From influencer-led livestreams, shoppable ads, instant-buy buttons, and in-app checkouts, social commerce is growing rapidly by capturing customers where they are—on social media. Closely linked to mobile shopping and the convenience that consumers crave, social commerce offers a more tailored and targeted shopping experience than other forms of digital commerce.
Social commerce is an online selling strategy that allows merchants to sell directly through social media platforms and purchases are made within the platform or app. Social commerce promises a seamless, in-app shopping experience that can cover all the major touchpoints from product discovery to checkout and customer service. To this end, Deloitte defines social commerce as a “consumer experience on a social platform that blends the point of inspiration with the point of purchase.”¹
Interest in social commerce is taking off worldwide as consumers take to a diverse set of social media platforms like commerce-pioneer Facebook, influencer-inspired Instagram and video-sharing TikTok. China is leading the way in both its technology prowess in social commerce and sheer market size, estimated at a about ten times greater than current U.S. social commerce sales. In addition to the China-based TikTok, team-buying app Pinduoduo and messaging-and-payment app WeChat are among China’s many tech-forward social platforms.
Already a massive e-commerce channel in China, social commerce is still emerging in the U.S. and Europe, in part, owed to hesitancy by consumers to buy on social media, and lags in commerce-enabled functionality by social platforms. But one in ten U.S. omnichannel shoppers have already made a purchase directly on social media, according to McKinsey’s latest Consumer Pulse survey, conducted in early 2022 to more than 2,100 U.S. adults.²
U.S. retail social commerce sales which include products and services ordered on social networks have continued to increase annually since 2019 according to Insider Intelligence and eMarketer.³ In 2022, U.S. social commerce sales will reach over $45 billion, and will grow to more than $79 billion in 2025.⁴
Gen Z and Millennials gravitate toward social commerce as a natural extension of their high social media engagement rates. About one-half of all U.S. social network users ages 18 to 34 plan to make at least one social commerce purchase, according to Insider Intelligence’s “Social Commerce Forecasts 2021” report.⁵
Many retailers and brands, both large and small, are taking a serious look at social commerce for their marketing strategies, giving them greater control of their brand identity and the purchase journey as they boost brand awareness and build brand loyalty. Spending by consumer product companies and retailers in channels such as mobile marketing, social marketing, email marketing, SEO and digital advertising increased significantly from 2020 to 2021, according to research by Gartner.⁶ Social commerce intersects with all these marketing channels, ideal for creating cross-channel integrated campaigns.
Many social media platforms allow brands to embed their products into their profiles, social posts, ads and user-generated content (UGC). Merchants are forming partnerships with social media providers, while others might keep exclusivity with one platform.
As consumers flocked to online shopping during the pandemic, they also started shopping within social media apps at a higher rate. Bazaarvoice, a UGC technology company, polled consumers and the majority said they are more influenced to shop on social media than prior to the pandemic, and 70 percent said apparel was a top category they shop for most on social media.⁷ In addition to fashion, popular categories on social commerce include beauty, health and wellness, and home products.⁸
Consumer goods brands and retailers stand to capitalize on the captive audiences of social media apps which are proven to attract sales of lower-cost items across a range of categories. Merchants can easily discover and capture new audiences on social media, while strengthening relationships with existing customers. They also get instant social proof when consumers engage with likes, shares and comments about their in-app purchase or share a link to a livestream event to their followers.
Advances in technologies such as artificial intelligence (AI), machine learning, and augmented reality (AR) are all aiding what’s possible for digital and social commerce. So too are the faster speeds and greater bandwidth of edge-cloud processing and 5G networks. On Snapchat, luxury brands like Gucci and Prada use the platform’s AR-enabled “Lens Web Builder” capability to offer virtual try-on capabilities, along with other brands, giving consumers the chance to try out products such as earrings, watches and cosmetic colors via their smartphone cameras.⁹
Voice-recognition technology, a key feature of many smart devices and speakers, enables the customer journey from product discovery to purchase across channels.
When customer assistance is needed, smart chatbots can emulate humans with more natural conversation styles, eliminating the need to always have a live customer service agent standing by. In software, a number of third-party apps and plug-ins are emerging such as Soldsie and Jumper to bridge the gap between social media platforms and e-commerce platforms with greater functionality to create a seamless social commerce experience.
All of these technologies are furthering immersive shopping experiences, on the rapidly developing digital 3D metaverse which is already here in mini, siloed metaverses that bring personalized, 3D or 3D-like interactive experiences to shoppers such as virtual stores.
One of the most popular and fast-growing forms of social commerce is livestream shopping, which offers brands and retailers the versatility to present product demonstrations, host events like fashion shows, video consultations and more. Thanks to its immediacy, livestreams trigger impulse purchases and support engagement through chat functions and reaction buttons.
Leading brands like Nike and Kiehl’s and retailers from Nordstrom and Saks to Petco and JC Penney host livestream shopping events. Through its partnership with TikTok, Walmart’s first livestream event in late 2020 featured leading lifestyle and apparel brands and Walmart’s own private brands, garnering far better-than-expected results for the giant retailer: seven-times more views and 25 percent more Walmart followers.¹⁰
Following its foray into livestreaming with TikTok, Walmart struck another ongoing partnership with social-buying platform Talkshoplive to bring video-based buying capabilities across a number of channels, including its own website and those of its partners.¹¹
Even in its early stages in Western countries, social commerce is an efficient way to reach younger audiences and the fashion-forward crowd, among other segments. Brands and retailers may want to consider creating a social commerce presence, whether a narrow one based on one platform or many, bringing relevant and sometimes localized experiences to consumers.