Navigating the rise of digital commerce: Imperatives and impediments for marketing teams

Digital commerce

Companies and consumers are entering an era that prioritizes digital channels above all else. Kiosks are the new waiters; mobile apps the new foyer; messaging conversations the newest form of checkout.

During the global pandemic, businesses saw digital channels generate profit like never before — Instagram, TikTok, and other social media channels double down on commerce offerings.

This future is full of new opportunities, but it also comes with uncertainties.

Are these changes here to stay? Will the trend continue to be that consumers shop digitally? Will there be a revitalized demand for personalized, authentic human connections and experiences?

We asked these questions and more in a survey of over 1,300 consumers and marketing leaders around the globe. Through this research, we identified key consumer trends that impact how marketers allocate their budgets moving forward in a post-pandemic world. This research highlights the importance of the human connection in marketing strategies and gives marketers insight into hybrid, digital, and human strategies to future-proof marketing investments.

A quick peek at some of the findings:

  • 67% of consumers believe the best shopping experiences in the future will incorporate both human and digital channels

  • 57% of consumers want the option to talk to someone before buying a product or service

  • 59% of consumers (on average) who’ve engaged with brands through digital channels (such as social media, chat, or online communities) have considered or purchased a product because of an ad or content they saw on social media

The purchase journey is hybrid and becoming increasingly so

According to Bloomreach, 9% of marketers experienced digital growth year-over-year before the global pandemic. Comparatively, 83% of these same marketers experienced double-digit growth in digital post-COVID-19 because they had to pivot to serve consumer needs better.

Yet, across five select product and service categories — apparel, technology, health & beauty wellness, restaurants/quick service restaurants (QSR), and travel & hospitality — Khoros’s research shows consumers are more likely to engage in hybrid activities during the purchase process compared to taking a solely in-store or solely digital approach. Despite consumers’ increased reliance on digital channels, COVID-19 had little impact on their preference for purchasing in-person vs. online.

The hybrid purchase journey isn’t exactly new. Shopping habits are becoming more hybrid than before. In the survey, 67% of consumers believe the best shopping experiences incorporate both human and digital channels. As more phases of the purchase journey become integrated online (e.g., web chat deployed on more product detail pages), it will be easier for consumers to take a hybrid approach.

One thing’s for sure, the value of human connection throughout the purchase journey shouldn’t be overlooked. Our research proves it — 57% of consumers want the option to talk to someone before buying a product or service. After 18 months of quarantining and social distancing, consumers look forward to human interaction. But that doesn’t mean they will ignore the convenience of ecommerce. As purchase journeys become increasingly hybrid, we see consumers tend to rely on digital channels during the discovery and consideration phases and on in-person interactions during the purchase phase.

The question now is: Will this hybrid approach last forever? Or will consumers’ growing appetite for digital eventually tip the scales and make human interaction less of a need?

The future of commerce is here

We conducted an a-priori segmentation analysis with the results from its consumer survey. The results help marketers understand what their strategies should look like one, five, or ten years down the road. We also identified a subset of the general population (“GenPop”) who might help us understand the future of commerce.

We also identified a subset of consumers already engaging with brands through communication channels such as social media, chat, and branded communities. Much like the GenPop audience, this segment relies on both in-person and digital engagements throughout their purchase journeys today. Still, they are significantly more likely than GenPop to prefer digital-only methods for purchasing products and services six months from now (which includes the consideration, purchase, and postpurchase phases of the purchase journey).

More importantly, this digital-forward segment is the future consumer.

Compared to GenPop, this segment is significantly more likely to be Millennials employed full-time and living in urban environments with children. In other words, they are young, busy professionals comfortable harnessing technology as they look for ways to optimize a busy lifestyle.

The digital-forward segment expects a simpler, more convenient, and more personalized purchase journey, and the digital strategies marketers dialed up during the pandemic got them closer to that journey. Furthermore, this segment’s age group suggests that the need for simpler, more convenient, and personalized shopping experiences will only grow over time.

Pyschographically, this segment is also significantly more comfortable shopping online for almost all product categories than GenPop. They’re more likely to turn to online shopping because it gives them more options than stores. They are also more likely than GenPop to have recently purchased a product or service because of an ad or content they saw on social media. They’re willing to share their personal data for an improved shopping experience — something rare among the older generations of GenPop.

However, the digital-forward segment is not looking for a purely digital, robotic-like experience. The common thread seen throughout the dataset is that even this segment needs the convenience of digital alongside a human connection to have the personalized shopping experience they desire. Simply interacting with a mobile app or a chatbot isn’t enough. Marketers need to tap into the human experience when engaging with this segment.

