Shopping on social media platforms is growing at a torrid pace — three times faster than traditional e-commerce platforms — and is on a pace to reach US$1.2 trillion globally by 2025, according to a study released Tuesday by an international professional services firm.
Most of that growth — 62 percent — will be driven by Gen Z and millennial shoppers, reported Accenture, which defines social commerce as shopping on a social media platform where a person’s entire experience — from discovery to final purchase — can be performed on the platform.
“In the future, it will seem weird to us that we used to spend so much time learning about and discovering products in one place and then having to pick up stakes and go somewhere else for a transaction,” observed Accenture Managing Director Kevin Collins.
Although initially fueled by younger shoppers, the demographics for social commerce will likely expand over time, he predicted.
“Like many internet trends, it will start with a younger generation, but it’s not going to stay there,” he told the E-Commerce Times.
“We have TikTok moms now,” he said, “and Gen X’s and boomers have been coming to TikTok over the last year and are really starting to make some noise and do some really interesting things on the platform.”
“I think social commerce is going to go the same way,” he continued.
Influence of Influencers
Greg Sterling, co-founder of Near Media, a news, commentary and analysis website, agreed that ultimately, social commerce may become mainstream for all shoppers, but right now it’s primarily attracting younger shoppers.
“That’s partly because influencers are driving social commerce and younger adults and teens are much more likely to engage with and follow social media influencers,” he told the E-Commerce Times.
He added that he expects to see revenues from social commerce to continue to grow.
“They’re already massive in China,” he said. “That’s not to say that the West will follow China’s lead entirely, but there are a number of factors that argue revenues will grow significantly.”
“It’s also likely that some existing traditional e-commerce activity will shift to social platforms,” he added.
Chelsea Gross, a director and industry analyst at Gartner, noted that social commerce has shown incremental growth over the past few years and is expected to continue to grow in the double-digits as the capabilities mature for end-to-end transactions.
“However, consumers do cite trust as a critical barrier to purchasing on social media, and the platforms will need to solve for these barriers by improving merchandising capabilities and highlighting payment security,” she told the E-Commerce Times.
Consumer Trust Issues
Those trust concerns also appeared in Accenture’s report. It noted that half of social media users surveyed indicated they were concerned that social commerce purchases will not be protected or refunded properly, making trust the biggest barrier to adoption, as it was for traditional e-commerce when it started.
“Those who have yet to use social commerce say one reason they are held back is their lack of trust in the authenticity of social sellers, while active social commerce users point to poor policies on returns, refunds and exchanges as an area for improvement,” Accenture Global Consumer Goods and Services Lead Oliver Wright said in a news release.
“Trust is an issue that will take time to overcome, but the sellers who focus on these areas will be better positioned to grow market share,” he added.
Trust is one area where traditional e-commerce players currently have an advantage over social commerce players, Collins maintained.
“Consumers have a lot more trust that traditional commerce players can do the commerce basics better than the social players do,” he explained.
“The commerce players have a long history of successfully navigating the transaction,” he continued. “Social players haven’t proven that they can do that yet.”
The quality of advertising on some social platforms can also be contributing to consumer skepticism about social commerce, maintained Rob Enderle, president and principal analyst at the Enderle Group, an advisory services firm in Bend, Ore.
“Facebook’s lack of quality control in advertisers has resulted in a lot of us getting scammed on their platform and clicking on those ads less as a result,” he told the E-Commerce Times.
“Way too many ads, particularly on Facebook, are scams where you pay your money and you either get a product that is nothing like what was promised or you get nothing,” he continued. “That is training people not to buy off of these platforms.”
Sterling noted that the question of trust is complex but essential to the success of social commerce.
“It’s really all about the brand, seller or influencer and not necessarily the platform — although some platforms may see greater success than others,” he said.
“While Instagram and Facebook have limited or little trust as entities, social media influencers may be more trustworthy,” he added, “and so they may be extremely successful promoting and selling products.”
Small Guy Benefits
Social media has dramatically impacted how consumers discover new products and is often cited as a top channel for product discovery, Gross observed.
“Further,” she added, “social media has given rise to influencers as key components to generating awareness as part of a marketing strategy.”
The discovery benefits of social commerce could be a boon for small businesses or lesser-known brands on the net, according to Accenture.
Its report noted that while social commerce is a significant opportunity for large businesses, individuals and smaller brands also stand to benefit.
More than half (59 percent) of social buyers surveyed said they are more likely to support small and medium-sized businesses through social commerce than when shopping through e-commerce websites, the firm reported.
Furthermore, it continued, 63 percent said they are more likely to buy from the same seller again, showing the benefits of social commerce in building loyalty and driving repeat purchases.
“Social commerce is a leveling force that is driven by the creativity, ingenuity and power of people,” Wright observed. “It empowers smaller brands and individuals and makes big brands reevaluate their relevance for a marketplace of millions of individuals.”
Will social commerce supplant traditional e-commerce? Collins doesn’t think so. “What I think is going to happen,” he said, “is the line between traditional commerce and social commerce is going to get so blurred it’s going to become unimportant.”