The story of social commerce is in the mindset of the shopper. There is nothing in recent memory that has changed the hardwiring of our brains and reframed of how we consume more than Covid-19.
Gen Z and Millennials used social media more than ever in 2020 and 2021. During the same period, social commerce markets saw the largest year over year percentage changes. Today’s social commerce adoption is being driven by those same two demographics who showed up on social in March 2020 looking for fun videos to idle away hours at home and left with a reoccurring charge their bank statement called #TikTokMadeMeBuyIt.
Social commerce in the US is still very much in its infancy. Take this into consideration: in 2022, social commerce accounted for only 5% of the total US e-commerce market which pulls in $1.1T. Nearly half of people say social media is a great way to learn about new products, so there is enormous potential for advertisers to leverage social networks as search engines, lean hard into product discovery, and drive lower funnel objectives.
Analysts predict that social commerce in the US will more than double to $99B by 2025, and Gen Z and Millennials will account for 62% of that spend. In preparation for such growth, social media companies have been rolling out enhancements that make it easier for brands to entertain shoppers with heavy emphasis on interactivity. TikTok brought TikTok Shops to US businesses, beta-ed its augmented reality tool Effects House, and bought a virtual reality company. Pinterest made pins shoppable with product tags, allowed videos in product catalogs, and built try-on experiences for you and your home. Meanwhile Snap and Amazon announced a partnership to leverage Snap’s AR (Augmented Reality) try-on technology for consumers shopping Amazon Fashion’s eyewear styles.
Facebook was the first on the social commerce scene and commands immense advertising dollars. It still reigns supreme, carried by the C2C Facebook Marketplace which accounts for over 40% of total purchases made on Facebook. However Meta leadership seems to be toning down social commerce in favor of focus on shopper marketing. Announced in early January, their new IRI partnership will examine product sales at the retailer level to help advertisers better target and measure Facebook and Instagram ads. As Meta ramps up for the Metaverse, this push towards retail media makes sense. The Metaverse is going to be a phygital world—a place for connection as well as commerce with virtual and real world components.
The Metaverse still has a long way to go in winning hearts, minds, and trust among most people. But of those that are enthusiasts, 49% are excited to use the Metaverse to try out products before they buy them. Lucky for marketers, Metaverse-y type AR technology currently exists within the established social commerce ecosystem. People are using AR to make shopping personalized and more participatory than a detached “add to cart” click.
In 2020, Shopify released data saying interactions with products having AR content showed a 94% higher conversion rate than for products without AR content. We’ve only seen acceptance of AR become more mainstream since then. This year 1.4B people globally, or 1/8 of the world’s population, are expected to have an AR device.
As advertisers, let’s think of present-day social commerce AR functionalities as a bridge to the Metaverse. Folding AR into our current advertising toolkit prepares consumers by baby steps to join the brave new world of digital shopping. We can also see AR as a consumer safety measure during this age of inflation. For example, try on technology could make a nervous consumer feel confident buying new lipstick because she has “seen” it on herself and knows it’s flattering.
This begs the question: how does what’s possible through social commerce fit into larger economic trends? As consumers monitor their discretionary spending and social ads become are harder to measure and as shipping costs and time soar, DTC is struggling. As a result shopper marketing is increasingly leaning on social media to understand and connect to customers individually who don’t always love being marketed to and want as much personalization as possible. Social commerce has the potential to make sense of these challenges and market to an individual, one-to-one level speaking to their individual journeys.
To gain consumer trust today so they participate in what’s coming tomorrow, we need to identify moments in their purchasing journeys where authenticity enhances the experience, make technology intuitive, provide safe and smooth payment methods, and ensure delivery systems deliver. Then when we put these fully integrated social commerce tools in their hands now, our brands will educate, inspire, and bring consumers along for the ride into the future of social commerce.
Contributed By: Dagney Rodburg
Image Source: Unplash