The World of Commerce has Changed
The purchasing traits of the mobile-first generation
The mobile-first generation has emerged as a breed of phone users who prefer mobile over desktop. With the rising sophistication of mobile smart phones and their omnipresence, these consumers have an opportunity to shop anywhere, at any time and for almost any good or service. From making travel reservations and paying bills to phone purchases and shopping online, mobile-first generation purchases are increasing at an unprecedented rate.
This vast group of individuals, Millennials and Gen Z or iGen, search online for relevant content that piques their interest and draw inspiration from social media. They take their time to consume information, far more so than previous generations. They view information in short intervals over longer periods of time throughout the day. With varied tastes and behaviors, what is interesting for one may not be interesting for all. They tend to know exactly what they want in a product, whether that’s a specific ingredient, color or fit. When they can’t find what they’re looking for, they’re quick to move on to another site or store.
These preferences mean it’s critical for businesses to go beyond demographics to understand the personalized interests of the individuals who buy their products. A brand or product built to appeal to everyone will, in effect, appeal to no one.
The world of commerce has changed based on the purchasing traits of this mobile-first generation. To remain relevant, brands and retailers must tap into and hone in on the habits of this generation of users, for whom:
- Mobile is the device of choice for online activity.
2018 was the first year mobile commerce traffic grew above 50%. Moreover, 27% of all sales were conducted on mobile phones, a 12% increase over the year before, at the expense of other platforms (desktop, laptop and tablets).
"2018 was the first year Mobile Commerce traffic grew above 50%"
- Social media is a source of inspiration for shopping.
60% of users are influenced by social media for their purchases. 54% of the more than 3 billion daily active users on social media channels spend more than 2 hours a day on these channels.
"60% of users engage with social media as a source of inspiration for their purchases."
- User experience is a critical factor in making a purchase.
Over 60% of Millennials say they gravitate toward brands that speak to them as individuals. Also, according to a 2018 survey, Customer Experience is the primary way companies seek to differentiate themselves, ahead of product, price and service.
"Customer Experience is the primary way companies seek to differentiate themselves, ahead of product, price and service"
Millennials have changed the ground rules
The shopping habits of Millennials have changed the ground rules for commerce. This introduces both a challenge and opportunity for retailers which now need to concern themselves with:
- Market dislocations and fear of getting “Amazon-ed”.
Without a solid Direct-to-Consumer (D2C) strategy to target the mobile-first generation, retailers are likely to lose market share in this so-called Amazon era.
- Anemic conversion rates due to “frictions” in mobile commerce.
While the majority of eCommerce traffic has moved to mobile, conversion rates remain very low using traditional browser-based channels. The new generation of users expects a much more seamless shopping experience, and browser redirects to websites on mobile devices is a conversion-killing step for them.
- Converting social media engagement to sales.
While many retailers have developed strategies to publish engaging social media content, the key challenge remains to be able to convert social media engagement into sales.
Retailers that employ effective Direct-to-Consumer strategies along these new ground rules are able to reap the benefits, and cultivate long-lasting and genuine relationships that translate into strong sales and branding. Standout examples of this approach are two brands that have, since their inception, become known entities: Casper bed-in-a-box & Dollar Shave Club. Both began as virtually unheard of by their target demographic until they tapped into their audiences on social media to become celebrated D2C global brands.
The D2C Solution
A ramp onto the mobile-first highway
As consumer engagement has shifted from web to mobile and social channels, a successful D2C solution now requires much more than just your average online website. Brands need to open and have a presence on all commerce channels across social media, messaging apps, and marketplaces. When brands invest in a strategic imperative with special consideration given to a comprehensive online presence and corresponding social media efforts, they are setting the foundation for strong customer interaction, brand presence and user experience.
However, having a strong online presence on social channels like Facebook and Instagram, messaging apps, and marketplaces like Amazon, is only part of the D2C strategy. Brands also need to understand the desires of the mobile-first generation and provide them with a flawless, personalized and thorough user experience.
Research shows that once on social media, a user can make purchasing decisions within minutes. For example while surfing Instagram, users will quickly research key ingredients, compare prices, maybe even watch a few how-to videos, and if they can’t find what they’re looking for, they’re quick to move on to the next store or site. Therefore, brands need to provide 24/7 transparency and tailored user experiences for their customers that ultimately lead to conversion in a seamless way. In terms of technology, this means enabling built-in applications that implement rich experiences in social media such as chatbots, shop-by-look checkouts, how-to-video tutorials, virtual mirror try-ons, product recommendation quizzes, apparel sizing flows, and so on.
