Social Commerce Is the Next Shopping Revolution

The internet is undergoing a global social revolution. Nearly all of the 4.8 billion internet users worldwide are also on social media, some 4.5 billion people. That means 57% of all the people in the world are using social media.

It’s made social media their front door to the internet. As of July 2021, social media platforms were used by 96% of global internet users, according to data compiled by GWI and reported by We Are Social and Hootsuite. Chat and messaging platforms were second, 95%, followed by search engines at 84%.

And even more astounding is that the typical social media user spends about two-and-half hours per day on their favored social media platforms, according to Statista.

While brands understand the importance of social media as part of their marketing mix, they may not fully comprehend the implications of this online social revolution. They spent a total of $537 billion globally last year on digital advertising, according to GroupM, but less than one-third is devoted to social media advertising, estimates Statista.

The problem with social media advertising is it sends people from where they want to be (e.g. Facebook, Instagram) to someplace else (i.e. a brand website). It’s like when people are driving down the highway and get detoured to an alternate route. They can easily get lost.

Likewise, if social media is users’ preferred highway on the internet, it makes no sense to force them off an exit ramp to get what they want.

That is what social commerce fixes. It keeps people where they want to be by enabling social media users to do some shopping while they are interacting with friends, getting their news and watching videos all in one place.

Social commerce is the next digital shopping revolution and it will change people’s shopping behavior as profoundly as internet shopping did over the last twenty years. And just like any revolution, it will bring unanticipated change and leave behind collateral damage.

Social commerce is here now, but much more to come

Social commerce is defined as when the entire shopping journey from product discovery through the check-out process is conducted on a social media platform.

In 2021, global social commerce sales reached $492 billion, but it is expected to nearly triple by 2025 to reach $1.2 trillion, according to a new study by Accenture.

“The steady rise in time spent on social media reflects how essential these platforms are in our daily life,” explains Robin Murdoch, Accenture’s global software and platforms industry lead. “They’re reshaping how people buy and sell, which provides platforms and brands with new opportunities for user experiences and revenue streams.”

All told, social commerce represents 10% of e-commerce sales today, but its share is going to reach 17% in just three short years. And surprisingly, retail brands in developed markets, like the U.S., U.K, and Europe, are way behind developing markets in exploiting the opportunities in social commerce.

“Mobile-first cultures, like China, India and Brazil, that haven’t had the history of the journey through physical retail to e-commerce, have made the jump to social commerce much faster than in Western Europe and North America,” says Oliver Wright, Accenture’s global consumer goods and services lead.

“The appeal for consumers everywhere is overwhelming,” he continues. “Consumers basically want simplicity and social commerce is a very natural, integrated part of the social media experience.”

Brands that have taken early forays into social commerce know its power. Sephora, for one, launched early on Instagram Shopping which allows customers to purchase through the Instagram app. And it did a weekly series of livestream shopping shows with Facebook during this past summer.

“Every indication is that it’s [social commerce] is going to be big,” Carolyn Bojanowski, Sephora’s general manager of e-commerce, said in an interview with Glossy. “We know from our partners in Sephora China that it’s such a big piece of the whole customer experience. It’s one of those things that we know is coming and we want to be a pioneer.”

Three ways to engage socially

As social commerce evolves, Wright sees three primary models for social commerce engagement:

Content model

This engages potential customers with unique, original content. It is perhaps the easiest one for brands to turn on, since they are doing much the same already with their content posts. All they need to do is to make it shoppable on the platform or via in-app stores on Pinterest, YouTube, TikTok, Facebook, and Instagram to name a few.

“It allows brands, influencers and individuals to use social content to drive authentic discovery, engagement and action,” Wright explains.

Nike, for example, has developed the NbG (Nothing by Gold) app that combines content on style, sport and self-care and enables community members to shop directly within the app.

Experience model

“This is perhaps the most interesting, since it adds the experiential dimension,” Wright says. It engages customers through experience-driven channels, such as livestreaming, virtual and augmented reality as in gaming, to enhance the shopping experience.

For example, beauty influencer Michelle Phan, hosted a livestream on the Twitch platform to launch her EM Cosmetics new foundation during “League of Legends” game playing. A bot was programmed to add links to purchase and to chat while a commercial played during breaks in the game. The company reported the new foundation sold nearly three-times as much on Twitch compared to previous new product launches.

Network model

“This is peer-to-peer commerce, like group-buy models,” Wright explains. “It gives people more power, more control and more ability to do things themselves. It democratizes commerce.”

Such network models include Pinduoduo in China, which reportedly has more active buyers than Alibaba, and India’s Meesho e-commerce site, which supports social commerce via WhatsApp.

Express, the apparel brand, is doing a take on this, allowing not just professional influencers but regular shoppers to set up Express storefronts and become virtual “Style Editors” to earn rewards for attracting new customers and sales.

Power to the people

Wright believes we’ve barely scatched the surface of what social commerce can become. “Any brand, large or small, and any individual can now become or create a ‘brand’ of their own and reach a market directly,” he says. “This gives consumers more control. It gives power back to the people.”

“This has hugely positive implications for small businesses and entrepreneurs as they are able to reach potentially massive markets that were simply not available to them before,” he envisions. “Rather than a handful of big retailers and brands selling to mass markets of millions, we’re now seeing millions of individuals and smaller businesses selling to one another within a vast social commerce ecosystem.”

Citing Accenture’s research that found 59% of social buyers say they are more likely to purchase from a small business through social commerce versus online, Wright concludes:

“Social commerce is a democratizing force that is driven by creativity, ingenuity and power of people. It empowers small brands and individuals and makes big brands reevaluate their relevance. The implications cut across every consumer category, across products and services, and will impact every platform, brand and retailer. These players need to put ‘people’ at the heart of their strategies and embrace this rich ecosystem with new partnerships and business models.”

About Pam Danziger: Pamela N. Danziger is an internationally recognized expert specializing in consumer insights for marketers targeting the affluent consumer segment. She is president of Unity Marketing, a boutique marketing consulting firm she founded in 1992 where she leads with research to provide brands with actionable insights into the minds of their most profitable customers.

She is also a founding partner in Retail Rescue, a firm that provides retailers with advice, mentoring and support in Marketing, Management, Merchandising, Operations, Service and Selling.

A prolific writer, she is the author of eight books including Shops that POP! 7 Steps to Extraordinary Retail Success, written about and for independent retailers. She is a contributor to The Robin Report and Forbes.com. Pam is frequently called on to share new insights with audiences and business leaders all over the world. Contact her at [email protected].