The rise of social commerce and what it means for retail sales
There is no arguing that social media has changed the relationship between brands and buyers, and how traditional retailers reach out to their customers.
Platforms such as TikTok, Instagram and even X – formally Twitter – are being used by more people today to consume news and commentary and learning about new products and services.
According to a 2022 study put out by Accenture, ‘Why shopping's set for a social revolution’ some 3.5 billion people in the world use social media, spending on average some two-and-a-half hours a day on social media platforms. As the study noted: “For many people, social platforms are the entry point for everything they do online—news, entertainment, and communication. Now commerce is in the mix too. And it could soon become so powerful as a destination in its own right that it starts to threaten the dominance of e-commerce and search giants.”
Tech.co reported late last year that social media is one of the fastest growing industries in the world, “with an estimated 5.22 billion users, accounting for 63.8% of the global population. From 2023 to 2024, social media user numbers grew by 256 million, making it one of the biggest marketing opportunities for businesses worldwide.”
Social media’s growing influence on buying behaviours has created its own business category, social commerce, which is the merging of commerce and social media content.
Influencers are a good example of social commerce.
These are people who use social media to talk about their favourite brands or products, demonstrating their use and even recommending their purchase and often directing people to where to buy them. And the power and influence of TikTok, for example, on buying behaviours is tremendous.
Upinfluence says with TikTok having over 1.04 billion active users spending more than 95 minutes a day on the app, it should not come as a surprise that, “78% of users report buying a product after seeing it promoted by a TikTok influencer.”
READ: Canadians worry over security, privacy when it comes to social commerce retail
SOTI, a creator of mobile apps that digitize business processes, in its recent study of social commerce, The Rise of Social Commerce: Turning Tech-Driven Browsers into Influenced Buyers, finds globally, “65% of consumers say that phones are the most convenient way to make an online purchase and nearly half (49%) of consumers say social media offers a quick and effortless way to buy, making it an essential channel for retail growth.”
Mikhail Ishkhanov, senior director of product strategy and sales enablement with SOTI says social commerce is becoming part of many omnichannel sales approaches used by companies. Where traditionally a company would look to promote its products or services themselves on various online platforms, more are turning to influencers not directly affiliated with the company or its brands to promote products and services on their social media platforms.
Amongst gen Z consumers, who are most used to getting news and shopping through social media apps, are very open to following such influencers to discover new products, to watch products demonstrations and reviews, and then purchase products and services upon what they have watch or recommended by the influencer.
The SOTI study finds 26% of gen Z respondents in its study have already embraced social commerce and have done so enthusiastically. Ishkhanov says retailers now need to start incorporating social commerce into their omnichannel strategies.
Viral Nation put together a list of the 20 Retail Influencers Shaping Shopping Habits In 2024 noting the, “influence of these digital trendsetters is so potent that 70% of teens place more trust in them over celebrities, and nearly half of all consumers rely on influencers’ recommendations before making purchases.”
The challenge is overcoming concerns some people, especially generation X and Boomers, have of moving from following an influencer to clicking ‘Buy.’
One is the issue around security. Simply, is it safe making a purchase through an influencer’s site or another social commerce application. The SOTI study finds while more people are attracted by the idea of seeing someone demonstrate a product or talk about, “globally, 25% of consumers have expressed security concerns when following purchase links from social media, with Gen Z (28%) and Millennials (26%) being the most concerned.”
Other concerns are around fulfillment. Will what have been ordered be delivered?
Ishkhanov says going forward, as companies begin to make social commerce a key part of their consumer engagement and sales strategies, they will need to start working to incorporate secure buying and payment options that can be used on social media sites. He points to the recent announcement that Elon Musk’s X —formally known to most as Twitter—is partnering with Visa for what it is calling the X Money Account. This will allow users of the X platform to move funds between a traditional bank account and digital wallets so people can make peer-to-peer payments.
“When I think of Visa, I think of a trusted brand,” he continues. “I have Visa, and I have Amex, so if you now have a trusted [payment] partner now part of an established platform like X or another site, you are creating a perception of validity through such a partnership.”
Ishkhanov says that the issues around payment and trust will be overcome. He points to how early on people did not know what to make of PayPal or the hesitation some felt with the introduction of Apple Pay or Google Wallet. Over time with more trusted sites and technology allowing the safe use of Apple Pay and Google Wallet and PayPal, no one hesitates now to pay using the apps or paying for services and products with them on sites that have the option to do so built in.
Over time, as more trusted retailers and brands embrace social commerce and integrate ways to make secure payments over social media sites and then trusted delivery mechanisms, more people will begin to shop directly through social media applications.
Social commerce could in the coming years change the buying landscape as profoundly as when e-commerce did for traditional brick-and-mortar retailers.