Social commerce - defined as conducting business transactions on social media channels and mobile messaging apps - is an indispensable aspect of any D2C strategy and is continuing to fuel the D2C Brand Phenomenon. For social commerce to be effective, providing an engaging user experience for customers is non-negotiable.
"Social commerce is fueling the D2C brand phenomenon"
Where Brands Win or Lose
Social media has taken eCommerce another giant step further by creating an entirely new channel where brands can:
- Connect directly with billions of users on social media - an open channel that allows access to an already highly active platform of daily users
- Engage with consumers in real time via interactive and personalized content daily
- Convert these users’ interest into global sales by utilizing new direct sales channels on these platforms
"User experience not only promotes branding- it is also the key to conversion and sales in social commerce"
In 2019, average-daily mobile usage surpassed 3.1 hours, with 54% of the users spending over 2.3 hours a day on social media and mobile messaging apps. With an estimated 2.7 billion mobile phones currently in use around the world, this figure translates to over 3.1 billion hours per day that brands have the opportunity to showcase themselves to new and existing customers. This unprecedented opportunity to tap into this power of visibility and engagement is fueling the growth in social commerce, something brands cannot afford to ignore.
In line with this opportunity, social media companies have developed business models and technology features around enabling brands and retailers to reach the billions of users on their channels. These technology features have transformed social media companies into two kinds of engagement platforms:
- “Application development platform” for creating rich brand experiences.
This allows businesses to create and embed unique experiences for their customers. When done right, these applications provide seamless and immersive shopping experiences all within social media with emphasis on personalization capabilities.
- “Digital marketing platform” for customer segmentation and targeting.
This allows businesses to build and grow audiences on social media, and target those audiences with tailored advertising campaigns that maximize conversion within each segment.
While brands recognize this growing importance of social media, most struggle to deploy effective solutions to utilize these new sales channels to build, captivate and deliver highly personalized experiences to their target audience. 60% of mobile-first users say that they gravitate toward brands that speak to them as individuals.
"Paid social is overtaking paid search at a rate of 2x"
Through a combination of organic content, targeted ad campaigns, and built-in applications, it is up to brands to create an appealing and personalized experience that speaks to their users.
In terms of marketing spend, many brands are realizing that they get better marketing results on social media compared to web search, as paid social marketing budgets are growing 16% per year, twice as much as paid search[5,6]. This means that the mobile first generation is relying on options being presented to them rather than searching for them.
Overcoming the anemic mobile conversion rates is a challenge for all brands due to existing frictions in mobile commerce and obstacles in converting social engagement into sales. Therefore, brands need to have a clear strategy and the right technology partner to overcome this challenge. With a successful social commerce deployment, D2C brands, on average, are able to acquire 61% of their customers from social media.
"With an effective social commerce deployment, D2C brands are able to acquire 61% of their customers from social media"
Getting Your D2C Strategy Game On
Core components for a successful deployment
As discussed, the mobile-first generation requires all aspects of the Direct-to-Consumer experience from first glance to final touch. Whether a brick and mortar establishment or an online brand, a D2C strategy with a strong social commerce component must be in place to optimize both the experience and sales. The following are the main elements that should be working cohesively and in unison for a successful D2C brand presence.
1. Content, Content, Content
Brands need to acknowledge that as an eCommerce company they’re actually a media company. For brands it is key to have a streamlined production system on social media, where they’re able to strategize and push out assets in a very systematic way. Creating captivating content that speaks to a brand’s target audience and offers a compelling reason for users to engage is a crucial first step. Therefore, a large, organic following on social media is a key for traction and engagement.
2. Presence Across All Customer Channels
A D2C strategy requires more than just an eCommerce website. Brands must be present across all customer channels, and in particular on social media and messaging apps where they need to provide strong brand identity and experience. Marketplaces like Amazon are other channels for brands to consider, although these channels may subject brands to unfair negative reviews that can be sticky. Having understood the importance of user experience however, marketplaces are increasingly enabling brands to provide unique brand experiences for their customers (e.g., Amazon’s Brand Stores in partnership with Adobe) and hence making them more attractive sales channels. Finally, brands also need to consider home assistant devices like Alexa and Google home, and the Internet-of-Things (IoT) world as emerging customer channels as part of their product roadmap. Some use cases for these channels include ordering pizza delivery on Alexa, making a doctor’s appointment on Google Home, and having smart refrigerators do the grocery shopping for you.
