Social Commerce is Taking Off. Here’s How it Gets to the Next Level

Social commerce is the latest frontier for brands looking to spur sales and boost revenues. The segment, which hit an estimated $37 billion in 2021, is poised to more than double to nearly $80 billion by 2025, according to McKinsey & Co.

Social commerce, a.k.a. buying stuff on TikTok and other social media apps, is a compelling story for brands. Where Gen Z once dominated, the demographics are expanding to the over-30 crowd, providing a bigger pool of shoppers.

Influencer videos and virtual try-ons build trust and make the shopping experience fun for consumers. Apps are rolling out platforms expressly designed to ease transactions.

But while shopping on social media is expected to grow rapidly, there are a few kinks that marketers need to iron out for the trend to reach its full potential.


The Opportunities

A:  Demographic shift expands market potential.
TikTok is rapidly changing. Two years ago, Gen Z accounted for most of the users on the platform. Today, half of TikTok users are over 25. Gen Z and millennials each account for 30% of users on Instagram.

The expanding demos translate into more shoppers with cash to spare, yet the audience remains youthful and attractive for brands seeking inroads with these groups. More than 23.7 million users already shop on TikTok and the platform is growing its capabilities.

B: Social commerce is fun and engaging.
Consumers can find a more interactive and entertaining shopping experience on social. Celebrities and influencers who have gained their followers’ trust provide a less overtly promotional experience than traditional advertising — and trust is a prized commodity.

The trending #TikTokMadeMeBuyIt, where influencers post their splurges and detail how they use them, has already garnered more than 29 billion views and sales often go viral as a result.

C: Dedicated live platforms.
TikTok is looking to become the dominant vehicle for social shopping. After some fits and starts, it struck a partnership with TalkShopLive last fall to relaunch a dedicated live shopping site that features influencers hawking their favorite wares. Loyal fans can snap up the items instantly — while they last. Think QVC on social.

Pinterest is another active player in the live space trying to capture sales, collect data and ease transactions with several new initiatives, including AR try-on, launched in the past year.  Amazon also entered the live shopping arena with its Amazon live.

These players stand to gain as Facebook and Instagram exit the live shopping arena. Parent company Meta, facing declining ad sales, pulled the plug on its live shopping sites last October to focus on more traditional ad revenue.

The Pain Points

A: Transaction traction.
All too often shoppers see an item on social media, click to buy it and then get redirected to the brand’s website and must start all over again.  That’s a turnoff that will likely result in a lost transaction.  In an oversaturated media landscape, grabbing a consumers’ attention — an extremely valuable but highly ephemeral commodity — is the key to making a sale. Once that attention is lost, it is not coming back.

Having better cart integration and seamless authentication between the social platform and the brand’s website will maintain context, avoid friction at the point of sale and seal the deal.

All manner of brands, from cosmetics to cookware, are launching dedicated shops on social platforms so consumers can buy items without leaving the site. However, that leads to the next big issue — who owns the customer?

B. Data mining.
While brands can benefit from social sales, the most valuable part of that sale could be customer data, and brands want to own that. Because the cost of customer acquisition is high, merchants often lose money on a first sale, according to Retail Customer Experience. Brands want the customer data so they can maintain that relationship, initiate further contact and spur more sales. Brands and apps need to continue to work together on technology that will smooth transactions and find equitable ways to share customer data.

C. Mobile wallet barriers.
Another hitch involves mobile wallets. If a shopper wants to use Apple Pay for her transactions, barriers can be a turnoff. All mobile wallets, whether Apple Pay, PayPal or Samsung Pay, should be accepted on every site. While adoption is becoming more widespread, the issue needs to be resolved.

This is not something that will happen overnight. Companies must sign deals and make agreements in this highly competitive arena where billions are at stake and rivalries and egos often get in the way.

The Bottom Line

Social commerce is the next big wave in digital shopping. Growth is set to double over the next two years. But tech companies and brands need to take some steps to encourage the process. Better cart integration, universal mobile wallet acceptance and striking the right balance on data collection can help smooth out the kinks and send sales to the next level.

Lawrence Edmondson is Chief Technology Officer at Barbarian Commerce,  where he focuses on Barbarian’s technology capabilities, talents, and processes so the agency can stay at the forefront of solving clients’ complex business problems and meeting their technology needs. Edmondson is a technology specialist who creates software, scales teams and uses technology to enable creative ideation. With over two decades of tech experience in ad agency settings, Edmondson has built a stellar reputation. He is known for his innovative thought leadership, creative approach to integrating tech into brand stories and solid commitment to industry DEI initiatives.

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