Over the past few decades, e-commerce has grown from a puddle to a lake to a sprawling ocean. In 2000, the U.S. transacted about $27.5 billion in e-commerce sales. By 2010 that number had grown sixfold to nearly $170 billion, and last year, U.S. e-commerce sales totaled about $763 billion, nearly $200 billion more than 2019.
But for all the shifting and repositioning of commerce from the physical world to the digital, there have also been churning waters within the ocean of e-commerce. As shopping online becomes more and more consumer-centric, brands have realized that one size no longer fits all, and that’s caused the meteoric rise of three new forms of social e-commerce — influencer marketing, live shopping and conversational commerce.
Whether buyers and brands are ready or not, a new wave of e-commerce is here, and everyone had better put on their ponchos.
Influencer marketing and live shopping
As brands try to capitalize on shifting consumer shopping habits, influencer marketing and live shopping have become key methods of engagement. Like many things, these two trends took off during COVID as the pandemic accelerated consumers’ shift to digital shopping.
“Last year, at least, it wasn’t something brands were actively looking for or seeking out,” Eric Dahan, CEO and co-founder of marketing agency Open Influence, told Modern Shipper. “I think this year is really sort of the first year where brands are trying to dabble with live shopping.”
Already Amazon has released Amazon Live, TikTok has gone all-in on its live shopping offering and Instagram is experimenting with its own live shopping program. Given the size and influence of those players, it’s clear that a new era of e-commerce is knocking on the door.
Dahan said that Apple’s iOS 14 update, which was released in September 2020, also had a huge impact on emerging forms of e-commerce like influencer marketing and live shopping. A defining feature of that update was the switching of Apple’s (NASDAQ: AAPL) data-tracking policy to an opt-in system, rather than an opt-out, which has had a couple of effects.
“One is you’ve seen a decrease in return on ad spend just because the ads aren’t as effective or efficient in how they’re distributed,” Dahan explained. “The next is reporting is all over the place. Because of the update, it’s hard to track. It’s really hard to attribute where sales are coming from.”
As a result, brands have gradually become less dependent on ads, instead emphasizing the customer journey. By creating a vacuum of data, iOS 14 has made brands focus on owning the consumer experience from beginning to end so that they can reliably track and analyze data.
While these social forms of e-commerce are relatively foreign to the U.S., they’re very familiar in China. The country’s social platforms are multifaceted behemoths, where you can chat with friends, make payments or order a haircut all in the same place — think apps like Weibo.
Dahan also thinks that China has more of an openness to quickly adopting new forms of social functionality. For example, Chinese shopping platform Taobao rolled out a live shopping option before its U.S. counterpart Amazon launched Amazon Live. Only now are these trends beginning to seep into the U.S. mainstream.
“I believe that from a social media standpoint, China’s actually about five years, give or take, ahead of us in a lot of cases,” Dahan said.
According to Dahan, influencer marketing and live shopping are all about trust “because there’s so much information out there. People are gonna listen to what they trust. And the truth is people trust people. And it’s why every part of consumer decision-making comes down to reviews or ratings or some level of social validation of what other people are saying.”
This idea is nothing new, as evidenced by the existence of shopping channels like QVC and HSN, which serve almost exclusively to recommend products. It’s even more salient when looking at the sea of Google (NASDAQ: GOOGL) and Yelp (NYSE: YELP) reviews Americans use to evaluate products and services. Simply put, people buy things when an authority recommends them.
Dahan sees influencer marketing and live shopping as forms of content, like any other content you’d find on Twitter (NYSE: TWTR), Instagram or Facebook (NASDAQ: FB). Like those platforms, influencer marketing and live shopping imbue a sense of discovery in the customer. He compares them to TikTok: Sometimes you never know what video — or product — you’re looking for until you find it.
“Now is really the time for brands to start embracing and learning, because with anything with social media, failure is cheap early on and the rewards for success are really high,” Dahan said. “And what I mean by that is while these things are still taking off, it gives you a really good environment to test stuff out.”
Another major trend among brands today is that of conversational commerce. Everyone knows that commerce is the buying and selling of goods and services, but the conversational piece is probably new to many.
“The way people communicate with each other is through messaging apps, right? You send a text message to someone, or you will use Facebook Messenger or WhatsApp, to chat with friends,” Beerud Sheth, CEO of conversational messaging platform Gupshup, told Modern Shipper. “And many consumers are starting to say, ‘Well, could I chat with businesses just as easily as chatting with a friend or family member?’”
That’s the idea behind Sheth’s company Gupshup, which provides the tools and infrastructure for brands to integrate AI chatbots into their digital shops. In his view, conversational commerce is simply the buying and selling of goods and services, but through conversation and chatting, the idea is to bring the experience of a physical store into a virtual environment.
“This can range from designing conversations meant to help answer specific questions and help the visitor progress faster through the sales journey, engaging the user in experiences that are contextual to their current needs … or simply connecting to the shopper’s past purchase history in order to return an instant order status or automate returns or refunds,” Liziana Carter, founder and CEO of chatbot agency GROW AI, told Modern Shipper in an email.
Carter’s company GROW AI helps brands use conversational AI, known colloquially as chatbots, to meet shoppers on the platform of their preference — whether that be social media, an online store or a marketplace — and engage them in conversation around things that matter to them.
Like influencer marketing and live shopping, conversational commerce is hottest in the countries and regions that Sheth refers to as “mobile-first ecosystems” — think China, India, Latin America, Southeast Asia and Africa. Unlike those parts of the globe, the U.S. relies heavily on email and call centers, which are typically much more costly to operate than something like a chatbot.
“In all these other countries, you don’t have call centers, you don’t have anything, because those are very expensive for businesses to set up,” Sheth explained. “But this [conversational commerce] is a great alternative that’s both better and cheaper than having a human-staffed call center.”
If cost is one major advantage of using conversational commerce, then engagement is another. According to Carter, 78% of the 2 billion monthly active WhatsApp users, 1.3 billion monthly active Facebook users and 1 billion monthly active Instagram users say that checking and answering messages is the activity they do most on their smartphones. Conversational commerce can allow brands to slide into those DMs.
Carter also said that 82% of customers say an “immediate” answer is important or very important when they ask a sales-related question, while three-quarters of shoppers expect “now” service within five minutes of interacting with a brand online. Consumers want quick service, and a chatbot can deliver. But Carter also emphasized that conversational commerce is sacrificing its full potential if it doesn’t have an AI component.
“When engaging with a bot, you’re limited to choosing an option and if you start to type random questions, chances are you’ll break it and you’ll most likely get stuck if there’s no bot-to-human handover protocol,” she explained. “I saw a gap there that would be filled by AI.”
By incorporating AI into conversational commerce, a brand can essentially automate the entire staff that would normally be present at a physical store — from the salespeople to the customer service desk to the cashiers. Carter said that hundreds of the e-commerce CEOs with which she’s worked are using methods like chatbots to walk the customer through the entire e-commerce experience, from point of sale to post-purchase customer service.
For many, the rise of e-commerce during COVID was no surprise, as e-commerce sales had already been trending up for years. But the shift to online shopping has created new trends of its own, and they’re more than just drops in the bucket.