites not providing a good enough user experience on mobile devices. Admittedly this may be true and social commerce may well make our lives easier, but one cannot help but get the feeling that it is a substantial step towards social networks becoming the single most important connector in our digital lives, further cementing the idea of social networks becoming attractive ‘walled gardens’ which contain their users.

social media walled garden

All of the big players: Facebook, Twitter, Pinterest, Google and Instagram have already dipped (or have announced plans to dip) their toes in the warm waters of social commerce and payment providers such as Stripe have joined the race, looking to offer a one stop shop for both social networks and the retailers looking to hawk their wares through social commerce.

Social Commerce is a natural progression

Social media advertising has already exploded. UK based users will have noticed a significant increase in the amount of sponsored content being displayed in their news feeds over the past 12 months. Companies looking to increase their exposure to potential customers are allocating more and more of their marketing budgets to social advertising, fuelled no doubt by the decrease in organic reach in the last 24 months on Facebook. Social networks are providing increasingly complex advertising platforms which allow businesses to create highly targeted campaigns which are focussed on their target demographic. In essence, the old school ‘spray and pray’ methodology has been usurped by an ability to pay a relatively small fee to be much more specific about your content solicitation. As a result, social commerce is but a natural progression from an advertising model that is already working for the social platforms.


WHO is doing WHAT in social commerce?

You would be forgiven for thinking that the social networks and retailers are the only winners in social commerce. In fact, there is a veritable mountain of money to be made by the companies that will actually process and facilitate the payments, the two main players being Stripe and Braintree. So what does the current landscape look like for social networks, payment providers and retailers within social commerce?

Payment Providers

Unlike the social networks who are somewhat confined to their individual user bases, social commerce represents a significant opportunity for payment providers. If they are able to provide the correct payment system for social networks and get them signed up as a partner, it eliminates the need for them to attract individual retailers (at least in the social commerce space). Instead, the social network(s) attract retailers that then sign up to sell via social which in turn means that they have inevitably signed up with said payment provider.


The big news for Stripe is that they have signed up Twitter to their social payments system, which couples with the ability for retailers to upload their product catalogue to the platform and for consumers to pay with a click of a button. However, whilst Twitter is definitely a big win for Stripe, they have bigger plans. Stripe’s social payment system, which they have called ‘Relay’, is designed to tie in seamlessly with a retailer’s online store and provide a one click buy button for social commerce, without the heavy account specific integration needed to sell via social at the moment.  The issue faced by Stripe is ensuring that their payment processing and integration with online stock management systems is good enough to warrant all of the social networks using the same system. Relay is being marketed as one stop shop for social commerce, so they need all of the big players to sign up.


Braintree is a PayPal owned company (although Ebay was making noises in 2013 to purchase them) looking to capitalise on social commerce, or as they describe it ‘contextual commerce’. This year they acquired another solution provider called Modest to help them in the social commerce space. They have partnered with Facebook to test a payment process and are helping Pinterest to process their buyable pins. With testing occurring on two of the major social networks, Braintree is a significant player in the social commerce payment processing market.


Facebook have been actively pursuing social commerce for a number of years now, offering gifts and also a psuedo Facebook wallet where they autofilled payment details on retailer websites. Neither of these tests returned the type of data that Facebook needed to continue with a full roll out and as such they did not make it out of the US (the traditional testing ground for new social media functionality). However, Facebook are now very publicly partnering with the likes of Shopify to make online Facebook stores so that the user never has to leave their carefully constructed ecosystem. It is unclear as to which payment processor they will be using but the partnership with Shopify allows them to tap into the 165,000+ retailers that already use the Shopify platform. It is not all rosy for Facebook though, they face fierce competition from other networks, most notably Pinterest. With acquisition of users in the 16-24 age category declining in relation to competitors it is critical that they do not miss the boat with social commerce. As a network which has tested multiple versions of social buying in the past couple of years, it is clear that whilst they are willing to test innovation, they are not necessarily willing to roll out functionality globally that will not be a success. After all, you don’t get a stock valuation of over $200 billion by mistake.

Buying on facebook
*photo credit:


Twitter is experiencing somewhat of a tumultuous period with the resignation of their CEO Dick Costolo (yet to be permanently replaced). Taking the comments by Chris Sacca into account it is almost surprising to see that Twitter are not lagging behind the other networks in terms of the social commerce bandwagon. They have been testing their ‘buy now’ button in the US since 2014 with a select amount of retailers but have since rolled this functionality out to over 100k retailers in the US. Furthermore, during the Summer Twitter started to test product and collection pages to give the user what they term ‘rich collections’ although this will only be available for 41 curators for the time being. With Twitter’s current issues it is imperative for the platform that they capitalise on their loyal user base in regards to social buying.


