Returns Reduction

Does Social Selling Lead to Increased Impulse Purchases and More Returns For Retailers?

Social media is changing the way people shop while also providing retailers with a means to recoup lost brick-and-mortar sales. With the rise of e-commerce (and its amplification by the COVID-19 pandemic), businesses need to be creative in offering a similar “high touch” customer experience, where consumers can see the product in action. Social media selling provides businesses and customers with a platform to both showcase and purchase products. 

Selling to the Next Generation of Shoppers

GfK’s study on selling on social media has found that overall, US consumers who have shopped online by using the “buy” button on social media, has increased 13% over 2019, while those clicking on a shoppable post or story on a social media platform is up 18% from 2019. This increase is even more pronounced when looking at shopping habits by age group. In the United States, 15–22-year-olds are much more likely to shop online, with these percentages doubling: 37% of people in this age group use the “buy” button and 30% click on a shoppable post. Gen Z are the future shoppers, and they are much more likely to shop through social media. As a whole, social commerce sales in the United States was estimated to be $22 billion in 2019. As social media selling continues to increase, social commerce is projected to reach $84.2 billion in 2024, which will account for approximately 7.8% of US retail e-com.

How Social Platforms Are Catching Up to Consumers

It is not only shoppers who are changing, but social media platforms are constantly evolving  to make it easier for consumers and brands. Recently, Instagram updated its app so users can discover shoppable products straight from the main navigation menu. Every month, 130 million people tap on an Instagram shopping post and Instagram Checkout is now available for all businesses and creators in the US. This is another pathway for businesses to display their products and drive more sales. Even more, Instagram recently announced their global rollout of Instagram Shopping across IGTV and will start testing shopping on Instagram Reels. The customer journey used to involve several steps: consumers finding out about a product, seeing multiple TV ads, going shopping before finally buying the product. This journey has now been shortened to minutes. According to a Deloitte report, 29% of social media users are more likely to buy a product on the same day of using social media, as they simply have to see a product and click the link to buy it. 

Walmart is now bringing shoppable fashion to TikTok. On December 18, 2020 at 8pm EST, Walmart hosted an hour-long livestream on TikTok. During this hour, ten TikTok influencers highlighted and showcased their apparel from Walmart. When doing so, a pin appeared on the page where those who tuned into the livestream event were able to shop for that piece of clothing. At the end of the live stream, viewers could go in and view all pieces that were highlighted during the livestream event and then buy from Walmart right from the app. When Newmine tuned into the livestream from 8:00-8:20 PM, there were 15.2K viewers on the livestream. The livestream was hosted by Michael Le, a popular (43 million followers) TikTok creator known for his dancing.

Does Social Selling Increase Impulse Buys and Product Returns?

One note of caution: expect higher return rates. Social selling allows the consumer to both see the product in action and buy from trusted influencers. Influencers have become a key aspect for any brand’s marketing strategy. Compared to celebrity endorsements, influencers build their relationships with their following based on shared interests and sharing a majority of their lives. This causes their followers to feel close to them and thus enables a high level of trust in selling and promoting opportunity.  But social media, and consequently its influencers, are known for editing their images to the point of perfection. This can have serious implications for managing customer expectations for products. 

Furthermore, consumers are prompted to act quickly and easily on their buying impulse through the direct in-app buying experience. Advanced Supply Chain Group conducted a survey in 2019 where they found that 34% of their survey group will make more impulse buys as social media makes it easier for consumers to buy products directly from the platform. And 63% of these impulse shoppers will end up returning their product, accounting for a fifth of all online shoppers.

The Long and Short of Social Selling in the Age of Returns

Online sales are known to drive much higher product return rates, and retailers should be aware of  the impact on their top and bottom lines. Additionally, more consumers are likely to share their negative reviews on social media for others to see, magnifying the need for retailers to reduce their returns by catching problems quickly and taking corrective actions.

Newmine’s Chief Returns Officer® has powerful AI capabilities to do just that. An integral part of Chief Returns Officer, KeepScore™ is an objective success measurement and allows retailers to understand which of their products consumers are keeping, enabling retailers to promote high-KeepScore products on their social media platforms to promote, rather than facing the onslaught of returns from impulse purchases. 

Social selling and Chief Returns Officer® provide the best of both worlds for a retailer: another growing sales channel and a way to ensure better financial performance driven by customers  keeping, and not returning, their products. 

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