Social commerce is not just the latest e-commerce buzzword. It has been around for a few years, gaining traction as early as 2015, but accelerated to the forefront when the Covid-19 pandemic hit almost two years ago. Last year, social commerce generated approximately $474.8 billion in revenue, representing an almost 40 percent surge in sales. Since then, more brands have adopted social commerce as a core asset in their e-commerce toolkit supporting their omnichannel commerce strategies.
But what is it, exactly? Simply put, social commerce is the intersection of e-commerce and social media. It is the harnessing of a brand's social platforms for sales, creating a seamless in-app path to purchase. Whether it is Facebook, Instagram, or TikTok, everyone's favorite social media platforms have become lucrative sales channels for all brands venturing into social commerce.
Popular implementations of social commerce range from small shops on the platform, to extensive marketplaces and in-app Where-to-Buy campaigns driving traffic directly to a brand's direct or indirect channels. Now, that it has proven itself to be more than a passing fad, we know that the future of e-commerce is one with social commerce fixed firmly at its core.
As companies look beyond the holiday season and into 2022, the time is ripe to consider a social commerce strategy that connects brands with consumers in more personalized and seamless ways than before.
Social commerce is not a competitor to e-commerce, but another important extension of it.
It shouldn't exist in a vacuum. Instead, social commerce works best when it interlinks with a brand's existing sales channels, from its online storefront to its in-store presence.
Nowadays social networks are the top choice for conducting brand research among consumers aged 16 to 24, but this doesn't necessarily mean the purchase will always be made there and then. A consumer might make their purchase decision from a brand's social media, but still decide to buy the product in-store or from a trusted retail partner.
However, the easier the buying options are and the checkout process, the more likely the consumer will complete the purchase entirely via social media or at least follow the path to purchase to the brand's other channels. Readily available 'Buy now' or 'Where to Buy' buttons on socials streamline the buying journey for consumers and with increased investment in social commerce, they will likely become increasingly common next year.
A whopping 97 percent of Gen-Z consumers say social media is their top source of shopping inspiration, while 62 percent of 13 to 39-year-old consumers are interested in purchasing items directly from their social media feeds. Almost two-thirds of shoppers surveyed by Google have said that mobile-friendly modes of shopping are essential in deciding which brand or retailer to buy from.
Because of this, brands making the mistake of creating online storefronts that work best on desktop lose customers before they even reach the checkout. Social commerce, on the other hand, offers a seamless path to purchase from browsing to checkout, whether consumers are looking for fashion on Instagram or potential Christmas presents on local retailers' Facebook pages.
Businesses of all sizes should look to social commerce as a lucrative revenue source-- it's not just for the big players.
One of the most fundamental qualities of social media is its ability to connect with target consumers. Research indicates that 72 percent of millennials say that if a brand engages with them on social networks, they are more likely to become a loyal customer.
Each holiday season there is a drive to shop local and support small businesses. This trend is even more common on social media since the outbreak of the COVID-19 pandemic and the resulting challenges smaller retailers have faced.
Here, social media is especially valuable: the more you connect with your customers online, the more likely they are to utilize the shoppable channels on offer. Sixty-two percent of consumers say they trust small and local businesses more than major retailers, and considering Gen-Z trust in big business is low but social media usage is high, social commerce offers the ideal place for boosting consumer engagement with the demographic. It also allows big brands to promote and support their local retail partners to drive more business through their indirect channel.
In many ways, social media platforms democratize the playing field between small and big businesses, and this social commerce superpower is why more brands should consider investing in it in 2022.
Looking to the future, the global social commerce market is set to reach $2.9 trillion by the year 2026. It's clear that younger consumers are shaping social media and shopping trends, with hashtags like #tiktokmademebuyit popular online. Likewise, influencers will be important players in social commerce's future, with 35 percent of surveyed individuals stating that they trust what their favorite influencers have to say or recommend, and Gen-Z is particularly likely to make their purchase on social media for this reason.
However, both Gen X and Baby Boomers are avid digital shoppers, particularly on Facebook, which, followed by Instagram, is the leading platform for social commerce. While purchases and trends may vary across generations, the common thread is that social media is a popular place for following and engaging with brands no matter the age.
To prepare for a future where social commerce continues to thrive as a fundamental function of e-commerce, brands need to look to their existing channels, both direct and indirect, and figure out how they can complement each other. Not compete against each other. Greater investment in social media now will boost consumer engagement and create fertile ground for social commerce to flourish-- something that will be attractive to customers both old and new.