09 Mar The Status of Social Commerce Report + INFOGRAPHIC
Summary
What Is Social Commerce
Social Commerce is taking over, studies show it is a $89 billion market currently. In basic terms, it is the process of selling products directly on social media. Through social commerce, the entire shopping experience, from product discovery to checkout, takes place on the social media platform. The current platforms that permit social commerce are Instagram, Pinterest and Facebook.
It is important to understand that social commerce is not e-commerce. E-commerce involves buying and selling goods through a website or a dedicated app. While social commerce is about selling products through social media, without leaving the platform. Social commerce allows the user to visit the website, discover products and checkout without ever exiting.
Social commerce allows the user to have an all-in-one experience – some may even argue it is preferred over traditional in-person shopping. This feature allows the customer to have access to their favorite social media, while still providing a shopping experience and they are also able to share this with friends and family.
Social Commerce Survey
Our agency completed a survey where we studied the US market to date over this emerging trend. Our survey was focused on Gen Z and Millennial shoppers, and understanding their preferences when it comes to social media, shopping and their overall consumer behavior.
After analyzing our results, we narrowed down three main findings. Which include:
- 40% of Gen Z and Millennials interviewed have bought something while watching a live stream on a social media app
- 53% of the responders said they like to carefully research the product online before buying, while only 12% said they buy something right away after seeing it on social media (e.g. in an influencer post or live streaming)
- 61% prefer “Add to cart” (without leaving the social media app), while the other 39% prefers “Buy on third-party website” (leaving the social media app)
Click on the infographic to enlarge it
Social Commerce Opportunities
This new method of shopping has been exponentially growing, specifically in the United States. “The number of US social commerce buyers grew by 25.2% to 80.1 million in 2020 and will grow another 12.9% to 90.4 million in 2021. US retail social commerce sales will rise by 34.8% to $36.09 billion this year, representing 4.3% of all retail e-commerce sales.” Brands are discovering that society spends a good amount of time spending their day scrolling online, especially in a pandemic as there isn’t much to do. This has made them pivot into having to get in front of the customer through their screen and on the apps they are spending most of their time on.
The main targets for social commerce are Gen Z and Millennials – mainly because of their characteristics. 97% of Gen Z consumers use social media as their top source of shopping inspiration. 40% follow brands they like on social media. 68% of Gen Z customers read or watch at least three reviews before a first-time purchase. Millennials: 72 million in the US, They have consistent spending power and they seek experiences even when they are buying something online (and they buy A LOT online!).
Social commerce is here to stay as it provides a great opportunity for small businesses, provides reliable data and allows for influencers to become more involved. A small business with a storefront, before COVID-19, was only successful if it was discovered by people in its surrounding area and had some sort of popularity. Whereas now, small businesses are beginning to triumph over some novelty brands due to the power and ease of social media and being able to purchase while online. It also is a great way to track how long a user stays on the website and which products they gravitate towards. Not to mention, influencer marketing becomes a lot more seamless with social commerce and clickable links that lead straight to the product.
Social Commerce Apps
Social Commerce and BNPL (Buy Now, Pay Later)
Another critical portion of social commerce is the “buy now pay later” service. It is becoming very popular for online shopping platforms to have an alternative “payment plans” such as Affirm, Klarna and Afterpay that allow a customer to split payments without paying interest. Budgeting is something very important to Gen Z and Millenials, so this service creates an extra push for online purchasing.
Social Commerce Quotes from Experts
Pavllo Zengo, Brand Storyteller @FOREO said:
Over the past years we have seen a progressive shift in consumer shopping habits that switched heavily from brick and mortar to e-commerce. Social Media has now taken a large piece of the e-commerce space with direct purchasing on platforms like FB, IG and soon Tiktok. We can see that consumers appreciate the interactive component of social commerce and even though it’s proven that most users are not as likely to “engage” with brand content, what has grabbed consumers interest is the ability to browse, share and buy products within these different digital platforms. I believe it’s that curiosity that will continue to drive the demand for social commerce shopping and sales. This is a very lucrative channel for all brands not just in the Beauty/Skincare world.
I strongly believe that Brands need to have a very active presence on Social Media….specifically Tiktok. What I have found beneficial is to really understand each platform and treat it as you would any retail partner. Adapt to each platform accordingly and create content, messaging and campaigns that best fit the platform. Working with the IMF has really helped FOREO understand this concept and put it in practice. We understand that Social Media has 3 main pillars that we have to acknowledge; Awareness, Consideration and Conversion. Most companies/brands are only interested or measure conversion on social media and that’s a mistake. You have to lay a steady foundation that leads consumers through the awareness phase where they see your brand/product to then the consideration phase where they are evaluating and “thinking” about your brand and finally the “DO” stage where they purchase and we have a conversion. All phases lead to sales and not just directly on your social commerce but also on all other sales channels.
Matthew Brennan, Author of Attention Factory, stated:
China has pioneered social commerce for years now. In the local Chinese market barriers between traditional content platforms, social networks, and marketplaces have broken down. The infrastructure is in place to make commerce happen almost anywhere. Discovery, consideration, and purchase have become deeply intertwined with entertainment and education. Customers are frequently incentivized to recruit friends and share in the buying process. Trust is driven by the vast and deep ecosystem of niche KOLs and influencers.
Anna Dato Marketing Manager Asia for Intercos, said:
China’s ability to accelerate change and live the future before the rest of the world is closely connected with its digital vision. But in a world with an unlimited offering, curation is becoming increasingly necessary… hence the success of the KOL! The Chinese leading influencers built their image and reputation on the ability to authentically interpret the domestic demand, and channel the consumer voice with the brand to build a stronger offering, with a direct-to-consumer approach. This value is extremely precious for the international luxury brands, that are depending on Asia for over 50% of their overall sales. But in the reputation power game, who will definitely win the Chinese consumers’ hearts? Will KOLs – driving social commerce – make brands unnecessary.
Alessandro Bogliari, CEO & Co-Founder of The Influencer Marketing Factory:
Social commerce will help brands increase their mobile conversion rates and decrease cart abandonment rates and will support influencers in terms of additional revenue streams thanks to affiliate fees when they sell third-party items and better margins on their own merchandising, products, and services. Our survey shows that there are a big interest and potential in social commerce and I am personally really curious to see its future.
Social Commerce and Second-hand Marketplaces
Depop and Poshmark are a second-hand marketplace where users can create their profiles and sell clothes.
On both platforms, users have followers, likes, comments, and reviews so it’s 100% social commerce. Lately, thrifting became more and more popular among Genz, not only because it’s a lifestyle or a vintage trend but also because Genz is well known for its efforts in saving the planet (and when it’s possible money). Shopping second-hand and from a stranger is not something new among GenZ. Cute 90s shirts, Levi’s, and baguette bags are the items you can find the most in Tiktok videos or YouTube hauls! “Gen Z owns the most resale, the fastest fashion, and the most luxury products of all generations, underscoring their desire for consistently fresh looks.”
Social Commerce and Luxury Brands
Luxury brands market in china
Despite the pandemic, the luxury sector grew in sales in China, many brands decided to promote their collections thru Douyin and Xiaohongshu (little red book) to attract more consumers.
Louis Vuitton held a fashion show in Shanghai, Livestreamed across multiple social media platforms such as Douyin, the Chinese version of TikTok, a WeChat mini programmed more..the show collected 50 million views on Weibo alone.
As of December 2020, the Italian luxury brand Bulgari had over two million monthly active users in China on its WeChat mini-program platform.