Social commerce: A potential fool’s gold for retailers?


This article is brought to you by Retail Technology Review: Social commerce: A potential fool’s gold for retailers?.

By Nina Müller, Director of The Ethical Commerce Alliance. 
Social commerce could well be seen as a £700bn opportunity for retailers, however, there are serious concerns about the ethical validity and potential data security risks of this growing sales channel.
The majority of Brits say social media is where they feel their data was most at risk. As information about TikTok Shop or Instacart’s data collection practices is hard to find and a plethora of stories discussing the tech companies’ ethical violations continue to emerge, such sentiment is not hard to understand.

With that in mind, retailers need to approach social commerce with caution as consumer backlash towards social media platforms can easily spill onto their own brands. After all, no brand wants to be associated with unconsented location tracking, inadequate user protection, or aggressive data harvesting - something most social media platforms are known for and are desperately trying to shake off. 
That’s not to say social platforms like Instagram, TikTok, and Snapchat should be neglected completely, although Lush took such action with a social blackout. It's rather a case of meeting ethical standards. Consumers expect retail brands to respect their digital rights above their own needs and this must be taken into account before taking the social commerce plunge.

The ethics of social media 

Outside of significant data privacy scandals, social media platforms have also spurred the rise of misinformation, harmful content and ‘cancel culture’. Protective measures such as content moderation now exist to limit this but it doesn’t address the problematic dynamics of social media such as addiction, manipulation and impacted mental health. 
When nearly half of children and teenagers aged between 8-17 use TikTok and Instagram, the ethical implications of social media platforms laxed ethical behaviour is dangerous. This becomes even more problematic with the current shift away from ‘friends and family’ content to unconnected algorithm driven material, that platforms like TikTok use.
From a birds eye view, it’s clear this business model doesn’t advocate responsibility, transparency or respect - the exact building blocks needed for ethical commerce. 

Going all in on social commerce is a gamble

Approaching social commerce without considerations around the impact on consumer trust, can make selling on these platforms a slippery slope. The opaque privacy policies, ambiguous data practices and unethical brand behaviour of Big Tech means new channels such as TikTok Shop are nothing short of a black box.

The crux of the issue is control. Retailers operating on social platforms to engage with Gen Z consumers, need to consider that TikTok and Instagram are expanding beyond commerce services and are becoming the digital infrastructure of engagement. What is then lost are important touch points that many retailers rely on.

By engaging with TikTok Shop or Instacart, retailers can actually increase the distance between users and the business. Whilst product discovery becomes more authentic and selling becomes frictionless, the more narrow parts of the funnel are streamlined, creating the potential for an experience which may not align with retailer’s brands. 

Another element lost in the social media black box is ethical practices. Through owned e-commerce channels, retailer’s can dictate which cookies are used, how much data is collected and what happens to such information post-purchase. But with social commerce platforms, retailers become subject to the same ethical standards Meta, TikTok and SnapChat all live up to, which we know isn’t a high bar. 

When less than one-fifth of consumers trust the UK’s leading retailers, the decision to join the social commerce bandwagon seems ever so risky.  

Elevated standards needed for social commerce 

To ensure retailers engage with consumers on social media in a safe and protected way, consumers need to see elevated standards around transparency, inclusion and respect.

Whilst social commerce is seen as a jackpot to many retailers, the ambiguity of the commerce channel and scrutiny of social media platforms' reputations fails to offer retailers the above principles. That said, there are a number of ways social media can be used that allow retailers to increase purchasing decisions but maintain control over important touch points.  

The key to doing so is through a caution-first approach. With the pitfalls and concerns surrounding social media, retailers must consider and respect consumers' digital rights above their own needs. This is especially felt when it comes to data transparency, ownership and inclusion around new commerce channels. That’s not to say retailers need to boycott social media but rather consider the perils of personalisation and concerns around children’s online safety when using platforms that aren’t adequately regulated. 

Of course, with services that offer high levels of convenience, there is a tradeoff. On the one hand, retailers can streamline the consumer journey to create frictionless, instant shopping experiences. But on the other hand, there’s a potential for weakened control over the customer journey, brand misalignment, and a damaged reputation. 

Unless we see improved ethical standards from Big Tech companies, retailers should approach social commerce with caution. By recognising the potential pitfalls of this selling channel, retailers can avoid being put into the same bracket as TikTok, Meta, and Amazon - one that is defined by mistrust and ambiguity. Instead, retailers can tap into social media and other new channels on their own terms, where the onus of ethical standards lies in their hands.

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