The recent launch of Pinterest TV is a great example. The project, “akin to a Pinterest version of the QVC,” lets consumers shop while watching live-streamed shows hosted by various social influencers and celebrities. The show’s hosts use tags (“Product Pins”) to tie products to their shows, enabling viewers to redirect to a product page when they “see something they love on one of the shows.”

GenPop is more concerned about data privacy and security today, regardless of whether or not sharing their data leads to a more personalized experience. Only 39% trust major tech brands like Facebook, Google, and Amazon with their personal data, and 28% prefer not to share their data when making or researching a purchase. GenPop feels safer sharing their personal data in person, on websites, or via email versus digital channels such as chatbots, web chat, or mobile messaging. Thus, it will be important for marketers to build trust and create connections in digital commerce if brands hope to get GenPop to fully embrace these channels.

In recent decades, literature warned of the danger of the lack of human connection because of technology. Gary Shteyngart’s “Super Sad True Love Story”, where technology — specifically social media — dehumanizes the human condition, is an example that comes to mind. But the actual behaviors of consumers and the preferences they shared with us tell a more nuanced story. Marketers must balance the demands for convenience and speed that digital offers with the perceived risk of losing human connection while leaning into the security and privacy guardrails of the messaging or chat solutions they choose. A powerful strategy to alleviate this perception is conversational commerce.

Preserving human connection with evolving digital strategy

Conversational commerce is where brands and consumers engage with human representatives and AI assistants to ask questions, get support, and even make purchases. Outbound messaging & notifications, click-to-message entry points on ads, and in-channel customer authentication are examples of how conversational commerce can provide consumers with personalized interactions above and beyond what they’re accustomed to today.

While conversational commerce involves messaging with brands with the sole intent of purchasing, it’s not necessarily the same as social commerce. Conversational commerce refers to purchases made through a 1:1 interaction via a web app alongside a personalized conversation (e.g., you customize and purchase a pair of Nikes via WeChat). Social commerce refers to purchases made via a “one-click buy” model within a social media platform (e.g., you see a pair of Nikes you like as you’re scrolling through your Facebook feed, you click “Buy Now,” and your purchase is complete).

When used in digital strategies, conversational commerce can help brands create personalized, human connections with consumers that mirror in-person interactions — but still add novel experiences, convenience, and automation that’s impossible in the physical world.

The tech giants shaping the future of commerce are investing in ways marketers are missing. These “Digital Giants” — Google, Apple, and Meta — are increasingly using conversational commerce today to satisfy their customers' growing and evolving needs. Moreover, they’re also paving the way for other companies to do the same by building the infrastructure, tools, and experiences that advance the technology overall (e.g., easy consumer-to-brand messaging, easy social commerce integrations and payment, etc.).

Yet, Khoros’ research revealed that too few marketers — only 12% — consider conversational commerce a very high priority in their commerce strategies today.

Now is the moment for marketers to pivot from reactive to proactive. Most marketing executives believe their organization successfully responded to the market’s needs throughout COVID-19. Most consider themselves “ahead of the curve” in engaging with customers via digital channels. The pandemic has shown marketers can’t remain passive — reacting to a changing world — they must evolve proactive strategies that predict consumer needs and deliver the human connection they crave. This is what conversational commerce offers.

To that end, marketers must continue prioritizing their social commerce strategies and ramp up investment in conversational commerce. Social commerce is the stepping stone to engaging with consumers in a way that invites two-way communication between brands and customers. Consumers’ heavy reliance on social media will not dissipate anytime soon. Moreover, since companies are investing in social media today, marketers already have the tools to extend these channels' reach into conversational commerce. Not doing so would be a missed opportunity that could cost millions.

Statista estimated social commerce sales in the US to be at nearly $27 billion in 2020. And, as social media’s influence continues to increase, US social commerce is projected to reach $79.6 billion in 2025 and account for 5.2% of US retail ecommerce sales.

Based on the results from the marketer survey, Facebook (52%), YouTube (52%), and Instagram (51%) will be the three most important channels included in a marketer’s social commerce strategy within the next two years, followed by TikTok (42%). Investment in these channels will likely increase beyond the estimates, given the constant influx of branded content and live-streaming shopping experiences available via social media.

Strategies to help marketing teams avoid blind spots

The years of the pandemic created many challenges for marketing leaders. With this in mind, below are some marketing strategies, considerations, and digital channels marketing teams should prioritize to be proactive rather than reactive in light of the future of commerce.

