Social Commerce in Trend: Protecting Digital Identities Using 2FA

The coronavirus pandemic has changed buying behaviour – social commerce is the new buzzword. Is digital identity authentication at risk?

Jun 28, 2021 - 3 min.
Picture of: Sonja Spaccarotella
Sonja Spaccarotella

Just in time for the start of summer, Covid 19 infections are dropping, bringing retail relief after seven months of lockdown. But the coronavirus pandemic has had a lasting impact on consumer shopping behaviour: According to the recently published study "Online Shopping - Who buys what, when, how?" by the auditing and consulting firm KPMG, nearly 50 per cent of the people surveyed have changed their online shopping behaviour as a result of the coronavirus pandemic. The new shopping experience is too practical and convenient, and one in five respondents no longer wants to do without it. Online retailers and social media platforms are benefiting from this: Social commerce is the new buzzword in e-commerce. But what is this buzzword all about and what dangers lurk for shoppers when paying via Instagram and the like? One thing is certain: the data protection challenges for retailers continue to increase and the need for passwordless two-factor authentication is growing - a plus for secure authentication and a relaxed shopping experience.

Social commerce combines online shopping with a personal relationship with the consumer in e-commerce. What is new is the sales channel: The interaction with the target group takes place on familiar social media platforms and thus in the private environment of the users. Startups especially benefit from the visibility this entails, as it enables them to compete more easily against large competitors. For customers, the increased competition means greater usability in the purchasing process, as they can make purchases conveniently in their social media app; at the same time, the product selection increases, as smaller providers are also more strongly represented. 

New buying behaviour: Fewer concerns and more convenience

The coronavirus pandemic has changed consumers' willingness to shop online. Whereas two years ago, a typical Saturday morning was defined by crowded city centres and long queues, today, consumers conveniently select their products online. During the lockdown, for example, 34 per cent of those surveyed tested online shopping for the first time, according to The Shape of Retails Report by consulting firm Alvarez & Marsal – with the result that brick-and-mortar retail is losing long-term relevance. At the same time, a positive shopping experience reduces users' security concerns, for example, when providing bank details, if web stores use particularly secure and convenient procedures such as biometric authentication when logging in.

Live formats shorten the customer journey

This combination of a changing customer journey and high purchasing power has become a trend on all major social media platforms and has spawned entirely new features. Since November 2020, Instagram, for example, has released no less than five new shopping options, including product tags and its own Marketplace. Users can now discover new products and brands in this virtual space. What's more, merchants can group their products into collections and sell them directly via the platform using the "Checkout on Instagram" function without users leaving the app and going through further authentication on third-party platforms.

Pinterest is also advertising new shopping options, which are possible from the search function to the pinboard to the pin. The TikTok platform, on the other hand, has chosen a different approach. By integrating Shopify, the platform, which is particularly popular among young people, has put live shopping in the foreground. Influencers can showcase products live; a few clicks will take customers to the purchase function. In China, the feature is already generating billions in sales.

High-security requirements for authentication

But the danger of the new features lies in the small details. Because the more unknown and smaller stores there are on the platforms, the higher the risk of falling prey to a fake shop. This is especially true since such profiles can be created on social media platforms with minimal effort and without being visually distinguishable from other stores. Payment in advance is also one of the common methods used by fraudsters: When customers order their goods from dubious providers, they are asked to pay in advance. However, the goods never reach their destination. A subsequent complaint to the merchant is then usually no longer possible; the money is long gone, and the store can no longer be found. It is also not uncommon for customs duties to be incurred, which subsequently drive up the price in social commerce. This is precisely why in-app payments on social media platforms, which are tied to users' customer accounts, are becoming increasingly relevant. With Instagram Checkout, for example, users can integrate a wallet with the payment services into the account. Customers can then pay via Instagram using a credit card or via PayPal in the app. This puts high-security demands on social media platforms as well as on password security during authentication.

Preventing identity theft using two-factor authentication

In order to make digital identities in social networks more secure via the smartphone, it is recommended that providers integrate and use newer login procedures: Two-factor authentication, combined with the verification of biometric characteristics of the user, combines consumer requirements for user-friendliness and security by eliminating the need for complicated passwords. Instead, login is quick and easy via fingerprint or Face ID after one-time registration. The customer account can then be used securely and without a password at any time and anywhere.


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