Decoding Social Commerce and Web 3
Prototype your way to success.
If social commerce and Web3 have you feeling uncertain, you’re not alone. Many leaders we talk to are either overwhelmed and waiting it out, excited but unsure of how to get started, or moving fast and hoping for the best. All sides make perfect sense. After all, these spaces are new enough to feel unproven and filled with so many possibilities that it can be hard to know which bets to make.
We believe it’s time to look past these hesitations. As Peter Drucker said, “the best way to overcome hesitation is to build your future.” And the best way to build toward a successful future is by balancing your risks with enough opportunities to win.
About 2 billion people, or 64% of all social media users, report making purchases spurred by social content or offers.
Why Now?
We are at a significant inflection point in the digital customer experience evolution, and the transformation is only accelerating. Waiting it out could mean losing ground you won’t be able to re-gain later and potentially being deemed irrelevant by Gen Z consumers.
New Opportunities are exploding in two broad, interconnected categories:
- Social Commerce- Where brands have gone beyond marketing to sell products and services through social media channels
- Web3- Where consumers create, share, and interact in a decentralized online ecosystem that leverages blockchain technologies, including non-fungible tokens (NFTs)
Remember the .com days of the mid-90s? And the rise of e-commerce and user-generated content in the early days of Web2? The promise of social commerce and Web3 is at least as significant for brands nimble enough to reimagine their customer experience. Many are already gaining ground, establishing relevance, and building affinity with new audiences.
Unlocking the Value of the Fastest-Growing Sales Channel
Consumers have made the call. They want to buy products wherever they are, without leaving their platform of choice. This increasingly means selling through social media, where the data shows significant potential. About 2 billion people, or 64% of all social media users, report making purchases spurred by social content or offers. The #TikTokMadeMeBuyIt hashtag demonstrates social media’s power as a product discovery engine, attracting billions of views.
Some brands are uniquely positioned to take advantage of social selling. For example, Stella and Dot equip “ambassadors” – their distributed sales force – with tools to build online jewelry and accessories stores they can connect to their own social networks. Brands with large and varied product catalogs and significant brick-and-mortar infrastructures face bigger hurdles when choosing the most strategic path forward. Many, like Macy’s, Zales, and Bed Bath & Beyond are starting with influencer shops, where personally curated product lists can help turn followers into customers.
Regardless of the strategy and tactics you choose, the trend to include social commerce as part of an overall sales strategy remains strong. Forecasts suggest the use of social commerce will increase by 30% in the next eight years.
Building Awareness and Engagement With New Audiences in New Ways
Web3 represents yet another future-focused opportunity for leading brands, and many are already realizing value by minting NFTs and setting up shop in the metaverse.
The space represents a confluence of technologies built upon the foundation of blockchain. Transactions on the blockchain are visible to everyone, providing a new and transparent way for things of value – like bitcoin or NFTs – to be held securely. While NFTs can feel like a new phenomenon, most of us have already experienced something very similar in the form of digital tickets. Generally, a ticketing organization such as Ticketmaster sells guests access to an event via a QR code, which represents a type of NFT. The digital ticket allows guests access based on the value guaranteed by the digital system behind it – a database that says the ticket is valid and unused. If someone attempts to copy the image and use it a second time, the system will show that it's invalid.
Brands as disparate as Nike, Pizza Hut, Gucci and Coca-Cola have all placed bets on Web3. For example, Gucci is harnessing the power of the metaverse to build affinity and gain relevance among emerging Gen Z customers. Their partnership with Roblox brings them into an immersive virtual world, where customer avatars can interact with the brand and its products as a part of their self-expression.
Navigating Uncharted Territory
While some brands are trying new things, most have not gotten off the blocks. While the reasons are varied, the most common is simply not knowing how or where to start.
Uncertainty is compounded by the fact that most brands simply don’t have the bandwidth or relevant skills to figure it out. Faced with a historically tight (and expensive) labor market, supply chain issues, and macro-economic concerns, leaders are consumed by existing initiatives.
In addition, there’s a perception that this realm may be too niche or only popular among the gamer crowd. This leads to limiting beliefs that social commerce and Web3 may just be a passing fad, making it harder to recognize their increasingly broad acceptance and potential.
As a result, waiting can seem like the safest bet. But choosing analysis over action comes with risks, including missed connection with the rising affluence of younger audiences, the ability to establish yourself and evolve based on early lessons learned, and negative impacts on valuation due to lack of innovation.
On the other side, jumping in and picking poorly brings its own set of risks, from wasted time and funds to poor team morale and retention to appearing tone-deaf and turning off potential customers.
New Mindsets Accelerate Success
Successful social commerce or Web3 initiatives require a fundamental shift in thinking. Although many organizations have become more comfortable talking about failure’s role in innovation, most have yet to walk the talk. Social commerce and Web3 present an opportunity to embrace the concept of failing fast.
We recommend taking lessons from the venture capital world, where there’s a clear understanding and expectation that most ventures fail. They are willing to lose – sometimes up to six out of ten times – because they know that the winners will more than cover any misses along the way.
Some of the most innovative companies also minimize risk by metering funding, establish sunset timelines on projects and ensure financial commitments are commensurate with milestone achievements.
Working with a strategic partner is another way to help lower risk and amplify the speed of success. A fresh, external perspective can help break the innovator’s dilemma, a pattern that holds leaders hostage to their existing, day-to-day business, limiting their ability to make space for new, innovative opportunities.
Moving Forward With Reduced Risk
Here are some practical steps that will help you get started with clarity, evaluate results, and minimize risk.
Establish Guardrails
What are your ambitions for your social commerce and Web3 projects? What will fit with your brand and culture and what won’t? Having clear answers to questions like these will help narrow the field, align your team around shared intent, and reduce questions down the road.
Map Your Innovation Portfolio
Once the rules of engagement are understood and agreed upon, it’s time to ideate. In this stage you’re getting all the options out on the table and building a menu of projects to pursue.
Test and Learn
Rather than jumping to a six-month pilot, start with metered funding. We recommend multiple, small tests you can evaluate as you go. Here's some criteria to consider when designing tests:
- What will it take to validate your assumptions?
- How expensive will testing be and how long will it take?
- How confident will you be in the answers the test returns?
Evaluate Test Results
Compare your test results based on current value, expected future value, timeframe, and potential risk to see which projects come out on top.
The Bottom Line
The retail market has already made the call – social commerce and Web3 are gaining momentum and offering real opportunities for brands that get it right. By all indications and metrics, these spaces will define the digital customer experience of the future. It’s time to get started, find the right partners to support your journey, and place a series of small bets that will stack the odds in your favor down the road.
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