Understanding the SMB sales landscape

Take SMB growth to new heights

August 20, 2022 7-MINUTE READ

Overview
Don't Tell Me, Show Me
Tell Me All About Yourself
Take SMB Growth to New Heights
The Power to Influence
Winning in a Small (and Medium-sized) World
Say Hi to the New SMBs on the Block

Overview
Don't Tell Me, Show Me
Tell Me All About Yourself
Take SMB Growth to New Heights
The Power to Influence
- Winning in a Small (and Medium-sized) World
- Say Hi to the New SMBs on the Block

In brief

SMBs have a unique advantage to capitalize on social commerce.
There are three critical areas for platforms to empower SMBs to embrace social commerce.
Consumer trust and experience remain critical for social commerce success.

When sunglasses business Dezi started using Instagram’s ‘Product Launches’ feature to tag and build awareness around its sunglasses that will become available for purchase in the future, they sold nearly 3,000 pairs of sunglasses in just 48 hours.

Inspired by influencers scrolling through Instagram, customers were able to purchase the glasses without having to leave the app, making it a serendipitous social shopping experience. These buyers were almost entirely new customers to the business: 94% hadn’t purchased through Dezi’s Instagram Shop in the past two years.

This is just one example that illustrates the potential that social commerce can unleash for SMBs. Social commerce is set to be a $1.2 trillion global market by 2025 because it provides an opportunity to integrate the entire shopper journey seamlessly into consumers’ lives – from discovery and payment through to post-purchase service.

What does this mean for the small and medium-sized business (SMBs), that account for about 70% of global GDP? In the consumer goods & services (CG&S) industry, nimble, digitally native SMBs are challenging the dominance of large incumbents: small CG&S companies captured 73% of industry growth between 2010 and 20191. Now, platform-enabled social commerce could be even more transformational for SMBs.

There is more to this opportunity than simply unprecedented reach. When done right, social commerce creates a unique environment and relationship with consumers that fosters trust and generates excitement to buy from SMBs.

54%

54% of consumers are more likely to purchase from an SMB through social commerce than through traditional ecommerce².

New growth for platforms

Dezi sunglasses is a great example of the opportunity social commerce presents to SMBs, but it’s far from mainstream today. Platform support for SMBs across the entire social commerce value chain will make the crucial difference.

The platforms that empower SMBs will not only help those businesses thrive, but they’ll also access new sources of revenue to offset slowing growth in digital advertising. More importantly, SMB social commerce allows platforms to engage users in a new way through a marketplace, at a time when getting and holding their attention is becoming increasingly challenging. To take advantage, platforms need to rethink where they focus, what they offer and how they truly partner with SMBs to maximize the potential of this segment.

Opening SMBs’ and consumers’ eyes to a world of new possibility

Our research shows SMBs expect the share of revenue they generate from on-platform sales to remain relatively flat over the next 3-5 years. Rather, they’re still focused on traditional e-commerce, with almost 42% viewing their own sites as the most important channel for driving revenue2. This suggests that most SMBs currently don’t see the value in the full end-to-end approach to social commerce, or at least don’t know how to realize it.

SMBs also question the credibility of social platforms as shopping channels. In fact, 44% of SMBs agree that trust is the biggest barrier to adopting social commerce2. Fortunately, stories like Dezi’s can help platforms illustrate the value of social commerce and address these questions of credibility head-on.

Top barriers to social commerce adoption by SMBs

Percent of SMBs who ranked factor as the 1st, 2nd, or 3rd largest barrier to adopting social commerce:

Platforms also need to build credibility with end users to convert them into shoppers. In a previous essay, we revealed that trust is a key barrier to consumer adoption, particularly for higher value transactions. The top fear for half of all consumers is that their social commerce purchases won’t be protected or refunded. A trustworthy end-to-end experience – one that meets or exceeds the standards set by e-commerce – is critical to converting new social shoppers and making others feel comfortable spending more in any one transaction. Addressing these concerns is table-stakes. Platforms and SMBs need to work together to provide the security and support consumers expect throughout the end-to-end journey.

Platforms also need to provide the innovative commerce features that will help consumers discover new products, make decisions, drive sales, and keep them coming back. Our research found that differentiated social commerce features – like livestreaming and Q&As – are the most powerful sales engines.

