In a recent announcement, Ned Segal, the CFO of Twitter announced that the platform is looking to add new eCommerce features to the app. While the company has not yet shared how the new features work or how much it will assume per sale, there have been experiments with shopping features and an in-app Twitter Card. This is otherwise known as a social media storefront.

Twitter is certainly not the first company to integrate eCommerce into its platform. Given that mobile devices make up 63% of all traffic in the United States, and with mobile sales figures projected to reach upwards of 3.5 trillion dollars worldwide by this year, it is no surprise that companies are looking to sell products through apps, especially social media. Early last year, Facebook launched Facebook Shops and Instagram Shops, which are direct-to-consumer digital storefronts hosted on their platforms.

What Are Social Media Storefronts?

According to UPS, 87% of their shoppers say influencers have inspired them to make a purchase, and 34% of shoppers say that social media affects purchase decisions. Instagram reports that 70% of shopping enthusiasts use their platform for product discovery. This, combined with the 24.5% increase in mobile screen time over the past five years gives promise to social media storefronts that have the potential to convert customer interest directly into sales.

During the COVID-19 pandemic, Facebook launched Facebook and Instagram Shops to help small businesses who needed to transition to eCommerce. Now, these shops have robust shopping features with many benefits.

On Facebook Shop pages, users can easily create a shop page and curate their own collections of products. These pages load faster than mobile websites and do not require the user to leave the app to complete their purchase. New products posted to your shop will be featured on users’ News Feeds and on your company’s Facebook Shop tab.

Instagram Shop has similar features. On Instagram, business accounts have the ability to customize their shop pages. The products can also be tagged in photos throughout the feed, on Instagram Lives, and on Instagram stories. Tags can also be used in ads that are launched by your company. These tags are clickable and can bring potential customers to product detail pages, which has information about pricing, sizing, and includes all the other media in which the product is tagged.

How Do Social Media Storefronts Work?

There are multiple ways for businesses to set up their social media storefronts. The first way is for a business to open a shop with checkout on the social media platform using the platform’s native commerce tools. Merchants who use only the native commerce tools can then use that tool to tag their posts with shopping tags that have the embedded information about the product. When a consumer decides to buy that product, the social media platform handles the credit card transaction, and the commerce tool will track the revenue, collection, and order management on that order. The downside to this method is that merchants will be tied to that platform out of which they can run their business.

The other way businesses can set up shop is to integrate with a commerce engine, such as Shopify, Magneto, or Big Commerce. This method still requires tags on social media with shopping links, but when the consumer checks out there are more payment method options like Shopify Payments. If the consumer selects that option, all the order and payment information is managed centrally from that commerce tool. So, companies will be able to manage orders from all channels – from their website to all different social channels – in one place.

The last way, which requires the least effort, is to use social media to redirect customers to the online shopping experience with a link. This allows the business to remain in full control of the shopping experience. However, this complicates the customer’s path to purchase because it requires leaving the social media site.

Should You Set Up a Social Media Storefront?

Pros

• Meet your consumers where they are: Social media users are increasingly relying on the apps for product discovery. By giving them a direct path to purchase, it eases their customer experience and increases their likelihood to follow through with a purchase.
• Increase your reach: Product posts and stories can be shared and featured on multiple accounts and feeds, which increases the range of people who will see a product. In addition, the customizable features of the social media shop pages allow brands to stay true to their identity and primary audience.
• Create a consistent brand identity and messaging across marketing channels: Facebook Shop and Instagram Shop can be set up simultaneously on a company’s Facebook page. This means that brands can create a unified look and feel for their storefronts regardless of the social media site on which it is hosted.
• It is free and easy to set up your shop: Facebook, Instagram, and soon Twitter, allows business profiles to set up their shop completely free of charge. Their goal of helping smaller businesses and business owners means they have designed their tools to be easy to use and understand.

Cons

• Social media’s audience may not fit your brand’s audience: It is important to remember that not everyone uses social media. If a company or brand does not wish to capture this audience, social media shops may not be the best place to set up an e-commerce channel.
• Data capture may be limited: Since the shops are hosted on social media sites, the sites have access to most of their users’ data. This data can be sold to others, which can potentially harm a customer’s trust in the brand.
• Analytics may be limited: If a business chooses to use the native commerce tool, the social media site records the customer’s data, not the retailer. Though the business can track the number of sales and revenue, little customer data will be provided. Therefore, it can be harder for sellers to analyze their customers and give them a personalized experience online and in stores.
• Customers may not trust social media transactions: While many people turn to social media as their new “window shopping experience,” as many as 95% of people don’t trust social media with their personal data that is necessary to complete a transaction. As a result, the purchase may not be made, or worse, the customer would lose their trust in the brand.

Contributions by Maggie Wong