3. Full & Embedded User Journey
Mobile commerce suffers from poor conversion rates due to the limitations of a small screen, especially when it comes to (legacy) browser-based shopping. A successful D2C deployment embeds the full user journey natively within the channels, so at no point the user is redirected to the web browser to complete a purchase. If, for example, the user is engaging with a brand on social media and is then forced to leave the social media app to go to a mobile browser to continue the shopping experience, this step will introduce friction and can lead to shopping cart abandonment. A seamless, full mobile user journey that maximizes conversion rate requires built-in shopping experiences from engagement all the way to payment processing.
4. Best-in-Class User Experience
In order to stay on trend and create a customer-centric platform, brands must deploy an efficient and seamless social commerce solution with emphasis on personalization capabilities and immersive user experiences. Different D2C channels have different modalities of engagement and best-in-class user experiences engage users with these modalities as well. For example, a D2C solution for messaging apps should engage users using text and voice, while for social media apps it should engage users with rich media content and touch interfaces. Some examples of such immersive experiences include: concierge chatbots, shop-by-look checkouts, how-to-video tutorials, virtual mirror try-ons, product recommendation quizzes, apparel sizing flows, etc.
5. Complete Digital Marketing Deployment
D2C brands need to leverage the marketing capabilities of social media platforms which allow businesses to target new and existing customers with tailored campaigns. Different social media platforms are better suited for different marketing objectives (brand awareness, lead generation, sales), customer demographics (younger, older, male, female), and products and services (B2C/B2B, Fashion, Wellness), so marketing budgets need to be spread optimally across these platforms. A complete digital marketing deployment involves all platforms, and consists of a mechanism to create engaging assets and themes for campaigns with the embedded applications to complete the user journey with a conversion.
What brands must know and start to adopt now
Cognitive Services: Text, Touch & Voice User Interfaces
Chat is the medium of choice for users on social media, messaging apps, and voice-enabled devices with over 600 millions chat messages sent by users every day . Brands provide the best user experience on these channels when they have the ability to interact with users in the same fashion via chat, which involves text, touch & voice interfaces.
"53% of consumers are more likely to purchase from a company that they can message"
Artificial Intelligence (AI) technology is now available for brands to build these so-called cognitive interfaces that automatically respond like a human agent to customer inquiries in chat. This provides brands with an AI assistant (similar to “Siri” on Apple devices) that is able to fulfill a complete and personalized user journey, including shopping cart integration and checkout, within these social, messaging, and voice-enabled channels. These features and capabilities replace redirects, remove friction from purchasing and ultimately reduce shopping cart abandonment. This level of personalization also brings both the engaging experience and customer service of shopping back to the consumer. In fact, two billion messages are sent to business on chat each month and according to a survey 53% of consumers say they are more likely to purchase from a company that they can message.
Examples of AI-assisted engagement through voice channels can be seen on Amazon Alexa and Google Home devices. Beyond being able to simply place orders with a voice assistant on these platforms, some brands’ assistants, such as Liv by Estee Lauder, can answer questions that then lead to personalized recommendations. Other AI assistants on social media include Phil for Accor Hotels, Rachna for Yogo Sport, and Cades for Christina Choi Cosmetics. We have also seen the first AI news anchor going live in China.
Augmented Reality: Immersive Shopping Experiences
Another trending AI technology is in the area of Augmented Reality (AR), which enables brands to provide immersive experiences to their users such as virtual mirror try-ons, apparel sizing, and product overlays. These forms of augmented reality that can be delivered over the mobile phone and within social media channels, allow users to delve deeper into a brand to discover what makes them unique and exclusive.
Real-Time Predictive Analytics: Leveraging Data for Personalization
Real-time analytics afford brands with the ability to provide users with personalized content and to target experiences for various user audiences and cohort groups that lead to the best marketing results. Predictive analytics, part of what drives this personalization engine, monitors consumer behavioral patterns to both offer personalized recommendations and help brands determine what is resonating.
