The power of social media in ecommerce is palpable. Shares, recommendations and actual transactions on channels like Instagram and TikTok are indispensable ways to build brand recognition and improve buyer trust. Take Instagram, for instance – the platform pulled in an estimated 6.5 billion site visits in August 2024 alone. Critical milestones in the journey are no longer confined to a traditional retailer’s ecommerce site or checkout cart. They extend to things like livestreams, shoppable content and payment links within Instagram Reels, stories, TikTok videos or Pinterest Pins.
We’re in the early stages of what you might call the Great Shopping Migration: almost 60% of online customers recently polled confirmed that they were likely to use social media platforms to shop. What’s more, Deloitte data shows that consumers using social media were four times more likely to add more to their baskets or make purchases of a higher value than they would when shopping off-channel.
The explosive growth of TikTok Shop, launched in 2023 and now generating billions in gross merchandise value, perhaps best exemplifies how ecommerce has penetrated social media platforms, displacing both offline and traditional online retail.
Higher transaction volumes across these platforms have led users to be more cognizant (or wary) of privacy and data-sharing. Nevertheless, TikTok, Instagram and others are seizing this growth opportunity – improving the in-platform customer shopping experience (and security) and establishing key infrastructure that supports unique user journeys. Here, I’ll outline this infrastructure and other top considerations for merchants and platforms as they wade into this new domain.
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Impact on Sellers
The future appears promising for sellers integrating with popular platforms like Meta, TikTok and Pinterest, all of which have made great strides.
For one, geography is no longer a blocker; in fact, around half of consumers recently polled said better deals on social platforms were their biggest motivator. Distance and concerns like shipping complexity become an afterthought, and platforms are increasingly setting a high bar for reputable merchants that can fulfill products in a timely manner.
Airwallex data also shows that despite ever-shifting market conditions, most global consumers (54%) plan to increase their cross-border purchasing over the coming months. That’s good news for social sellers stationed across the globe.
Although sellers can tap into platforms like Instagram Shopping or TikTok Shop that more or less offer a plug-and-play experience, are these destinations safe to transact on, compliant and dependable?
When it comes to dependability, at least early on, they’ve drawn some ire – as close to half of consumers (41%) polled for one study indicated that their related purchases didn’t match influencers’ claims. As mentioned, though, these shops are making improvements in standard-setting – with higher-caliber merchants operating on them.
Impact on Shoppers
Data privacy has, of course, become a highly sensitive topic. Adding an entire shopping ecosystem on top of social platforms only increases the amount of collected consumer data. For instance, purchase behavior, consumer preferences, credit card or payments information and shipping data is all added to the platforms’ arsenal of “monetizable” targeted ads.
Consumers actually cite fears over personal data privacy as the top reason for not using social media to purchase goods. This created a gulf between “browsing” and actual “purchase” activity on these channels – but I believe it’s narrowing.
Impact on Social Media Platforms
The integration of shopping features has been a game-changer for social media platforms, driving significant revenue growth.
By keeping users engaged with the ability to shop directly within the platform, these features have led to increased ad impressions, new revenue streams from product sales and valuable data insights for targeted advertising.
This trend has solidified social media platforms as powerful marketplaces, further enhancing their financial success.
Impact on Financial Institutions
As with fintechs and other financial institutions, social platform and merchant safety/success truly come down to underlying financial infrastructure. For one, there can be little to no user friction, and payments must not only be secure, but as smooth as a face-to-face transaction at a local brick-and-mortar establishment.
Luckily, payment systems have improved dramatically – with features like integrated gateways that allow in-app transactions and local payment methods that optimize for a buyer’s geography (e.g., a U.S. buyer may use Visa, Mastercard, American Express, Klarna, Apple Pay or Google Pay, while a Chinese shopper can select Alipay or WeChat Pay). What’s more, payment systems offer real-time fraud detection, multi-currency support and the ability to identify and offboard more deceptive sellers.
This innovation has reached social media, with reputable shops now being powered by centralized, scalable solutions that remove payment complexity, boost conversion rates and average purchase value and layer on other protections.
Breaking Through
With established payment rails and other backend processes, merchants are free to focus on selling products. In fact, they can be up and running in no time, and make a splash by doing easy things like:
- Maximizing payment links or QR codes: Embedded to enable quick, secure purchases directly from posts and stories.
- Utilizing the platforms’ in-app checkout: Native checkout processes can facilitate the purchase — reducing the drop-off that occurs when customers are redirected.
- Enabling a variety of third-party checkout options, such as BNPL, one-click checkout, and local payment methods: These help meet customers’ needs by allowing choice (a variety of payment options) or eliminating repetitive data entry. This enhances UX, conversions and, potentially, average purchase size.
Meeting Users In-App
It’s clear that activity is broadening on these channels. Merchants are meeting shoppers directly in-app, and are moving to entice other user groups (with the transaction volumes to prove it).
Still, while the more marquee shops boast in-app checkout and unique payment rails, it’s important to remember that the buck doesn’t stop with them – the platforms and merchants must safely and securely handle customer data, and like any business, operate ethically.
As a tech executive helping to build this ecosystem, I’m excited by its potential. It’s not hype about one channel over another, but instead this concept of a flashy – and functional – new digital storefront.
Jessica Chiu is VP of Strategic Partnerships for the Americas at Airwallex, a global payments and financial platform enabling businesses of all sizes to scale and operate efficiently across borders. Prior to Airwallex, Chiu led strategic growth and product partnerships at Pinterest and Spotify. She also held business and finance-focused roles at Netflix and LinkedIn, and has additional experience in technology investment banking.
