On the hidden costs of social platform innovation in retail. Where, how, and what we buy is constantly changing. A scenario where a consumer relies on their Amazon Alexa to order “the dress that Emma Hill wore on her Instagram post from Wednesday” is just as probable as buying that same dress, directly from Emma Hill’s Instagram account. The tools of the trade evolve, the funnel shortens and widens, commerce becomes linear. There’s no better example of this than on Instagram, where the lines between brand, promotion, and commerce continue to blur.
Instagram’s native cart is part of an industry shift shift towards linear commerce. Chinese superapps, like Little Red Book and WeChat’s Good Product Circle have already turned the Chinese consumer’s collective review power into an integral part of their shopping experience. And, with American platforms’ ad models being under attack from regulators, adding social commerce capability is a hedge that will become increasingly common throughout audience-driven platforms. Stateside, platforms like Verishop include native promotional posts from Instagram and Snapchat influencers throughout the user experience.
No. 314: Law of Linear Commerce
The digital economy rewards the companies that work along the line that separates traditional digital media and traditional eCommerce.A great product needs an organic and impassioned audience. Captive audiences will need products and services tailored to their tastes. Linear commerce is the understanding that digital media and traditional online retail will eventually meet at the center – along the line – the most efficient path for growth. Brands will develop publishing as a core competency and publishers will develop retail operations as a core competency.
Powered by Instagram’s native checkout, social commerce has narrowed the line between promotion and consumption. We are just as influenced by the peers that we follow, than we are by mass marketed influencers, brand models, and marketing campaigns. Linear Commerce on social platforms like Instagram, Snapchat, and Pinterest represent the ultimate merger of consumption and influence. It moves the business of consumerism into creative pursuit, where the brands that are best rewarded are often the most creative. Today, social media has become, both, a driver of economic value and a canvas for artistic expression.
Retail tacticians are quick to celebrate wonders of the convergence between inspiration and the checkout funnel. As performance marketing continues to increase in cost as it’s value flattens, this form of influence-driven sales has emerged as a more cost effective alternative.
A great product needs an organic and impassioned audience. Captive audiences will need products and services tailored to their tastes
Platforms like Instagram have successfully monetized our attention. They are in the process of commercializing our network. This will increase the platforms’ power as gatekeepers, a strategy that we’ve seen before.
Member Brief: A Familiar Strategy
In 2010, the ten most popular brand pages on Facebook looked something like this: Pringles, Converse, Victoria’s Secret, Converse All-Star, Red Bull, Skittles, Disney, Oreo, and Starbucks, and the top brand: Coca-Cola. With over 22 million fans and Facebook’s once-famed organic reach at its peak, brands’ investments into growing their audience was a lucrative practice. Fast-forward nine years and Coca-Cola’s page is now at 107 million. A recent post received just 1,500 likes. That’s right, just .0014% of Coca-Cola’s audience “liked” the post.
Strategically, there will be consequences suffered by brands who rely upon external social platforms to amplify commerce. Curating an independent audience is an involved process with long tail benefits and short-term headaches; marketing executives have long underestimated the value of this approach to community development and marketing. But while we extol the virtues of platform-driven linear commerce, it has an expiration date. The optimal path forward for brands is an independent one.
On Platform-driven Retail concerns:
Products > Brands. Platform-driven linear commerce emphasizes individual moments over brands. Consumers are purchasing a look, not a particular brand. In this way, the brand equity of a product can be secondary to its part within a whole. In this way, the mechanics of social platforms have emerged as product seeders. This product-focused model does little for brand equity. It could also have a detrimental effect on sales in the longer term.
Taste Bubbles. If you read enough reporting on the issue, Instagram has replaced the mall. The difference is that, your typical, suburban mall isn’t partitioned by pre-set preferences. Consumers have little no control over the shoppability of these platforms. Rather, they serve as recommendation bubbles. The dangers of content bubbles have already been copiously documented. Consumers are served content that they already approve of, creating biases that can quickly entrench a person’s concept of quality, availability, or preference. Now imagine a taste bubble, where consumers are served products of which they’ve already shown an interest. Here is a great example of an algo-driven interpretation of an understanding that was previously deemed subjective.
Longer Product Life cycles. If online retail influenced consumers away from physical malls, social platforms discouraged ownership. The total resale market is expected to double in value to $51 billion in the next five years,according to ThredUp. Traditional retail operates on product innovation and seasonality. In what could be another detriment to brands, social platforms may extend product life cycles. The same products can be marketed and remarketed as long as its component of an influential capsule or influencer outfit. Consider retail influence app, Depop. In the “about us” section:
After realizing that Depop needed a selling function, Simon re-envisioned the app as a global marketplace — a mobile space where you can see what your friends and the people you’re inspired by are liking, buying, and selling.
In turn, your friends and creative influencers all over the world can see the things you like, buy, and sell, and are inspired by you. This ecosystem has supported Depop becoming a global conduit of connection, not only in m-commerce, but culture, design, and creative communities around the world.
Shortened zeitgeist cycles combined with extended product life my impact retail operations, production, distribution, and merchandising strategies. These areas of the retail business have had to evolve to respond to real-time ebbs and flows of product preferences and tastes.
The rise and demise of brand dependence on social platforms will mirror media’s former dependence on these same platforms.
Today’s trends are the result of buying decisions made outside of direct influences of brands or advertising. Social platform investments were emphasized by retailers hoping to amplify word of mouth influence. However, retail growth may be stunted by these efforts – in the long term. Products are increasingly character-driven, not brand driven. Look no farther than Lady Gaga’s launch of Haus, covered here by Lightspeed Venture Partners.
The rise and demise of brand dependence on social platforms will mirror media’s former dependence on these same platforms. The only appropriate solution is ownership of the audience; the savviest brands are becoming their own publishers.
The digital economy rewards the companies that operate along the line that separates independent media and independent retail. The line between the two industries is no longer a line of demarcation for brands. That line represents the pulls and influences of both disciplines. It has become the retail strategy for the brands that will endure.
Read the No. 324 curation here.
Report by Web Smith and Ana Andjelic, Ph.D. | About 2PM