As you know, there’s also a negative impact of social commerce on companies. So, if you’re also asking why brands should be careful with social commerce, then you’re in for a treat. So, set aside all the good things about social commerce, let’s look at the negative impact of social commerce.
Sellers Don’t Control Customers
Every story has two sides. Yes, it’s no different regarding businesses selling on social media.
While social commerce offers many options for merchants, many are concerned about who truly owns the customer.
The more social networks take over the purchase process, the more power they take away from big and small shops.
When a customer checks out on Instagram or another social media platform, the platform, not the shop, keeps track of their information.
As a result, it becomes more difficult for retailers to learn more about their customers. Also, provide them with more personalized online and offline experiences.
Moreover, some merchants have expressed concern that social media platforms could sell this consumer data to third parties, jeopardizing the customer’s faith in the brand, or that the data could be used to send customers to competitors (even the social media platform itself if it expands into retail!).
Losing Control Over Products and Pricing
Worse yet, there’s a risk that social networks will have complete control over the customer and the pricing.
Some businesses concerns that as Amazon evolves away, it would change its product prices without its permission. But, Amazon does not need to earn a profit on things it sells. It only needs to sell, and it doesn’t care if businesses selling on their platform have lower profit margins.
The Area of Influence is Limited
On the other hand, overestimating the power of social media is something to be aware of. The COVID-19 epidemic has resulted in a significant increase in social media usage. 43% of social networkers aged 16 to 64 spend more time on the platform but no increase in the number of unique social media users. People who haven’t started using social media will not do so now because the market is saturated.
Of course, younger individuals are more likely to use social media than older people. But, major growth in new social media users will not occur until developing countries improve access to phones and the internet. It is slowly but steadily improving, but there is still a long way to go.
There Are Only So Many Options
Even if social commerce were to open up major new markets for merchants, not all social media users would be willing to shop on those platforms. For many people, social media is good for social interactions, but they prefer to shop online via retailers’ websites or on marketplaces.
According to the Global Web Index, only 13% of people believe that a “buy” button on a social network would increase their likelihood of purchasing a product.
Meanwhile, eMarketer found that 34.6 percent of regular social media users in the United States had never made a purchase directly from a social media post.
So there is a lot of work to be done before customers trust social networks with their credit card information. Furthermore, disasters like Facebook’s recent history of data breaches with the Cambridge Analytica controversy and alleged Russian influence in the 2016 US election aren’t helping.