"Discovery Commerce" in Social Networks: Products Find Customers

Shopping habits have changed dramatically in the digital age, and the Corona pandemic is accelerating this development. More and more people are now buying products or services online via smartphone, tablet or laptop. According to a study by Adobe Digital Insights, online purchases increased by 32 percent last year alone.

However, it is not only shopping habits that are increasingly changing, but also user behavior. Instead of specifically searching for products, customers are increasingly strolling and browsing online - especially in social networks - and discovering items of interest to them there that they didn't even know they needed or simply wanted to own. With Discovery Commerce, online retailers can take advantage of this behavior: Through targeted discovery, users are made aware of a suitable product or service and encouraged to make a purchase.

How Discovery Commerce works

Unlike e-commerce, where users specifically search for products and services on the Internet, in discovery commerce the products find their way to the people. Shopping by discovery" is originally known from strolling around town, where customers tend to make more impulse purchases, but is now also increasingly migrating to the Internet.

Social networks such as Facebook and Instagram play a central role in this context. 65 percent of Instagram users have already bought a product from the platform at some point, says Kai Herzberger, Group Director Commerce at Facebook. And according to a study by Hootsuite, 52 percent of brands are discovered in the public newsfeed of a social network (as of 2020). Customers who like to spend their time on social media platforms repeatedly discover products or services in the newsfeed that match their own desires and interests.

Someone who is interested in the topic of dog ownership, talks about it in the community, subscribes to corresponding channels and reacts to posts, receives product suggestions for dog leashes, beds or for the BARF nutrition method in the newsfeed. Other customers who see clothing on influencers or other people they follow that matches their own style not only receive information about the price, but can also buy the item of clothing directly in the story or feed post. For online retailers, this presents an opportunity to use discovery commerce to optimize their digital offering and drive new customer acquisition.

Products customers find on social media

In order to use discovery commerce effectively in apps and social media, online retailers must focus on the users or the target group and not on the products in the sense of a customer-first strategy. Instead of displaying an ad with the same images and the same wording to as many people as possible, the aim is to offer a suitable product experience for the respective user at the right time. This means enormous personalization, based primarily on information that users like to share online in social groups and communities.

Machine learning systems provide support here: They grant access to a data basis for understanding which people are most likely to be suitable for one's own products or services. They also ensure that individual advertising with messages, images and videos is played out and displayed automatically. The technical basis is provided by social networks such as Facebook, Instagram and Pinterest, as well as their messengers, which are well attuned to one another and are popular with customers. With them, companies can make individual offers and even anticipate customers' wishes. On Facebook and Instagram, online retailers have the opportunity to highlight products in content and ads, set up their own store, and upload product catalogs where customers can browse and shop.

Discovery Commerce on Facebook

With around three billion active users worldwide, Facebook is the largest social network and offers its own discovery commerce platform that brings together users' demographic and personal data in compliance with data protection laws. The platform is additionally complemented by Instagram, WhatsApp and other messengers.

Online retailers can benefit from the many tools Facebook provides that deliver meaningful data about how customers interact with the company and what is important to them. To do this, Facebook uses machine learning and the application of broad audience strategies. The basic requirement for online retailers is their own Facebook page and an Ads Manager or Business Manager account in order to be able to upload texts and images. In this context, Kai Herzberger recommends that companies give the algorithm as much freedom as possible when targeting and placing ads, as it can react and readjust much more quickly.

For the creative design of the products, there are several tools in Ads Manager and Business Manager that can be used, for example, to make color adjustments. The challenge in discovery commerce is to ensure that the products fit organically into the user's stories, convey authenticity, and avoid reproducing old patterns as much as possible. The goal is not just to sell something to the customer once, but to bind him to the brand in the long term.

Advantages of the new marketing strategy for online retailers

Discovery Commerce offers SMEs the opportunity to better reach and engage with their customers where they like to be and where they regularly spend time. With the right message at the right time, it brings people and brands together and makes the shopping experience much smoother. It combines storytelling and sales in one, with often only a few seconds between the discovery of a product or service (awareness) and the purchase (conversion). In addition, the conversion rate is significantly higher, which Facebook says is 86 percent.

Last but not least, discovery commerce enhances the experience of online shopping and promotes the joy and excitement of discovering a product. An essential factor in this context is personalizability: "Shopping by discovery" benefits from the fact that people are more inclined to shop at brands that offer deals and personalized recommendations, as studies show.

Another plus is the reliable option to analyze the ads over time in the Ads Manager of the social media channels and measure whether the marketing campaigns are actually working successfully or should be adjusted if necessary.

* Peter Potthast is CEO of Löwenstark Online Marketing. The agency develops and manages online marketing campaigns in SEO, SEA, marketplace marketing, affiliate marketing, email marketing and social media for clients in all industries. Potthast has been active in online marketing in the agency and AdTech environment for more than 20 years.