July 29 (Reuters) – Led by Facebook, Alphabet’s social media platforms YouTube to Snap Inc (SNAP.N) and Twitter (TWTR.N) are investing heavily in shopping features to drive revenue growth, a Major theme that emerged during the second quarter results of last week.
Companies are vying for part of the so-called social commerce industry, which relies on the ability of users to discover and buy products through social media apps and is expected to reach $ 50 billion against $ 36 billion in sales annuals by 2023 in the United States. Reports according to research firm eMarketer.
Part of the success of social commerce stems from targeting products based on user interests, with sales generating more data that can be used for future ad and merchandise placements.
Facebook, widely regarded as the leader in social commerce, and Google have helped retailers drive sales in the last quarter, with e-commerce player Shopify claiming that the growth rate of products sold on the platforms of both technology companies was “many times that” of websites run by the merchants themselves.
Facebook CEO Mark Zuckerberg said enabling commerce and making it easier for businesses to communicate with their customers through his Messenger and WhatsApp apps was “the right bet in the long run.”
Retailers are increasingly jumping on the trend as COVID-19 restrictions weigh on physical sales.
Brands ranging from luxury fashion house Burberry (BRBY.L) to fast fashion giant H&M (HMb.ST) have engaged celebrities and influencers to get millions of their followers to shop from. stories or ephemeral publications asking them to “swipe up to buy”.
Although the company is small at the moment, the social media giants are eyeing the data generated by users’ buying and browsing habits for targeted advertising.
The rush for user data has become even more crucial as recent privacy changes from Apple Inc (AAPL.O) limit the ability of tech companies to track iPhone users and serve personalized ads, said advertising experts.
THE FUTURE OF TRADE?
Facebook launched Shops in May 2020 at the height of the pandemic, attracting brands with an easy way to sell items directly through Facebook and Instagram and consumers with an organized, personalized way to discover trendy clothing or items for the House.
Facebook was the number one social commerce platform according to a survey conducted by eMarketer in June 2020, with 18% of respondents saying they bought a product through Facebook. This compared to 11% for Instagram owned by Facebook and 3% for Pinterest (PINS.N).
Even if the restrictions are lifted, analysts say demand for online shopping is unlikely to decline.
“People have gotten used to buying online,” said Dave Heger, analyst at Edward Jones. “I don’t think they’re going to be completely back to where they were before in terms of brick-and-mortar store purchases.”
Snap Inc is investing in augmented reality technology designed to help users virtually try on items like watches, jewelry and other clothing to reduce returns, a major problem facing online retailers.
Snapchat users can snap a photo of a friend’s outfit with the app and find similar looks or product recommendations, Snap chief executive Evan Spiegel said last week on the conference call on business results.
“The holy grail of advertising is selling merchandise,” said Rich Greenfield, partner of LightShed Partners, in a note on Snap last week.
“While these initiatives are still in their early stages, we believe that a growing number of brands are interested in being associated with the direction the business is taking.”
The popular TikTok abbreviated video app tests live shopping with select brands in the UK, allowing viewers to purchase clothes as an influencer modeling the article in real time during a live video.
Twitter, a platform known for keeping up with breaking news or current events, said on Wednesday it would start testing a shopping feature that allows users to browse items for sale at the top of a profile page for a business. Mark. Read more
Video streaming site YouTube, known for “unboxing” videos in which YouTubers examine toys or tech gadgets, wants to integrate purchases directly into the platform, Google chief commercial officer Philipp Schindler said at Alphabet’s call for results on Tuesday.
Reporting by Sheila Dang in Dallas and Nivedita Balu in Bengaluru; edited by Kenneth Li, Peter Henderson and Saumyadeb Chakrabarty
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