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Social Commerce: Toward a New Direction of Online Sales

By Kenneth Campbell - L'Oreal Mexico
President and CEO

STORY INLINE POST

Thu, 04/27/2023 - 14:00

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Nowadays, digitalization permeates in different areas of our lives, allowing brands to develop new forms of interaction and consumer insight. One of the pandemic’s effects was digital acceleration, since the first 12 months of lockdown represented a five-year breakthrough in the country’s digital transformation.

Thanks to this process, there was a reinvention in the shopping experience, channels diversified and e-commerce increased exponentially, allowing industries to maintain an active selling option. As a result, brands had to innovate to stay current in the market and consumers’ minds since they also changed their purchasing habits. In addition, technology implementation, such as artificial intelligence, virtual reality, the cloud, and other tools in our sales strategy, allowed us to change the paradigm in acquiring products.

Despite the creation of new online shopping platforms and spaces in the beauty industry, there is still a significant number of consumers who prefer offline sales. Nonetheless, in L’Oréal’s case, at a global level, close to 30% of the group’s sales are made through the internet; specifically, in Mexico, online sales increased more than 11 times between 2019 and 2022.

These results were achieved due to the different channels that allow us to reach consumers. We sell products through partners dedicated entirely to e-commerce, retailers, and our direct e-commerce sites. At this point, it is relevant to have business partners that help meet the needs of consumers so that they can have our products whenever and wherever they want. 

After a couple of years of growth and success in e-commerce, it is necessary to continue innovating and developing new ways to reach the public because they are continually becoming more demanding, informed, and selective with the brands they consume. When the e-commerce boom started, consumers  wanted to save time and money, avoid crowds and take advantage of promotions. 

E-commerce is a platform that facilitates information spaces and purchases on digital platforms. Promoting this channel to reach new targets, some of which we never imagined we could reach, achieves the goal of allowing thousands of people to have access to products that are not easy to obtain due to location. 

Now, companies face a new sales scenario that combines the influences of social platforms, knowledge, and technology. This is social commerce, which makes it possible for people to monetize their digital reach and specialized knowledge about a product or service. As a result, everyone can contact a potential buyer by sharing their recommendations from an application or any social network, directing them to the purchase platform, and earning a commission on the value of the purchase.

This new way of conducting commerce contributes to the preference and image of the brands since, based on consumer recommendations, trust and credibility in the products are motivated by their opinion. Likewise, companies integrate into the communities created in the market. Social commerce is a new way of selling, and also allows us to  learn more about the reach and the results that represent brands and consumers. 

Mexico is the fifth-leading country in the world in the use of social channels, such as TikTok and Facebook. These kinds of platforms have become tools for use in daily life. That’s why companies are investing more in social media and to improve influencer marketing. This allows brands to take advantage of these channels as it is known that all actions that represent an extra service (such as reviews and recommendations on social platforms) can help consumers to make better decisions and increase conversion between 20 and 25%. 

Brands are also  increasingly investing in digital; thus, it is possible to have an even more personalized dialogue with consumers, which represents an opportunity to develop custom-made solutions. To illustrate this change from the digital boom, I would like to share some numbers from the beauty industry. In 2019, the sector’s online market penetration was almost 1%. Today, it makes up more than 10% of the Mexican beauty market, and it is a trend that will continue growing. I know that other markets have even bigger numbers , such as China, which has seen that market grow to 60%.

Furthermore, online channels are enjoying great results due to the beneficial characteristics of both brands and consumers. Yet, it is important to note that physical stores are also reemerging in the purchasing experience; as everybody is returning to their quotidian routine, at home and work, these places have reinforced their relevance among clients. The strategy has to focus on a mix of online and offline, catering to both worlds. It is common to see people look for a new product on their cellphones, searching for reviews, and, subsequently, to go to a store to buy it. 

Online sales will continue growing and companies will still work jointly with e-commerce and retail players to increase sales volumes; however, this is a good time to try new ways of approaching consumers. Social commerce represents an opportunity to capitalize the reach of social channels and brand experience in a digital world.

Photo by:   Kenneth Campbell

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