Social Commerce: The f\Buture of How Consumers Interact with Brands

 McKinsey: Social commerce: The Future of how Consumers Interact with Brands

Authors:

  Camilo Becdach is a partner in McKinsey’s Southern California office, where Zachary Kubetz is a consultant; Marc Brodherson is a senior partner in the New York office, where James Nakajima is a consultant; Alex Gersovitz is a consultant in the Bay Area office; Daniel Glaser is a partner in the Munich office; and Max Magni is a senior partner in the New Jersey office.

October 19, 2022 | Article

Browsing and shopping directly on social media platforms is a core feature of e-commerce in China. Now, this dynamic new way of buying is poised for rapid growth in the United States.

A two-hour live shopping event on TikTok brings in more than a week’s worth of sales at a flagship store.1 An interactive, shoppable Instagram live stream garners 40,000 comments. Augmented-reality (AR) lenses let Snapchat users “try on” makeup and send the images to friends.

Welcome to the dynamic world of social commerce, where consumers explore products and complete transactions through social media and content creation platforms, all in an app. This emerging form of shopping removes friction from the buying process, creates a more engaging journey for the consumer, and presents new opportunities for brands to generate consumer interest.

Already enormously popular in markets such as China, social commerce remains a small but rapidly growing segment in the United States (Exhibit 1). In 2021, $37 billion in goods and services were purchased through social-commerce channels.2

Exhibit 1

Social commerce is a small but rapidly growing segment in the United States.

We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

By 2025, that figure is expected to swell to nearly $80 billion, or 5 percent of total US e-commerce.3 Globally, the social-commerce market is expected to grow to more than $2 trillion by 2025.4

Discover NeXT Commerce

Social commerce is more than just a new shopping experience. It represents a paradigm shift in how consumers interact with brands: where, when, and how they shop. For consumer brands, this creates opportunities for a much more interactive, entertaining, and experiential journey (see sidebar, “Discover NeXT Commerce”). For example, leading brands are working with platforms such as TikTok to forge new relationships with consumers, shifting from traditional advertising strategies to fun, engaging content that is less overtly promotional. This content can be used to highlight unique product features or explain product complexities simply. For example, rather than watching an ad for a new skin-care formula, your favorite celebrity can invite you behind the scenes into their daily skin-care routine, showing you how they use the branded product and why they love it. Consumers can then buy the product directly within the platform, whether it’s on Instagram or TikTok or through YouTube Shopping.

The winning ingredients for social commerce in China

The evolution of social commerce in China offers a glimpse of the possibilities.5 By forging partnerships with wildly popular social influencers and participating in live-stream shopping—an experience that combines instant purchasing of a featured product and audience participation through chat or reaction buttons—brands in China have achieved conversion rates of almost 30 percent on social platforms.6 This is up to ten times higher than conversion in conventional e-commerce. Last year, goods and services purchased through live-stream shopping in China represented $132 billion, or 5 percent of total e-commerce gross merchandise value (GMV).7 More broadly, Chinese consumers spent more than double that amount—$352 billion (or 13 percent of total e-commerce)—on all social commerce. ... .' 

Virtual Reality at a Touch

A new kind of interaction with your reality.     Perhaps easier and more productive. 

Virtual Reality at Your Fingertips

ETH Zurich (Switzerland), Leo Herrmann, March 16, 2021

Researchers at ETH Zurich in Switzerland have developed a dual-sensor wristband that facilitates intuitive free-hand interaction within virtual productivity spaces. The prototype TapID technology incorporates two acceleration sensors in a rubber wristband, which detect when the hand touches a surface and which finger the user has employed. This design senses tiny differences in the vibration profile on the wrist and differentiates between each unique finger movement, while a custom machine learning pipeline processes the data in real time. TapID generates extremely precise input when used with cameras embedded within virtual reality (VR) glasses, which capture hand positions. The researchers designed a virtual keyboard and piano to demonstrate TapID's capabilities, and ETH Zurich's Christian Holz said the portable technology "has the potential to make VR systems suitable for productivity work on the go."

Combining Touchless and Tactile Interaction

Quite unusual combination, can it greatly improve interaction in new ways?

Intuitive in the Virtual Reality
Helmholtz-Zentrum Dresden-Rossendorf
By Simon Schmitt, Press Release

Researchers at Helmholtz-Zentrum Dresden-Rossendorf in Germany and Johannes Kepler University Linz (JKU) in Austria have developed an electronic sensor that can simultaneously process both touchless and tactile stimuli. When applied to human skin, the sensor could provide a seamless interactive platform for virtual and augmented reality applications. The researchers said the sensor was conceived as an electronic counterpart to human skin, and could “massively amplify” the interaction of people and machines. Said JKU's Martin Kaltenbrunner, "A better interface between humans and machines can be built on this foundation."  .... '

Participant, Customer Storytellling

How much of this can we hand off to the customer, and how well does that work?   Can customers plot their own journey?

Black Mirror: Bandersnatch Is an Experiment on Us
Independent (London)    By David Streitfeld

The Netflix series "Black Mirror" recently released an interactive episode in which viewers can choose the course of the program's narrative. Participants start by choosing relatively innocuous actions for the episode's protagonist to follow, which become increasingly consequential as the show plays out. An enthusiastic response to the program could encourage Netflix to produce more interactive content for public consumption, potentially transforming storytelling. The company already has developed software to help organize stories that have endless permutations, has the technical ability to present these tales on multiple platforms around the world simultaneously, and is calling for producers to submit interactive proposals in different genres. Behind the idea of interactive content is the notion that viewers will care more if they have a say in the plot.   ... " 

Designing Meaningful Conversations

Back to conversations.  Can they be designed?  Goals are good.   Will our systems become intelligent only when they can carry on a meaningful conversation?

Designing meaningful interactions at work  from SlackHQ

Information designer Erika Hall on the relationship between collaboration and conversation
Erika Hall is the author of multiple books on interaction design, including Just Enough Research 

Conversation is the oldest interface, explains Erika Hall, co-founder of Mule Design. The purpose of conversation is essentially to cooperate and achieve a goal. The value of conversational tone is that it makes communication feel more personal, more palatable. And so interaction design must be about more than creating interfaces that talk and text. “Technology is valuable when it brings us more of what’s already meaningful,” she says.

In her new book, Conversational Design, Hall surveys the history of conversation and explores how people’s tone evolves as new mediums — like text messages — are introduced. She believes that this deeper understanding of the way people communicate can help designers and engineers develop systems that are more intuitive and simple to use. .... " 

New Ways to Touch in AR

Its all about accurate and efficient interaction.

Touching The Future Of Augmented Reality
A collaboration between Meta, Ultrahaptics and ZeroLight demonstrates a new way for AR objects to be interacted with. ... 

 By  Rebecca Hills-Duty in VRFocus