Social commerce sales in the US accelerated by 37.9% to $26.77 billion in 2020. This impressive surge shows not only the growing interest of companies to jump on the social commerce bandwagon but, most importantly, consumers’ growing comfort with social as a way to shop. US social commerce buyers surged 25.2% in 2020 to 80.1 million buyers.
The size of social commerce opportunity is often benchmarked against China, with its social commerce market evaluated at 10 times the size of US. However, such a comparison omits the broader context of Chinese social commerce success. With 90% smartphone penetration, Chinese consumers got used to entertaining opportunities of social commerce faster than any other market. Live-streaming connected with shopping boomed during the covid-19 pandemic. Pinduoduo, a social platform connecting groups with merchants, reached its fame and $175bn evaluation by engaging merchants in live-streams and inviting groups of users into exploring bargains and bulk purchases.
The line between social media and shopping has not been defined the same way as in the West. The Chinese consumers leapfrogged to using social media for shopping, bypassing decades of Western fascination with shopping malls and brick-and-mortar shopping experience. This is also why Western consumers’ transition to social shopping might require a different approach, which will give them additional value to consider this new way of shopping.
From the technological standpoint, Facebook and Instagram are modelling social commerce solutions after China’s WeChat. Their focus is to offer end-to-end solution for merchants, from storefront set-up to payment solutions. At the same time, most social commerce conversions come from click-throughs to eCommerce sites, not direct checkout. Latest eMarketer research proved that among US adults who have not made a social commerce purchase, 44.9% said it’s because they prefer to have a direct relationship with the retailer. Others cited trust issues with social media platforms as intermediaries for their transactions. This doesn’t mean the transition to a full-fledged social commerce experience will not happen. It simply requires additional measures to create an experience that will reassure consumers and create a real value, based on their readiness to engage.
Although the impressive scale of Facebook puts it at the top of the social shopping platforms in 2020, what is really worth noting is the contextual relevance that smaller platforms offer their consumers. Instagram and Pinterest rank the highest in terms of contextual relevance for social commerce, having gained their incredible popularity thanks to lifestyle content and their focus on users’ need for discovery. Instagram and Pinterest feeds are beautiful and personal. They answer consumers’ needs seamlessly, thanks to their likes and algorithm’s magic. They work well for shopping too - social media are a go-to source of shopping inspiration for almost 90% of Millenials and GenZs.
The fact that social media is driven by visual and personalized experiences is proven also by TikTok’s surge, with its short-form video content. Last year’s partnership with Shopify shows that social commerce might be the next big thing for TikTok. However, if specific needs of TikTok users are not recognized in the process, no partnerships or brands will convince users to actually shop within the app.
Selling products via Facebook, Instagram, Pinterest or TikTok should build on core strengths of these platforms. Brands need to evaluate their strategies within those platforms and check how they can fit end-to-end shopping into consumers’ expectations. Facilitating discovery and delivering shopping convenience are key, but every brand should treat those elements as part of a bigger puzzle aimed to create a trustworthy, consumer-centric and simple shopping journey.
Only with this ensured, consumers might feel invited to shop with just a few taps of the finger, with the same easiness as they browse through their feeds. Indeed, looking and Chinese social commerce success, we can see how impressive the potential of social shopping is. Now let’s check with our consumers how we can use technology to give them entertainment and value that comes with this new, exciting opening for digital shopping.