Community commerce – A rising star business cant afford to leave out

This kind of commerce started to take off in early 2020 with the boom of community-building job titles but earned greater recognition after TikTok announced their report and new insights into ‘Community Commerce’ and “How Social Platforms Influence Purchase Decisions” in a joint effort with WARC and Publicis Groupe. According to the report, community commerce will be central to its marketing appeal and should be the same for anyone who’s attempting to make a name in the eCommerce industry. 

What does this mean for merchants and how do you leverage this new kid on the block? Read on to find out!

What is community commerce?

Community commerce is a form of commerce that generally happens on social media and “specifically speaks to the notion of entertaining, compelling content that just happens to feature brands”, according to WARC. TikTok further describes it as “It is creator-driven, word-of-mouth marketing that has taken over the TikTok platform and injects a new opportunity into content creation on social media that is more authentic to its environment.”

Amid the pandemic when customers couldn’t go outside to buy daily necessities and food, major marketplaces like Amazon were a huge disappointment to them since they couldn’t deliver on time due to stock shortages, or unknowns from third-party sellers. Meanwhile, smaller shops and channels with personal interaction thrived. 

There’s a heap of interesting and valuable insight here, definitely worth a look for those looking to get a better understanding of the social commerce shift. 

Why community commerce?

While eCommerce revolves around direct selling to buyers through digital traction and social commerce revolves around convenience and entertainment, community commerce focuses on the people. It aims at building connections and trust among members of its community. 

Some 70% of customers on a survey conducted by GlobalWebIndex said that they have been driven to purchase on social media even though they didn’t look for anything specific to buy in the first place. What triggers them to make a purchase? 

That’s the baseline for WARC, in partnership with TikTok and Publicis Groupe, to conclude that community commerce has “huge potential for brands to engage with audiences and increase unplanned purchases by narrowing the funnel between product discovery and purchase.”

According to numbers from Bain & Co. reported by Bloomberg, social commerce already makes up significant amounts of eCommerce gross merchandise volumes in several countries in Asia. This rise can be explained by the widespread mobile internet penetration and the mobile-first browsing habits of Asian customers. Moreover, strong communities are part of everyday life for many people in Asia, paving the way for the psychological reason behind this boom: Asians in general, love to be in a community. They find strong relationships a very important part of their life, as Asians tend to use networks for socializing as well as transacting.

Thriving social media channels have inspired many different types of social commerce such as live streaming and social marketplaces. In 2022, at the peak of the TikTok boom, we saw the undeniable force of community commerce – a long-time player now taking the lead in eCommerce all around the world.

And this sense of communal belonging affects the way they buy, leading to the popularity of community commerce.

The perks of community commerce

User-generated content for light, easy-to-remake content

TikTok, the hub of community commerce, is a prime example of how a community can build trust around a specific product. One of its very famous hashtags #TikTokMadeMeBuyIt has over 5 billion views and has been responsible for huge crazes for many products all around the world. In fact, 49% of TikTok users have confessed that they have purchased a product after seeing it reviewed, promoted or advertised on the app, according to a 2021 Adweek survey on consumer behavior.

TikTok has built a community where customers can freely create their own content related to the product that they’ve purchased and get their opinion heard and valued by their peers. For brands, especially consumer packaged goods brands, customers need to be active in creating and inspiring others to get creative in how they use the product and how it affects their life (in good ways, of course).

Some of the winners in this community commerce club are cosmetic companies such as Fenty Beauty and Bobbi Brown, and some fast fashion giants such as Zara, Shein and H&M. Are these brands behind the hype, or are these successes totally organic? It’s hard to say, but one thing that’s for sure is that customers are into interesting, short and bright videos that they can easily enjoy or even re-make. What companies can do is simply amplify them by sharing those videos on their official page to encourage these waves.

Put “trust” in the eCommerce equation

The boom of eCommerce has paved the way for customers to enjoy online shopping, but at the same time created a cut-throat market for merchants. More than ever, people are facing so many choices of brands for a single product. As a result, they turn to friends, family, influencers or the communities they trust for inspiration and recommendations. This phase, once called “the dark funnel” (the part of the buyer journey that brands find it hard to intervene in), is gradually seeing the light thanks to digital communities.

While trust is paramount for making money-related decisions, research shows that creators will continue to play a critical role in the shopping experience: over half of the consumers get ideas on which product to buy from celebrities and creators, and 45% of online shoppers globally say they want to buy products promoted by creators directly on social media. It’s not surprising to see brands investing in building loyal online communities.

A new way of collaborating with influencers 

According to the report, community commerce will be central to its marketing appeal and should be the same for anyone who’s attempting to make a name in the eCommerce industry. 

The social media giant TikTok has already introduced new tools and experiences like Live Shopping for Creators to help support this behavior, followed by a similar movement from its competitors Instagram. As creators’ influence continues to grow, we can expect to see continued industry-wide investment in bridging communities and commerce and increased prominence of monetization programs, such as affiliate marketing.

Open up new revenue channels

It is no doubt that customer experience is a top priority for 2022 and community commerce can be a perfect strategy to leverage this trend. It can offer an opportunity to satisfy both revenue and customer satisfaction goals with an established community.

Anyone can sell on social media and build a business there. This new form of commerce has posed a threat to big players as it creates more avenues for individuals and small businesses to reach millions of customers, and while it’s a new revenue channel, big brands and giant retailers need to be aware of community commerce to adapt and thrive.

For brands and retailers looking to begin this journey, there are several elements to consider when evaluating whether a community commerce strategy is the right move and how to get started. The very first step is evaluating your community and the role that your products play within it. 

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