How social media is changing online shopping for small businesses

Back in the 90s, online shopping used to be a side avenue for selling products from brick-and-mortar stores. But a few decades of marketing, social media use and a worldwide pandemic have pushed online shopping to the retail forefront. As more retailers have adopted online stores and startups increasingly prefer an online-only model, people have less incentive to leave the comfort of their couches.

According to the Census Bureau’s Annual Retail Trade Survey (ARTS), online shopping now makes up over $800 billion in sales. What’s more, online sales jumped by over 40 percent when the pandemic hit due to people prioritizing less in-person shopping.

The rise in online sales allows businesses to make sales with minimal overhead. But this shift in focus now makes online spaces like social media the prime spots for getting customers’ attention.

Let’s dive into how small businesses can use social media to reach customers and even engage with them for long-lasting relationships.

The impact of social media on small businesses

Traditionally, small business marketing would involve investing money in formal advertising to take their business to the next level and reach more customers. According to The CMO Survey, businesses allotted a record 13.8 percent of their overall budgets to marketing in 2022. That percentage is up from 9.8 percent of company budgets nearly a year before.

Social media platforms have changed the marketing game in a number of ways, including:

• Providing low-cost marketing. Small businesses can market themselves almost for free with time and sweat equity. Those are sacrifices many small business owners are familiar with making to help their businesses succeed.
• Increasing brand awareness. Small businesses can generate marketing buzz about their brand to a broader reach of customers. This way, they can reach more of their audience than they could by drawing customers in through local or traditional advertising.
• Understanding pain points. Social media connects you directly to your customers so that you can listen to their problems and concerns with your products and services. These give you the ability to change products to serve their needs directly as they interact with your business’s account.
• Drive traffic and sales to your business. Your business can use its social media account to advertise new products and services with more success because followers already engage with your brand.

Influence of social media on consumer behavior

Roughly 60 percent of the world’s population keeps social media accounts, according to DataReportal’s latest social media use report. The top social media platforms include Facebook, YouTube, WhatsApp and Instagram.

The report also shows that users scroll social platforms an average of two hours and 26 minutes per day, making social media a prime spot for small businesses to reach customers. Here’s how social media can affect consumer behavior.

Social proof

One of the main reasons consumers use social media is to see what other people think of brands. From likes and shares to online reviews and influencers, social proof shows consumers whether a product or service is worth their money.

Influencers and online reviews are two of the more popular forms of social proof. A report from Morning Consult Pro shows 61 percent of Gen Z and millennial consumers trust social media influencers. According to HubSpot’s 2022 U.S. Consumer Trends Report, 55 percent of surveyed Gen Zers say recommendations from influencers are one of the most important factors to influence their purchase decisions.

BrightlLocal’s local consumer survey shows that 49 percent of consumers believe online reviews are as trustworthy as reviews from friends and family. But you may not want to settle on just a few positive reviews.

A survey by Power Reviews shows that 43 percent of consumers believe a product should have more than 100 reviews. It also showed that 64 percent of surveyed participants are more likely to buy a product with over 1,000 reviews compared to just 100. And 54 percent are likely to buy a product with over 10,000 reviews compared to if it only had 1,000.

Customer service

Brands can use social media for business to provide customer service. According to the 2023 Sprout Social Index™, 76 percent of consumers appreciate when brands prioritize customer service, while another 76 percent value brands that respond quickly to their needs.

Some brands keep customer service agents solely for the purpose of answering customer questions and feedback on social media. Dedicated social media representatives help customers get questions answered in real-time.

Shopping

Users don’t just scroll social media — they buy from it, too. The 2023 US Social Commerce Market Report from Mintel shows that 47 percent of consumers made a purchase on social media.

Social media also inspires people to make impulse purchases. According to a recent Bankrate social media survey, 48 percent of users have made impulse purchases based on something they’ve seen on social media. Of those, 60 percent are Gen Z users, who are typically the most active on social media compared to other age groups.

Unfortunately, impulse purchases aren’t always the best choice. According to Bankrate’s data, these social media impulse buys cost people $754 per year. And 57 percent of social media users who made a purchase in the past year say they regret it.

“A social commerce strategy is a great way to extend your small business’s reach well beyond your local community. Engaging with influencers and tapping into physical and digital events are some of the ways that small business owners can capitalize upon these trends.“

— Ted RossmanBankrate Senior Industry Analyst

Leveraging social media for small business success

A social media marketing strategy will be a constantly evolving process. But if you use it the right way, social media can help you stay in tune with your customers and deliver sales and products directly to their digital doorsteps.

• Create posts that serve your customers first. Customers can see through sales tactics and want to know that your brand and product puts the customer first. Crafting social media posts that relieve your audience’s pain points and genuinely meet their needs may resonate better — and build a more long-lasting brand — than a continuous stream of sales.
• Stay engaged with your customers. Customers value original content and direct engagement with brands. So post new, relevant content for your customers, ask for feedback and respond quickly to issues.
• Work with social media influencers. Social media users trust what products are recommended by their favorite influencers. Influencers may recommend products voluntarily or as part of a paid strategy with businesses.         

Challenges and considerations for small businesses using social media

Using social media for your small business can be time-consuming. You’ll need to consistently create social media posts and stay engaged with your customers. If you don’t have the time, you’ll have to hire someone to help manage your social media strategy. So, you’ll want to determine if the opportunity cost of social media is greater than the effort you’ll put in.

You’ll also need to gain your customers’ trust. Customers won’t revere your small brand the same way they do a household name for a product or store franchise. You can build trust by incorporating business practices like quality control or a customer-first return policy that sow seeds of trust.

And you might want to think about what to do if your business suddenly goes viral. This is a common scenario that’s played out, especially for TikTok Shop, where sellers commonly run out of inventory when users discover and share their products. Do you make custom or handmade products or keep limited stock? Going viral could mean an influx of orders that your small business may not be able to handle with its usual resources.

But you might be able to remedy the problem until your sales settle into a new normal. You could quickly hire new employees or extend your shipping dates so that customers expect a longer timeline when buying from your business.

Conclusion

The rise in online shopping and social media use can work together to bring awareness to a small business. Social media can help potential customers find a small business and engage with that brand until they’re ready to make a purchase. Regular engagement and connection to your brand can go a long way in any small business’s social media strategy. But small businesses should stay aware of customers’ pain points and challenges to bring them products that truly serve their needs.