Walmart would bring its fulfillment, payment and advertising capabilities to TikTok. In turn, the platform offers Walmart more access to consumer product sellers, advertisers—and the influencers critical to selling to millennials and Gen Z.

Kristen Groh, managing partner at Publicis Sapient

Kristen Groh, managing partner at Publicis Sapient

After months of speculation about the future of TikTok in the United States, Walmart Inc. and Oracle Corp. emerged last month as prospective minority investors. Walmart has been focusing heavily on ecommerce as a key to its growth strategy and battle against Amazon. Its interest in the TikTok platform draws a spotlight on the increasing role of social channels in that ecosystem.

It’s no surprise that Walmart (No. 3 in the 2020 Digital Commerce 360 Top 1000) sees the potential in social commerce. According to Statista, social commerce sales in the U.S. are expected to increase from $22 billion in 2019 to over $84 billion in 2024, accounting for 7.8% of retail ecommerce sales.

As technology capabilities advance and consumers become increasingly comfortable with online shopping, social commerce has progressed from user reviews and user-generated content to include direct links to ecommerce websites. Marketers also have advanced to in-situation purchasing, allowing consumers to complete a purchase journey within the social platform. In addition to TikTok, platforms like Twitch, Instagram, Facebook and WeChat all have various social commerce capabilities.

The value of social commerce

The consumer value of social commerce is clear, especially in the context of impulse purchases. In a survey on impulse purchase behavior conducted by Publicis Sapient, 44% of participants said they are more likely to impulse purchase online, spending $11-50 while doing so. The scrolling behaviors prominent in social media lend themselves well to driving impulse purchases as brands can embed themselves into relevant experiences where engagement feels natural and consumers don’t have to go out to separate sites and apps for each brand. Of the participants surveyed who had made impulse purchases online, 45% said they saw the product they purchased while scrolling and 56% said they had never purchased that product before.

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In addition to new product discovery, social channels allow for highly targeted shopper experiences. Social platforms provide brands with consumer data that they can use to promote the most relevant products and services to their target audience. Many platforms also have the benefit of embedded direct messaging for customer support. With these tools, consumers can directly engage with brands for shipping updates, questions, usage support and returns, and product information, within a channel they are already comfortable using.

For consumer product companies, social commerce opens a new channel for selling directly to consumers. In the case of TikTok, Walmart will bring its capabilities to the platform with its fulfillment, payment and advertising services, increasing the feasibility of ecommerce for companies that do not have direct-to-consumer distribution capabilities. In turn, the platform will give Walmart more access to consumer product sellers, advertisers—and the influencers critical to selling to millennials and Gen Z.

Understanding the value and investing properly is vital

While the value of social commerce for consumers is obvious, one of the primary reasons consumer product companies hesitate to leverage social and other direct channels is a lack of understanding of the offering’s full value. Brand managers and even digital channel owners stop at measuring value simply in terms of revenue streams. The brand managers rarely make the business case once the costs of servicing the business are factored in. However, a total ecommerce offering, especially one that crosses multiple touchpoints like social, can bring tremendous value to the business beyond revenue.

With social commerce, brands can have more control over the buying experience, optimizing pricing and discounts, how the products are packaged and shipped, and the support provided throughout the shopping and delivery process. By establishing a direct relationship with consumers through social commerce platforms, consumer products companies can collect data and insights to predict consumer demands and develop more personalized experiences and offerings. This relationship can strengthen brand loyalty and increase the lifetime value of the consumer.

As the consumer continues to adopt new engagement changes and the shopping experience becomes more omnichannel and integrated, brands need to embrace a total commerce multichannel strategy that ensures consumers’ best experience and the most value for the business.

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Publicis Sapient is a digital consultancy. The firm offers strategy and consulting, customer experience and design, technical and engineering, enterprise platforms, data and artificial intelligence and innovation and digital product management services. 

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