With the introduction of the Internet into our society, online transactions between producers and consumers were made possible and thus, e-commerce was born. Amazon was one of the first renowned e-commerce websites in the USA that paved the way for thousands of other businesses to start selling products on the internet as well. Thanks to easy access, convenience and mostly pleasant experiences the digitalization of sales has developed exponentially, shaping consumer’s buying methods and needs.

Additionally, social media was also created due to this technological breakthrough, as a way for people to communicate, share thoughts, recommendations and information. These online communities then evolved into much bigger platforms, not only to socialize, but also to serve as retail and marketing tools. 

Moreover, ever since the Covid-19 pandemic became a part of our lives, social media platforms and e-commerce have boomed tremendously. Faced with lockdown measures, a wave of isolation and uncertainty settled into people’s minds which caused an unprecedented change in their behavior as consumers. Online shopping and bulk-buying (excessive purchase of a certain good) became the new norm. As a result, businesses and brands had to adapt in order to meet these changes in new ways of selling and marketing.

This article will discuss how e-commerce and social media has influenced consumer behavior.

From the first e-commerce online platform to worldwide digital marketplaces, running an online business is not only a new concept, but also a highly competitive one, due to low barriers of entry. As a result, securing consumers and making them become loyal customers is at the top of the priorities of any online business.

Amazon was one of the first online retailers to implement user reviews and ratings for their products, which to this day is a very common tactic among these markets. However, any person can access a website for the first time and leave it immediately the second after with no inconveniences imposed or time wasted. Behavioral economics can help these online stores with nudging strategies for potential consumers that find themselves on what is called a sales funnel (a way to illustrate what processes to apply as you observe each stage of a potential consumer’s buying decision).

Stages of the Sales Funnel

Starting at the top, we have ToFu (Top-of-the-funnel) consumers, mainly first-time website visitors. At this stage, the biggest concern is to ensure your business is trustworthy and that you somewhat segmentate your customers according to their preferences. Such can be achieved through lead generation quizzes during a sign-up. It is very likely that many of us have come across a BuzzFeed quiz to know which character in a famous series we are or what type of coffee we relate to today and found it quite entertaining. This is an example of an interactive and creative way to offer first time customers more personalized products and specially gather more information about them, without them even realizing that they are providing you with crucial data regarding their preferences.

Businesses such as vitamins and hair care subscriptions are known to use this strategy in order to best select products that each consumer would be more willing to buy. Questions such as the example below, pop up one by one and in between a request for your e-mail address may appear. While they ask, it is common to notice a small text explaining what the purpose is for giving the information to them, e.g., “So we can save your answers”, reclaiming a sense of awareness and trust to the consumer, making them comfortable in sharing valuable personal data.

Example lead generation quizz

Another way to gather more information about new consumers and ensure trust is through social media. A study from GlobalWebIndex shows that social media influences 71% of consumer behavior. Big platforms such as Facebook, Instagram, Twitter and recently TikTok put a huge emphasis on advertisement as their main source of profit, which is personalized to each consumer. Thanks to the ongoing pandemic this strategy has caught more and more attention from all businesses, as we are tucked away in our houses with much more time to spare scrolling through our phone.

Such paved the way to a new and very popular career path known as social media influencers.These people are content creators on these platforms that form a large and loyal audience, sometimes up to millions, thereby even being viewed as internet celebrities. A research study in 2017 (De Veirman, Cauberghe and Hudders) states that having a large number of followers leads to the belief that an influencer is likable and popular, which creates opportunities for successful promotion of brands. This differs from a traditional ad, because of the interactive aspects made possible by social media, as followers have a sense of connection and identification with the influencer. Thus, this highlights the importance of social proof, since an advertisement done by an internet personality that you follow is mostly considered a credible and genuine recommendation.

How social media promotes global consumer’s engagement

Furthermore, down-the-line we get to the MoFu (Middle-of-the-funnel) customers, they are the ones who have engaged with e-mails and products but have not made a purchase yet. Therefore, subtle and profitable nudging strategies to better guide them through their shopping experiences are applied. Some that stand out are, for instance, recommending products based on abandoned items on shopping carts, but even more interesting, sending sales promotional e-mails in the form of calendar invites. During busy events and holidays, such as Black Friday and Christmas, one can feel quite overwhelmed already with the numerous sales and promotions that are happening at the same time. A good way to stand out from the crowd is to send out beforehand the calendar’ invites to your customers with the dates and hours of when the sales are starting.
In both strategies, the company and the consumer are benefited, as the latter also enjoys recommendations in accordance with its preferences.

Example of promotional calendar invite

Lastly, we reach the BoFu (Bottom-of-the-funnel) costumers. These are consumers who are ready to buy for the first time or are repeated customers. In this case, the payment process needs to be easy and nudge their specific purchases with the right incentives. A common and frustrating situation is when you find yourself eager to buy that jacket you always wanted, but unfortunately it happens to be out of stock. Businesses redeem themselves by instead redirecting the customers from the sold-out page to similar or top-rated items and wish lists. Besides, and by also triggering FOMO (fear-of-missing-out) on consumers, companies establish a certain benchmark of items’ value in the shopping basket for free shipping discounts, in this case, two distinct effects come into play, not only does the consumer feel the urge to make the best possible deal, but also is affected by the power of the “free” in the shipping part.
As Dan Ariely showed in his book “Predictably Irrational”, when people were given a choice between a 15cent premium chocolate and a 1cent low quality one, only 27% chose the low quality one. In comparison, by simply dropping the price of each chocolate by 1 cent (maintaining the same economic incentives but now with the low-quality chocolate as free), the number of people who went for the low quality one were now 69%.

Furthermore, with continuous technological advancements, payment transactions have never been easier. With the introduction of PayPal Express, checkout frictions have mainly disappeared. A business report by Volusion, states that online merchants who offered this option have said that its buyers increased by 5.4% with 83% of PayPal users being first time consumers. An online purchase has now evolved to be one click away from your mobile phone.

How e-commerce digitalized the payment transactions

All in all, e-commerce opened the doors for new businesses and careers to emerge and as lockdown and the pandemic unfold, these behavioral strategies will only be amplified as more people from all age groups globally adhere to these platforms. Social media and Influencers have also helped advertisements be more targeted and viewed as authentic and thus, becoming more effective, forever changing the paradigm of marketing and consumer behavior. 

Sources: Big Commerce, Miva, Maryville University Blog, Volusion, Sleeknote, Search Engine Watch, Forbes.

Benedita Elias

Afonso Serrano

Daniel Calado

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