What Pinterest does not make up for in terms of quantity, they certainly make up for in quality. With only 70 million active monthly users, they are way behind the other networks in terms of userbase size. However, Pinterest users have been shown to spend significantly more than users of other networks, potentially down to their heavily female dominated demographic. Whatever the reason, Pinterest is attracting a significant amount of interest in the discussions around social commerce. They have a wealthy, loyal userbase which it seems have been preparing themselves to purchase through the platform. Of all the social networks, Pinterest is most suited to social commerce. Their boards represent a wishlist of products and with functionality for push notifications when a product you have pinned is for sale it is no wonder that investors are still pumping money into the platform. Currently partnered with Shopify and Demandware, Pinterest is the relatively small player in the market which may challenge the big names when social commerce takes off.


Barring Snapchat, Instagram is probably in last place in regards to a linear progression towards social commerce. Having only recently opened their advertising API to the world (after over a year of testing) it may appear that they are years behind the others. The only problem with that is you have to remember who owns Instagram: Zuckerberg and his hoodie wearing cronies. As a result, Instagram has access to such Mario Kart esque boosts as Facebook’s advertising tool, complete with all of its data analytics and boasts a ad recall rate 2.8 times greater than the average. Combine this with a highly discerning userbase that has historically shown a distain for anything that does not meet the required standard and suddenly Instagram looks like a strong proposition in social commerce. The final straw? Instagram is stealing more of the 16-24 generation than any other social network, adding to its 300 million users on a daily basis. Facebook’s hugely inflated purchase price doesn’t look like such a bad move now.


Not so much a social media platform but instead an addition to Google’s search engine. Google may have failed over recent years to break into the social media environment, but that doesn’t mean that they cannot make the most of social commerce – although contextual commerce is probably a more accurate description. The big advantage that Google has is that they have arguably the highest level of trust amongst users and therefore will experience the smallest barriers in regards to users becoming comfortable with their buy now buttons.



Shopify have been very successful in partnering with a number of the networks such as Facebook and Pinterest to roll out online stores. The attraction for the social media platforms is the ability to tap into Shopify’s pre-existing portfolio of users although whilst they have partnered, their does not seem to be any exclusivity. They are certainly the most vocal on Facebook about their shop functionality and a quick look at the Shopify website and the amount of real estate that they devote to their efforts within social media indicates that they view this as a space in which they can become the preferred supplier.

What does this mean for the consumer?

The conversations around the implications of buy now social buttons for the user are focussed on both the impulse buying market and the idea that social networks are attempting to create an ecosystem from which the user never has to leave. To an extent these arguments are completely true. We at Yellowball have no doubt that an easy to use social buying button will increase the amount of impulse purchases conducted by your everyday user and would expect both Twitter and Facebook to be the main networks through which impulse buying on social media will increase. Interestingly though, Pinterest is the platform which is attracting the most attention. As already mentioned, they have the smallest user base but the highest average spend. Their boards provide the perfect comparison functionality for more considered purchases and we expect both Pinterest and Instagram to be the sites on which users buy their highest value items. The most obvious implication is that should social commerce take off (which we have no doubt that it will), social networks will only further embed themselves in our day to day lives. If you thought our obsession with smartphones was bad at the moment, social commerce will only compound the issue!

The implications for the retailer/marketer

Just because it is being hailed as the next big step in commerce (along with streamlining online merchant systems), doesn’t mean that it is suitable for everyone. For example, it is unlikely that someone is going to buy a car directly from social media – although stranger things have happened. Initially it is likely that small value impulse buy goods will be most popular but as consumer confidence in the security of social commerce increases, so will the value of purchases. Furthermore, social networks will be very wary of irrelevant products being displayed to their users. As a result, relevance and quality factors will be incorporated into social media algorithms to ensure that their users are only shown products which may be of interest according to their previous activity. Therefore it will be critical for businesses to identify not only their buyer personas but also the platforms upon which their products or services should be advertised. Unfortunately we can also expect social advertising costs to increase as more and more companies compete for a cut of social spending. As a result, social media marketers (such as ourselves) and retailers will have to continue to be very specific about their content solicitation, hence why some are dubbing this ‘contextual buying’. We can expect social audiences to become much more discerning about content as the space continues to become more competitive.

When can we expect social commerce to take off?

The US has traditionally been the market in which social platforms test new features and as a result we in the UK (and really anyone outside the US) have had painfully little exposure to the concept of social commerce. As a result, consumer confidence in the security of social commerce is generally considered to be the main hurdle for social networks to break into this space. In addition to this, social networks are understandably cautious about how products are pushed to their users with the constant threat of mass desertion looming over them. How long this process will take is hard to quantify, but the signals are increasing in frequency. It is no coincidence that all of the major social networks are expanding their social commerce efforts in the same year and we fully expect social commerce to have been rolled out globally by this time next year.

It is simply a question of when. This is not so much a revolutionary step but instead a natural progression for the digital age.

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