Social Media eCommerce: A New Contender in “Shopping Wars”

Facebook, Instagram, and now TikTok are taking on eCommerce with in-app stores. Do social platforms have what it takes to compete with Amazon and Shopify?

When asked what he thought the top tech trend of 2021 would be, former Apple CEO John Sculley told FastCompany:

“Platforms like TikTok, Shopify, and YouTube have aligned as a third-party eCommerce fulfillment platforms system to compete versus Amazon. In fact, Facebook and TikTok are both expanding into social-media eCommerce.”

The way we see it, the opportunity is undeniable. But do social platforms have what it takes to take on the eCommerce giants like Amazon, Google, and Shopify? Let’s take a closer look at the opportunities and challenges these platforms are likely to face along the way, and what they might do to overcome them.


What Is Social Media eCommerce?

If popular social platforms in other countries are any indication, Facebook and Instagram Shops are poised to ride this growth. Social media accounts for one-third to one-half of all e-commerce transactions in Thailand. In China, WeChat and Little Red Book have already demonstrated the potential of social media eCommerce, and the results could be bigger in the U.S.

Compared to other countries, consumers in the U.S. tend to buy directly from brands more often. Amazon owns 37% of all US eCommerce sales, while 50% of all retail eCommerce in China goes through Alibaba.

If American shoppers continue to spend directly with brands more than they spend on Amazon, that’s a good sign for social media eCommerce. Brands can cultivate an online presence and build customer relationships on social platforms. When users are ready, they can make a purchase without ever navigating away from the place where they connect digitally with friends and family.

Social media eCommerce brings online connections and the shopping experience together.

Other social media platforms are poised to join this trend. People already use Pinterest to “pin” photos of things they like, for instance—and 40% of Pinterest users have an annual household income of over $100,000.


Adding eCommerce is a no-brainer, and Pinterest knows it. The platform’s “Complete the Look” feature recommends relevant home decor and fashion products based on what a user is looking at, linking users to product pages where they can buy what they see in-app.

Are Social Platforms Equipped for the Challenges and Opportunities that Lie Ahead?

As Facebook and TikTok prepare to square off in an era of shopping wars, it’s important to consider what hurdles the social media giants will face.

For example, social stores are sure to increase the number of messages merchants receive in-app. Offering chatbots that use AI to handle simple questions and requests would go a long way to ensure merchants can easily manage their store’s communications.

According to Azoya International director Franklin Chu, the biggest obstacle is actually a lack of easy mobile payments.

Payments are still largely driven by credit cards, which users have to input manually for mobile payments. This creates friction and room for errors. In China, mobile payments are simpler: customers simply authorize a card transaction by inputting a 6-digit code they’ve memorized.

What social media platforms need to overcome this challenge is a payment solution that streamlines in-app checkout. Facebook is introducing its own cryptocurrency, Libra, which may serve to meet this need in the future. In the meantime, however, an on-the-ground solution ideally would leverage digital wallets, virtual cards, and/or other secure in-app card storing options.

For social media providers looking into how ecommerce fits into their business model, the right partner makes all the difference. At Kunai, we build payment solutions to meet complex needs and provide smooth user experiences. Reach out to learn about how we can add payment functionality to your platform today.

Tom

Sandeep

Sandeep: Tell me a bit about the early part of your career.

Tom: I spent a decade helping to build start-ups focused on application and database software. This was where I learned how to sell and do business development. I was fortunate to be part of one company going public and another being sold to IBM.

Sandeep: What is something you learned during this time that helped you with consulting?

Tom: I began to appreciate how different customers achieved varying levels of success with the same foundational technology. This made me understand just how critical getting your team and process right can be.

Sandeep: This is something I only came to appreciate years into consulting, especially after the sale of my first consultancy to Capital One.I saw teams in different parts of the company trying to solve challenges like real-time messaging. Same corporate culture, same technology, same internal support mechanisms. Night and day outcomes.

Tom: We saw a lot of the same thing after selling our practice to EMC (sold to Dell in 2015). This is probably the thing I'm most proud of when it comes to the teams I've helped to build: the ability to perform well in a variety of contexts, sometimes in ways that inspires the client team to up their game as well.

Sandeep: Yes. It's particularly cool to see your team succeed in individual ways after an acquisition...consulting skills definitely translate into the corporate environment.

Tom: Totally. We have people who've stayed on at Dell and risen up the ranks, while others took the opportunity to become successful executives at other Fortune 100 companies....or to start their own agencies and startups.

Sandeep: We've both been around a while. My first consulting project was a Y2K thing for Cisco back in 1998. You've been around a little longer than that :). How do you think consulting has changed most during the past five years?

Tom: I think because there is so much infrastructure available now, consulting has become more delivery and outcome-oriented. A better blend of strategic and tactical. Public Cloud has also enabled velocity to increase at a pace unfathomable 5 years ago.

Sandeep: What has stayed the same?

Tom: It's still mostly about people. People who thrive on change and are focused on their personal and professional development. I love that this has not and will not change...it's what I love about consulting.

Sandeep: I know you're adjusting your work style to COVID. You're still a dude who clearly prefers to drive an hour for a socially-distanced hike or outdoor meeting over Zoom any day of the week :) But personal styles aside, what is specifically compelling about a remote agency during the era of COVID?

Tom: Kunai has been remote for years, which gives them an inherent advantage. There is something about the communication and management styles that just works in a way that other organizations are still figuring out.

Sandeep: Yeah, I think what a lot of people fail to realize is that remote work isn't just office work over Zoom. it's an entirely new paradigm. There needs to be an understanding for asynchronous efficiency...and this just takes time and effort to develop. How do you approach remote work and family? What are you learning about separating work and personal time?

Tom: No matter what the form of interaction, Focus. Be present. Quality over quantity. The best weeks are the weeks where I proactively schedule work and personal time. Neil (Kunai's Head of Delivery) shared a great quote with me "With discipline comes freedom." When I am proactively addressing the majority of my professional and personal commitments, I find I earn a little flexibility. A little freedom.

Sandeep: Tell us about a business hero of yours that I may not have heard of before.

Tom: Paul O'Neill is someone you may not know. His work in both the public and the private sector created a profound impact

Sandeep: We are both over forty years old :). How have you learned how to work smarter during the past decade or so? What do you wish you knew about consulting when you were 25 that you know now?

Tom: Consultants want to make lasting change. Lasting change is often not the act of a single person. Today I work much harder bringing others along on the journey.

Sandeep: Last question. What are you doing here? :) Why join a small consulting company this late in your career when you could have a cushy job somewhere else?

Tom: I love a good challenge personally and professionally. When I turned 40, I decided I would run a 10K every Thanksgiving weekend and try to have my finishing time be less than my age. With the exception of one year where I did not run due to a health issue, I have met the goal. I also recently completed the Leadville 100 Mountain Bike race. So, I guess I'm here because I'm a glutton for punishment :) Jokes aside, our customers have a job to do and I intend to put Kunai in a position to execute flawlessly on their behalf. I love committing jointly to audacious goals for our customers and our business.

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