Following a year of dramatic growth in the online economy, ‘discovery commerce’ is well on the way to redefining the future of marketing, writes Facebook’s David Harris.
The dramatic impact of the Covid pandemic on our lives is hopefully starting to ease, but in some areas it has accelerated changes that are likely to endure. While the retail industry in Ireland has begun the process of reopening and welcoming customers back to physical stores, the lockdown has powered a broader rise in the adoption of ecommerce.
Through a period of remarkable challenge we witnessed countless businesses taking steps to adapt and innovate online to help their business stay afloat.
They’ve taken advantage of the fact that we’ve been shopping online more – much more. In Ireland ecommerce revenue rocketed 160% in 2020, more than 5 times the growth of previous years. We’ve moved from going shopping to always shopping.
You might think the move online is only among digital natives and millennials, but the pandemic has closed the digital gap between the younger and older generations. Over 80% of Gen X and Boomers (the generations over 41 years of age) are now shopping online. It’s been a mass digital education for everyone, from schoolchildren to grandparents.
We’re also seeing a dramatic change in how shoppers perceive and use the Internet. When we are shopping it’s no longer just the case of using search engines to find the things we knew we wanted at the lowest price. Of course this will continue, but what is also happening is a shift from a utility mindset to a discovery mindset. As shoppers scroll the ideas of their friends and influencers they follow on social media they will now look to buy something that excites or inspires them.
At Facebook we call this ‘Discovery Commerce’, and it’s something we expect to be one of the major digital themes of 2021. The facts bear this out: social media is now the number 1 channel for product discovery among adults globally; after a year of lockdowns during which physical shopping has been largely impossible, 82% of people have told us they now find new products when on one of our platforms.
This has important implications for retailers as it means that their social media strategy is not just about brand building, but also about direct revenue generation. It’s a strategy that collapses the traditional slow and deliberate steps of the purchasing funnel (from awareness and interest through to evaluation and purchase), and allows customers to discover and buy products within seconds.
Retailers who make this as easy and seamless as possible are the ones who will do best, and this in part explains why having launched in May 2020, the Facebook Shops feature – allowing businesses to create an online shop experience on their Facebook or Instagram page – now has over 1m active shops getting over 250m visitors each month.
If you look at some of the big brands, the level of online sales is striking. L’Oreal is doing 30% of its sales online and Nike is at 40%. People are now willing to buy even big-ticket purchases online, with 50% of people saying they’d buy a car online, something that was unthinkable 5 years ago.
But leveraging the benefits of Discovery Commerce is not something that has to be the preserve of huge FMCG brands with dedicated social media marketing teams. It’s also something that Irish SMEs can use to their advantage to help drive the recovery of their business as we emerge from the pandemic.
We all know that there are thousands of small businesses across Ireland who have had an excruciatingly difficult period. Recent research we conducted shows that of the small businesses that stayed open in Ireland during the pandemic 62% experienced lower sales, and 25% reduced employment.
These SMEs are the engine room of the economy, employing over 1m people, and they’ve had a really tough time. The recovery of small and medium sized enterprises was crucial to the recovery of the Irish economy after the financial crash, and with the unemployment rate currently at over 22%, it will play a vital role as we recover.
Online sales were a lifeline during the pandemic that helped keep many of these businesses afloat, and those that pivoted effectively have found ways of engaging customers that will serve them well into the future.
The recently launched Boost with Facebook programme is aimed at providing over 10,000 Irish SMEs with the skills to compete in this rapidly changing digital marketplace: to ensure that their online presence provides an effective channel for customers to make purchases with ease, and take advantage of the Discovery Commerce trend.
And even for businesses that have been slow to adapt thus far, it’s not too late to start. If anything, we are still in the very infancy of what can be achieved in ecommerce, and how companies can best market themselves online.
When you look at history, you can see that it takes time for marketers to adapt to new technologies. In the early days, TV ads were just imitations of radio commercials, but it didn’t take long before the TV spot had become one of the most celebrated advertising formats of all time.
When it comes to online marketing for small businesses, we believe that this journey is just 1% finished. The scope for creative new approaches is almost limitless. Irish SMEs who focus on continuous customer engagement and ensuring the simplicity of their online sales process will be well placed to thrive.
David Harris, is director of global business at Facebook