As an eCommerce company, a brand must also consider itself a data company, and adopt AI technologies that create the foundation for informed decision making from customer data. Such technology would, for example, monitor popular content and products, register the times users shop, etc., and then use machine learning to build cohort groups of consumers to offer product recommendations and upsells in real-time based on similarities.
Marketing Automation: Re-engagement & Re-marketing Flows
Marketing automation capabilities enable brands to re-engage users in personalized ways and drive conversion. An example is when brands implement a mechanism to automatically contact users who have abandoned their shopping cart with an incentive to complete the transaction. Such “abandoned cart” flows typically increase revenue by several percent. To best leverage user engagement, brands need to deploy a remarketing solution and implement flows for abandoned cart, re-stock, loyalty offers, customer satisfaction surveys, etc.
Global Payment Processing: Reaching customers everywhere
Thanks to D2C channels like social media, global users are now within reach, and with the right global payment partner brands of all sizes have the opportunity to turn a global audience into a customer. A global payment partner will be able to provide a full portfolio of international payment products and capabilities in local currencies, so brands can transact anywhere with the most popular local payment methods for users.
The above technologies provide a synthesized combination of AI-assisted capabilities and features, Natural Language Processing (NLP) as well as immersive experiences powered by AR that can create the desired effect for each user in a highly personalized manner. When used in tandem, these technologies create an optimized social commerce experience known as a conversational commerce solution.
"When used in tandem, these technologies create an optimized social commerce experience known as a conversational commerce solution."
Results & What Brands Say
Direct to Consumer Strategy: Mobile + Social + Immersive Features
When mobile, social and AI work together, the synergistic effect is virtually immediate. Many brands have begun this synthesis in a piecemeal form.
Beef Up your D2C Commerce Journey Today
Joinedapp as your strategy and technology partner
Embracing this opportunity starts by putting the right Direct to Consumer components in place as soon as possible. On the digital commerce front, artificial intelligence will be used by at least 60% of organizations by 2020. The first step to start your commerce journey is to ensure that your brand is in sync with 21st century expectations.
Some questions to consider:
- What are other brands in the same space doing?
- What do your customers want?
- How are you meeting their desires and expectations?
When you are ready to take your brand to the next level, Joinedapp will guide your brand each step of the way to pull the pieces together to ensure optimized conversational commerce success.
Next steps with Joinedapp
- Learn about Joinedapp, including successes, brand experiences and testimonials
- Request a demo to see what Joinedapp can do for you, your team, and your brand
- Take a quiz to evaluate your social media strategy
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- Arnold, Andrew. “4 Ways Social Media Influences Millennials' Purchasing Decisions.” Forbes, Forbes Magazine, 23 Dec. 2017, https://www.forbes.com/sites/andrewarnold/2017/12/22/4-ways-social-media-influences-millennials-purchasing-decisions/#3c8366d9539f.
- Mihajlovic, Ursa. “Direct to Consumer Brands and Models That Are Killing It.” The Future of Customer Engagement and Experience, The Future of Customer Engagement and Experience, 13 July 2020, www.the-future-of-commerce.com/2019/02/08/direct-to-consumer-brands/.
- “75+ Mobile Marketing Statistics for 2020 and Beyond.” Blue Corona, 5 Mar. 2020, www.bluecorona.com/blog/mobile-marketing-statistics.
- CB Insights. “Direct to Consumers (D2C) Company Trends in Retail: CB Insights.” CB Insights Research, CB Insights, 17 July 2020, www.cbinsights.com/research/direct-to-consumer-retail-strategies/.
- “43 Social Media Advertising Stats That Matter to Marketers in 2020.” Social Media Marketing & Management Dashboard, 29 July 2020, blog.hootsuite.com/social-media-advertising-stats/.
- “Messenger at F8 2019: Over 20B Messages Exchanged between People and Businesses per Month.” Facebook for Developers, developers.facebook.com/blog/post/v2/2019/04/30/messenger-f8-2019/. “Gartner Survey Finds 70 Percent of AI Projects in Digital Commerce Are Successful.” Gartner, www.gartner.com/en/newsroom/press-releases/2018-09-18-gartner-says-28-percent-of-spending-in-key-IT-segments-will-shift-to-the-cloud-by-20220.
- “Why Messaging Businesses Is the New Normal.” Facebook IQ, www.facebook.com/business/news/insights/why-messaging-businesses-is-the-new-normal.