Why Social Commerce Is the Next Big Thing in Selling

Social media marketing is nothing new at this point. For over a decade now, retailers have understood that platforms such as Facebook, Instagram, and TikTok are one of the best ways to reach and connect with an active and engaged audience.

However, in recent years the relationship between social media and retail has deepened even further. Today, social media isn’t just a marketing channel but a direct selling one. The rise of social commerce has transformed the social media and ecommerce landscape and is likely to continue doing so for the foreseeable future.

A Growing Market

According to Deloitte Global, the market for social commerce will surpass one trillion dollars globally by the end of 2023. That is assuming a CAGR of 25%, which is not unreasonable when you consider the behavior of the market over the last few years and the continued rise of mobile and digital ecommerce activity. In terms of population, this equates to more than a quarter (over two billion people) of the planet’s population expected to shop directly through a social media platform during 2023.

"With an expected 5 billion social media users worldwide in 2023, the social commerce market is growing faster than traditional e-commerce, and it shows no signs of slowing down,” says Deloitte. "Fueled initially by a surge in popularity during COVID-19, the market is continuing to expand despite ebbs and flows in the pandemic. Research shows about a third of US consumers have made a purchase directly on social media, and an even larger share said that seeing a product on social media was part of their buying journey.”

So, we know what the market for social commerce is likely to look like over the coming year, but what is the reason for this surge in popularity?

Influencer Marketing

As Deloitte reports above, the COVID-19 crisis drove many people to ecommerce platforms to purchase essential items and luxury goods to get them through the pandemic. However, this doesn’t provide the whole picture regarding social commerce in particular.

Influencer marketing does, however. The rise of the influencer and their role in new media has the potential to shift products at a rate unheard of before. It’s hard to even watch a YouTube video these days without the presenter hitting the brakes on the content at some point to tell you about a sponsor’s latest product or service. And one of the best things about getting these people to promote your product directly during their content? No amount of ad-blocking technology will stop it, compared to programmatic advertising bookending the same content.

Combine the power influencers wield to promote products to staggering audience numbers with the addition of new ecommerce tools within social media platforms themselves and you have a recipe for social commerce. Now, instead of seeing a product on your social media feed and having to click a link or search it out yourself, you can complete the purchase with a few swipes of your thumb, without ever leaving the app.

"Social commerce marries serendipitous product discovery with effortless digital payment to create shopping opportunities that are hard for many to resist. Imagine seeing your favorite influencer’s latest post in your social feed and they’re wearing the coolest pair of shoes you’ve ever seen. With a couple of quick taps, you can add those exact shoes to your virtual cart, "buy now” with a mobile payment service, and get them delivered to your doorstep within a few days. All without leaving your couch or your device.”

China

If you truly want to see the potential of social commerce, you only have to look to China where the trend has been dominating for some time now. Because Chinese platforms such as TikTok (Douyin in China) and WeChat are so ubiquitous in the country, billions of people are engaging on the same channels.

According to McKinsey, this is why brands in China have achieved conversion rates of almost 30% on social platforms – up to ten times higher than the conversion rates seen in conventional ecommerce. Whilst goods and services purchased through live-stream shopping in China represented $132 billion in 2021, or 5% of total ecommerce gross merchandise value, Chinese shoppers spent more than double that amount – $352 billion (13%) – through social commerce channels.

China also has its own versions of influencers key opinion leaders – people who have achieved massive followings by becoming subject matter experts in their respective categories – and key opinion customers – micro influencers who drive social commerce through organic, word-of-mouth recommendations to their personal networks. Both these influencer types are incredible savvy to marketing techniques and regularly work with brands to promote specific products and service to their incredibly engaged audiences.

Final Thoughts

Social commerce may have been a big deal in China for some time now, but its popularity here in the West has been slower to take hold. However, as we move through 2023 and social shopping tools become ever more sophisticated, social commerce is only going to grow and become a premier source of revenue for ecommerce brands moving forwards.

Social selling is sure to be a hot topic at eTail Boston 2023, being held in August at the Sheraton Boston Hotel.

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