Purchases on social media platforms are expected to reach $1.2 trillion by 2025
Shopping on social media platforms is growing at a blistering pace – three times faster than traditional e-commerce platforms – and is on track 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% — will be driven by Gen Z and millennial shoppers, reported Accenturewhich 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.
“Going forward, it will seem odd to us that we spend so much time learning and discovering products in one place and then having to take equity stakes and go somewhere else for a transaction,” observed the Accenture chief executive. , Kevin Collins.
Although initially driven by young shoppers, the social commerce demographic will likely increase 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 Xers and baby boomers have come to TikTok over the past year and are really starting to make some noise and do some really cool stuff. on the platform.”
“I think social commerce will follow the same path,” he continued.
Influence of influencers
Greg Sterling, co-founder of Near Media, a news, commentary and analysis website, agreed that eventually social commerce could become mainstream for all buyers, but for now it mainly attracts young buyers.
“It’s partly because influencers are the engine of social commerce, and young adults and teens are much more likely to engage with and follow social media influencers,” he told the E -Trading Times.
He added that he expects social commerce revenue to continue to grow.
“They are already massive in China,” he said. “That’s not to say the West will entirely follow China’s lead, but there are a number of factors that make incomes rise significantly.”
“It’s also likely that some existing traditional e-commerce business will move to social platforms,” he added.
Chelsea Gross, director and industry analyst at Gartnernoted that social commerce has seen incremental growth over the past few years and is expected to continue growing in the double digits as capabilities mature for end-to-end transactions.
“However, consumers cite trust as a key barrier to buying on social media, and platforms will need to address these barriers by improving merchandising capabilities and highlighting payment security,” she said. told the E-Commerce Times.
Consumer trust issues
These trust issues also surfaced in Accenture’s report. He noted that half of social media users surveyed said they were concerned that social commerce purchases weren’t protected or refunded properly, making trust the biggest barrier to adoption, as it was. case for traditional e-commerce in its infancy.
“Those who have not yet used social commerce say that one of the reasons they are held back is their lack of trust in the authenticity of social sellers, while active social commerce users point to poor policies of return, refund and exchange as an area for improvement,” Oliver Wright, global head of consumer goods and services at Accenture, said Oliver Wright in a press release.
“Trust is an issue that will take time to overcome, but sellers who focus on these areas will be in a better position to increase market share,” he added.
Trust is one area where traditional e-commerce players currently have an edge over social commerce players, Collins said.
“Consumers have much more confidence that traditional commerce actors can do the basics of commerce better than social actors,” he explained.
“Trade players have a long history of successfully navigating the transaction,” he continued. “Social actors have not yet proven that they can do it.”
The quality of advertising on some social platforms can also contribute to consumer skepticism about social commerce, said Rob Enderle, president and principal analyst at Enderle Groupa consulting firm in Bend, Ore.
“Facebook’s lack of quality control among advertisers has resulted in many of us getting scammed on their platform and therefore clicking on those ads less,” he told E-Commerce Times.
“Far too many ads, especially on Facebook, are scams where you pay your money and you either get a product that looks nothing like what was promised or you get nothing,” he said. for follow-up. “It’s training people not to buy on these platforms.”
Sterling noted that the issue of trust is complex but critical to the success of social commerce.
“It all depends on the brand, seller or influencer and not necessarily the platform – although some platforms may be more successful than others,” he said.
“While Instagram and Facebook have limited or low trust as entities, social media influencers can be more trustworthy,” he added, “and therefore can be extremely effective at promote and sell products”.
Benefits for little guys
Social media has had a huge impact on how consumers discover new products and is often cited as one of the top channels for product discovery, Gross observed.
“Furthermore,” she added, “social media has given rise to influencers as key elements in 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 an important opportunity for large companies, individuals and small brands can also benefit.
More than half (59%) of social shoppers surveyed said they were more likely to support small and medium-sized businesses through social commerce than when buying through e-commerce websites, the company reported.
Additionally, he continues, 63% said they were 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 creativity, ingenuity, and people power,” Wright observed. “It empowers small brands and individuals and prompts big brands to re-evaluate their relevance to a market of millions.”
Will social commerce replace traditional e-commerce? Collins doesn’t think so. “What I think is going to happen,” he said, “is that the line between traditional commerce and social commerce is going to become so blurred that it’s going to become irrelevant.”