The extreme competition allows you to adapt, stay in demand, and remain relevant. These approaches will help you hone the hybrid experience — the vital element of the human connection — and the digitally-focused consumers shaping marketing’s future.

1. Get to know your customers deeper to design the right approach.

    Data analytics tools help you gain deep, valuable insights into what your customers say about your brand and products. You can even use these findings to determine consumer commerce preferences. For example, Khoros’s recent Smart Social Report aimed to determine the commerce patterns of Gen Z and found that they prefer to pay in installments rather than all at once. Software of this kind can answer many questions:

    • Are commerce messages hidden in plain sight?

    • How do consumers prefer to interact with your brand?

    • Further, they let you listen for clues: What are your customers saying about how they want you to sell to them?

    Implementing these systems opens up a proverbial treasure trove that allows brands the opportunity to non-invasively mine a wealth of knowledge benefitting everything from designing new product discovery methods to conversational commerce workflows.

    2. Make it easier than ever to chat and shop.

      Consumers will increasingly yearn for hyper-personalized experiences. Social discovery, omnichannel campaign strategies, and the ability to customize your purchase all weave into in-person and digital options. Brands like Google and Meta are already delivering on these expectations.

      Bots enable automated innovation and provide sticky experiences that create “eureka” moments with new standards low in effort but seamless and rich. Furthermore, this supercharges human agents by adding the flexibility of slotting them in when customers need more nuanced assistance. Overall, investing in these pathways makes it easier to chat and shop than ever while enabling an added boost of strategic agility.

      These communication channels positively impact customer experience (CX) metrics and higher-revenue returns, such as NPS & CSAT scores.

      3. Tap into the human element through purpose-driven marketing

        The tumultuous past two years proved audiences increasingly expect brands to be active stakeholders in social justice issues, crisis moments, and even in the political arena — this is commonly referred to as Purpose Driven Marketing. Brands’ products and advertising communicate their values and mission, but they risk customer attrition if they don’t align with their consumers’ values. Marketing teams need to ensure their marketing messages highlight their humanity.

        A shining example of this is H-E-B grocery. As a company that prides itself on “thinking like the customer, not about the customer,” they were put to the test as Texans went for days without electricity, food, and water during an almost week-long winter storm in 2021. From gifting necessities to consumers free of charge to handing out flowers to those waiting in line to shop, their generosity earned them copious amounts of online attention and a viral tweet of support by Brené Brown.

        A purpose-driven approach doesn’t stop there. Its messaging can be weaved into commerce channels to help personalize and communicate important messages and initiatives to consumers in organic, novel, and non-intrusive ways.

        4. Private communication channels are the future: Don’t neglect conversational commerce avenues

          Conversational commerce on messaging surfaces will continue to evolve. From web chat on your site to third-party channels like Facebook Messenger, Instagram Messenger, Google’s Business Messages, Apple Messages for Business, WhatsApp, and more, these surfaces boast unique entry points designed to capture the attention of your customers.

          If you’re using these channels today as only a way to respond to customer service inquiries, you’re missing the buying signals and cues your customers are already giving you.

          Ads, search, and critical brand-owned sales entry points are designed to drive commerce awareness, decision-making, and purchase. Imagine an ad designed to sell a particular product. What kind of automated or human workflow might you create around that specific objective? Like us, partners work with brands daily to bring these kinds of workflows to life.

          Research methodology

          Khoros commissioned Illuminas, an independent market research consultancy focused on generating insights for the tech industry, to conduct a two-pronged research study to assess consumer behavior and marketing strategies in a post-pandemic world.

          One thousand two hundred consumers in the US and EMEA (UK, France, and Germany) completed a 20-minute online survey, which was localized and translated into local languages outside the US. The consumer sample was sourced from third-party online panels and represented a natural mix of demographics across critical variables such as age, gender, and ethnicity.

          One hundred four marketers in the US completed a 10-minute online survey, and the sample was sourced from the Ad Age subscriber base. The sample comprises marketing professionals in leadership positions, but a small subset of them self-described themselves as marketing managers (14%) or individual contributors (2%).

          Khoros was not revealed as the research sponsor, and the data collection periods took place between August and September 2021.

          Let’s tackle the future together

          We can help prepare your company’s marketing strategy for the future and set your brand up for success. We want to ensure that marketing leaders check their blind spots, regear their marketing strategies, and prepare to connect with customers like never before.

          Get in touch to find out more about how our offerings can help ensure the human element isn’t lost through digital channels or how you can integrate conversational commerce into your stack.