The global social commerce industry could grow three times as fast as traditional e-commerce by 2025.
At least, that’s what Accenture predicted in the “Why Shopping’s Set for a Social Revolution” report it published this month. The professional services firm estimated that sales made through social media platforms—from product discovery to checkout—would grow at a compound annual growth rate (CAGR) of 26 percent and reach $1.23 trillion by 2025—a 150 percent increase compared to last year’s $492 billion.
Research and Markets projects shallower growth in its own report on social commerce, also published this month. Through 2025, it expects the market will grow at a CAGR of 12.2 percent to $793 billion. The firm placed the market size in 2021 at $501 billion.
Today, 10 percent of all e-commerce spend is done via social commerce, according to Accenture. By 2025, it estimates that number will reach 17 percent.
Unsurprisingly, Accenture said growth will be driven primarily by Gen Z and millennial social media users, with the two groups accounting for 62 percent of global social commerce spend by 2025. With more Gen Zers entering the workforce, spending by the digital natives is expected to grow at a 43 percent CAGR to $359 billion. The total is less than what Accenture predicts for millennials, $401 billion, but ahead of its forecast for Gen X, $344 billion. Those two generations are expected to grow at a 21 percent CAGR and 22 percent CAGR, respectively. Spending by Boomers is forecasted to grow at a slightly lower CAGR, 19 percent, to reach $128 billion.
By 2025, Accenture expects clothing will account for the highest portion of social commerce transactions globally, 18 percent, followed by consumer electronics, 13 percent, and home décor, 7 percent.
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Returning to the present day, nearly two-thirds, 64 percent, of social media users Accenture surveyed said they had made a social commerce purchase in the past year. These users are not distributed evenly around the world, with eight out of 10 users in China saying they had made a purchase over social media and a majority of users in the U.K. and the U.S. saying they had not.
According to the report, shoppers in China, India and Brazil care more about features that help them discover and evaluate potential purchases, while those in the U.S. and U.K. prioritize pricing and discounts. By age cohort, older generations emphasized security features and valued brand familiarity, while younger shoppers showed interest in livestreams and put more trust in buyer reviews.
Influencers and the new QVC
An increasingly common tool in brands and retailers’ social commerce arsenal is livestream shopping. Whether through social media platforms like TikTok and Twitter or via a retailer’s own e-commerce site, these videos offer typically younger generations a way to discover products.
The story of online livestream shopping as we know it today begins in 2016 with the launch of Alibaba’s Taobao Live. The following year, China’s live commerce market totaled $3 billion, according to a July report by McKinsey & Co. A year later, it reached $22 billion, and by 2020, an estimated $171 billion.
Eric Dahan, the CEO and co-founder of the influencer marketing company Open Influence, believes China is “several years” ahead of the rest of the world in terms of social media adoption. Dahan offered QR codes—a tool he believes China has used effectively “long before” the U.S.—as an example of this in action. “It took a pandemic for us to really, truly start using QR codes in any sort of real way,” he said.
Livestreaming, however, channels a behavior pattern that had already been established in the U.S. by networks like HSN and QVC. “Now that’s mainly been geared towards an older audience, just sitting at home all day, but there’s something to say about this sort of discovery,” Dahan said.
“When I was younger, we’d go to the mall and walk around and it wasn’t really about buying something specifically, it was just around discovery,” Dahan continued. “The internet and the search engines and the Amazons of the world have made it really easy to find what you’re looking for and surface that, but there’s so much out there. There’s this curation element of discovery that’s just as important, right? And that’s why I think live shopping plays a role.”
The practice is already picking up steam in the United States. In June, celebrities Kristen Bell, Karamo Brown and Mindy Kaling joined their favorite small business owners to discuss their products on Amazon Live. In August, content creator and model Mathieu Simoneau hosted Pacsun’s first livestreaming event. In November, pop star Jason Derulo and Walmart teamed up for a livestream that launched Twitter’s Live Shopping feature.
Dahan, whose business centers around helping brands optimize their marketing efforts with the help of “a network of over a million influencers,” said finding a livestream partner is not necessarily about who has the most followers. Mid-tier and micro influencers can “convert a lot better than bigger names, but it really kind of depends on your overall strategy,” he added. A big event that a brand is proactively marketing may benefit from someone more recognizable, for example, whereas lesser known, niche names would better fit a grassroots strategy.
Most important, Dahan said, look for creators who are familiar with live shopping. Just because someone is skilled at creating YouTube or Instagram content, does not inherently mean they will be good at live shopping.
“I actually think what we’re going to see is… people that weren’t influencers before, didn’t have a following before, really emerging as influencers on livestreaming, the same way LinkedIn elevated a lot of professionals to becoming influencers and creators or how TikTok spurred a whole new class of creators that had no following on any of the other platforms,” he said.
Dahan also stressed the importance of finding the right platform on which to livestream. “If you’re not on Amazon, and Amazon as a whole doesn’t make sense, don’t go jump on Amazon Live,” he said. Likewise, brands and retailers should not invest in creating a live shopping platform if it’s only going to be a “one-and-done” thing.
“I think the biggest mistake is not trying,” Dahan said. “With anything social, early adopters really get rewarded. Failure is cheap early on and it gets really expensive later on once people dive in, right? So, I think now is the time for brands to really try something.”
Where social meets shopping
As established brands look to influencers to promote their goods on social media, businesses like Basic.Space and Wardrobe are offering the internet famous a platform to profit off their closets.
Launched in September 2020, Basic.Space acts as a curated marketplace for more than 200 invited and vetted sellers. These multi-hyphenates—CEO and founder Jesse Lee said the brand avoids the term influencer—have included late designer Virgil Abloh, tennis champion Naomi Osaka and model-turned-musician Cailin Russo. Though the self-described “social commerce platform” mostly sells pre-owned fashion, other products include jewelry, art, home goods and NFTs.
“We believe in a completely different model or paradigm shift when it comes to ‘social commerce,’” Lee said. “Established, popular social media platforms may build and grow commerce capabilities, but fundamentally Basic.Space is constructing our own ecosystem. We’re focused on building our own community of customers and sellers.”
Similar to how brands are hosting livestreams to showcase their products, Basic.Space has what it calls “Experiences.” These shoppable, pre-recorded videos give fans “fly-on-the-wall access into each creatives’ vision for what they are selling, bringing real-life moments and textural feel to a digital medium,” Lee said.
Wardrobe operates a similar business that exclusively centers around fashion rentals. Founded in 2019, the peer-to-peer marketplace connects creators with fans who pay to rent clothes, shoes or accessories that are otherwise sitting around unused. This past fall, the network of featured “fashion creators” expanded to include higher-profile celebrities like Grammy-winning artist Leon Bridges, “Queer Eye” star Antoni Porowski and “The Vampire Diaries” actress Nina Dobrev.
“Once we realized how much passive earning and fan engagement potential there really is for celebs on Wardrobe, it only made sense to focus on bringing the most coveted closets in the world to Wardrobe,” Nina Rowan, Wardrobe’s director of marketing, said.
According to Rowan, the company grew tenfold in 2021. This year, it expects to grow, “conservatively,” eight to 10 times over.
“The pieces available in these closets have rich stories behind them—and when a fan’s favorite celeb launches on Wardrobe, they’re invited to contribute to the tapestry of stories any given piece of clothing holds,” Rowan said. “For fans and fashion enthusiasts alike, it’s an experience you really can’t get anywhere else.”