UM MENAT's latest study shares the nuts and bolts of social commerce today and how it continues to be a rapidly growing segment of e-commerce.
Nadeem Ibrahim, Head of Digital at UM KSA, discusses the impact of social commerce on today's world, emphasizing its effect on purchasing decisions and its role in the region - specifically Saudi Arabia.
Image above: Nadeem Ibrahim, Head of Digital at UM KSA
Some of the key insights from the study are:
How do you see the role of social commerce shaping the world we live in today in terms of consideration and purchase intent?
This region notably plays a significant role in social commerce. The divergence between Saudi and other GCC regions compared to Europe and North America surprises me, as I expected more alignment in trends between these markets. If I were representing another market, I might deem social commerce as non-existent. Its penetration is not as strong as in Saudi Arabia, where 80% have made social media purchases compared to 45% elsewhere – nearly double the average. Interestingly, this is possibly due to Saudi's youth focus and the evolving market landscape.
Consumers seek innovative e-commerce experiences and platforms like Snapchat and TikTok are aiming to reshape it. Could they evolve into marketplaces like Amazon? It's uncertain, given evolving media consumption and generative AI. The linking of social commerce and AI will shape the virtual brand consumer experience, although the exact outcome is unclear.
Can an in-store experience be replicated through AR technology?
Absolutely, our global study focused on social commerce and encompassed various markets including the US, Canada, Germany, the UK, and Saudi Arabia. This study aimed to comprehend non-traditional purchasing patterns. The findings were strikingly distinct, especially in Saudi Arabia. A remarkable 81% of Saudis wish to explore new products via social media. They seek diverse experiences beyond the norm, including augmented reality encounters.
The digitally-driven economy has become integral in Saudi, particularly among the youth. As they discover brands on social media, their desire for unique purchasing experiences challenges the conventional norms. This shift is intriguingly distinctive for Saudi Arabia, but not an anomaly. Rather, it prompts consideration of how other markets might eventually embrace similar changes. It's clear they're setting a trend.
How can Facebook and Instagram elevate themselves as e-commerce hubs?
META's positioning as a marketplace is clear, similar to platforms like eBay. However, their e-commerce potential often reverts to a classified approach. In our region, Facebook's strength lies in rapid audience reach through Instagram, WhatsApp, and possibly Threads, forming a potent mix. Yet, these elements aren't seamlessly integrated, causing disjointed experiences. Consumer journeys get muddled; purchasing on Facebook leads to WhatsApp outreach, each with distinct identities and experiences. What we found in our study is that consumers want to have a different way of experiencing e-commerce, in social spaces, in augmented reality spaces, that is beyond the traditional way of buying and researching. So Facebook and Instagram should perhaps enhance their approach in a way that is more meaningful for consumers.
Have advertisers abandoned the middle of the marketing funnel? Is it polarized between awareness and conversion?
Agencies like to have a USP with clients so they are different from any other agency. Our philosophy is that the customer journey is not linear. It's a two-way relationship and you have a way that you can capture people's attention and essentially influence them to buy the product. During COVID, nobody was on the streets so a lot of adverts were empathetic to consumers. Brands were committed to winning hearts. Since the impact of COVID subsided, we've gone back to the old ways of advertising. We have forgotten how to show empathy to customers and adapt our advertising to suit their daily needs, or to see what they want here and now.
Now we have a new way of looking at the funnel - which coincides with what Google has been advocating and recently announced at the Google Marketing live event in Riyadh, which was the messy middle. Their point of view is that social is great, because social is a community, whether it's with your inner circle or the outer circle, you're sharing and getting tips. For example, brands can bombard consumers with as many ads as they want. However, if there's a discount ongoing, consumers could buy it right away, or end up dwelling on it for two hours or even two days. But the fact of the matter is that we all end up in this messy middle, whether we’re influenced or stubborn on a decision we've already made. We might even end up seeking advice. 78% of people from our study in Saudi Arabia, seek advice from friends and family before making a purchase. Being present at each funnel stage is essential, and clients must adopt a comprehensive approach to advertising. Generative AI, a topic I'm looking forward to discussing at Communicate's AI Conference, compels advertisers to engage at every stage of the funnel and is achieved by tailoring ads based on context, environment, and behavioral cues to meet the audience's immediate needs.
Do you think reviews have a stronger influence on consumers than ads, especially noting that 78% of consumers value voices helping them make decisions? Are consumers more likely to trust online reviews/voices?
Certainly, I believe so. The market is still developing in terms of affiliate marketing and comparison sites. Despite Saudi's rapid growth and diverse communication practices, it's a mature market that's adapting platforms for consumer needs. The absence of affiliate marketing and comparison engines is noticeable. In the UK, for instance, PriceRunner helps consumers find the best prices live across the market. I recently saved 30% on a suitcase using such a service. Our region lacks these options, and consumers face limitations in discovering and comparing products. Some brands now offer price guarantees, displaying competitor prices alongside their own to instill confidence in consumers about their purchase decisions.
According to the report, KSA has the highest level of influencers who make or break brands to provide a sense of endorsement as mentioned in the study. How important is it to have influencers with high followings spreading a brand’s message? Do you feel brands heavily rely on influencers to market them?
Without generalizing different age groups, I think the younger you are, the faster you are influenced. That's great for brands. Influencers in Saudi Arabia are here to stay, I don't think it's going to go anywhere. If anything, I think it's going to become more and more effective. What you normally see is that influencer posts have the highest level of interaction. So if I get the opinion of an influencer, I'm 80% more likely to transact very quickly and go buy those products. This was also based on the global study. If an influencer is posting about a pair of shoes that can be bought on social platforms, they're building a more convenient and seamless experience for my purchase, because they've endorsed them. The target audience is likely to adopt their approach or take confidence in what they are and how they're saying it. Influencers are definitely bridging the gap between brands and customers to be able to transact and get the right experiences. A mistake a lot of advertisers make is because they have a target to deliver in a tight deadline, they rely on micro-influencers to do the job. But in the long run, it could probably damage the brand if the brand doesn't have an influencer who's purely talking to their audience from a community perspective.
The e-commerce experience you will have today will be the worst experience you will ever have - meaning it will only progressively get better and better. We have a lot more exciting things coming ahead of us.