"By allowing the viewer to shop directly from YouTube, it makes shopping seamless and easy. I predict that this will heavily impact my conversion rate which will help people give my products and my brand a chance to become part of their everyday life!"

— CASSEY HO, Creator & Shopify Merchant – Blogilates

Change mindsets…unlock the social commerce opportunity

The benefits of converting consumers to social commerce are multiplied for SMBs. Compared to shoppers who’ve never made a social commerce purchase, those who have recently made one are 1.4 X more likely to buy from the same seller or influencer again, and twice as likely to buy a brand they’ve never heard of before.

Unfortunately, the support and innovation needed to enable SMBs to seize the opportunity have been lacking up to now.

"While there has been significant investment in the digital creator economy, there has been little in the way of support for the creators of brands who are building exceptional physical product."

— IMRAN KHAN, Verishop CEO

It’s up to platforms to make the bold and decisive moves to overcome consumer and SMB reticence about social commerce and empower SMBs to turbocharge their growth.

There are three actions that platforms need to take to start on the journey to realizing the shared value of social commerce.

1 | Identify where to play in the social commerce value chain

Critically, platforms need to determine where to build capabilities themselves and where to partner along the value chain to deliver superior social commerce experiences for consumers and SMBs alike.

Take fulfillment and returns, for example. Consumers tell us that these are critical to building trust when purchasing through social commerce. But few platforms or SMBs can meet this need at scale. To address it, platforms must decide whether they will build the capability themselves or partner with others. Amazon includes fulfilment and returns as part of its SMB offering, while Shopify decided to partner with Loop.

Platforms must also work out how to provide other services that SMBs need. Amazon Business Prime members, for example, can access offers and benefits from third parties approved by Amazon to help fill operational gaps like HR, payroll and security.

2 | Build SMB advocacy from the ground up

Platforms need to invest in educating SMBs on the potential value of social commerce to their businesses and not only showing them how to get there, but actually providing the tools, integrations and support that enable them to do so. Importantly, a key part of this education includes addressing concerns around credibility and trust head-on, dispelling any myths and demonstrating how they are tackling these problems.

TikTok created a 6-week course called Follow Me, aimed at SMBs to help them use the platform to drive real-world results. It includes best practices, how to set up an account and use features such as Ad Manager and Promotion to improve performance.

As well as fixing operational pain-points like account setups and management, platforms should focus on real differentiators that empower SMBs get the most out of their social commerce endeavors. This means combining tactical support with more visionary cross-functional offerings.

Platforms are releasing these types of innovative tools that enable SMB growth across functions. For example, partner integrations from Meta enable SMBs to download lead information directly into their own CRM systems. Verishop is rolling out a data program that gives brands detailed product performance analysis to empower them with the information needed to make decisions that will improve their sales. And Snap offers SMBs a website where sellers can see live trends with frequently updated reports.

If platforms walk lockstep with SMBs throughout the social commerce learning curve and develop the tools to empower them, they can turn SMBs from customers into true advocates.

3 | Develop a consumer experience that instills confidence

Platforms also need to build out the experiences and features that engender trust with consumers and build confidence in their decisions to purchase from SMBs.

As a previous essay uncovered, much of the trust deficit can be addressed by focusing on the execution of ‘brilliant basics’. That means covering the bases of purchase protection and refunds, secure payments and reliable fulfillment.

However, there is more to be done to build consumer confidence: 33% of shoppers rank a lack of trust in sellers and their product quality and authenticity and 31% rank a lack of adequate information to make a purchase decision among their top 3 concerns with social commerce2.

Social commerce inputs like influencer and peer recommendations, robust reviews from other users, livestreaming, and augmented reality (AR) tools are uniquely positioned to address these concerns and aid consumers in the decision-making process. Pinterest found that beauty Pins with AR ‘Try On’ enabled have five times higher purchase propensity than those that don’t.

If platforms cover the basics of trust and get these innovative features right, consumers will trust SMBs through social commerce even more than other channels and truly unleash its power.

It is time to ignite SMB growth

The potential rewards for empowering SMBs to fully realize the social commerce opportunity are tremendous and warrant doubling down on innovation, investment and focus on social commerce within the company. It is time for platform companies to lock arms with SMBs and invest big to delight social media users with engaging new shopping experiences and ignite this new market dynamic.

Sources

¹ Euromonitor, AGA PPI Forecasts, GlobalData, Accenture Research analysis

²Accenture Research