Social commerce is the act of buying and selling products directly via social media platforms. Social commerce is distinct from social media marketing, as the intent of the former is to make the sale or customer conversion within the social platform itself. It also involves harnessing social networks to drive online sales through product reviews and recommendations.
Research has shown that by leveraging the power of social media, online sellers can enhance sales conversions while reducing online sales cost by improving customer stickiness, providing cross-selling opportunities, and reducing the number of returned items.
Social commerce has spawned various trends for interacting with shoppers, where both established social media platforms (which provide the underlying infrastructure for social commerce to take place) and startups provide tools and platforms to help brands and individual sellers succeed.
Social commerce platforms and tools are used by established brands and independent direct-to-consumer (D2C) sellers. Social commerce increases the sales of established brands by extending their existing ecommerce offerings to another customer touchpoint. Meanwhile, social commerce provides a cost-effective channel for independent sellers to build a target audience to convert into customers.
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Social media platforms have been active in providing in-built social media management tools and shoppable ad formats. Facebook and Instagram remain the two most popular platforms in social commerce, collectively attracting more than 100 million US shoppers in 2022. However, platforms such as TikTok and Snapchat, which appeal more to Gen Z users, have been also gaining ground and have introduced their own social commerce solutions.
Startup activity in the social commerce space is dominated by influencer-led commerce, where firms such as GRIN have attracted leading ecommerce brands to their influencer marketing and management platform. According to a report on the state of influencer marketing, the global number of influencer marketing-related service offerings reached nearly ~19,000 firms in 2021.
Interestingly, even established ecommerce platforms have begun showing an interest in the potential for social commerce, with a number of them having activities in livestream shopping and social marketplaces. For instance,in 2022, Amazon launched Amazon Live, a livestream for shopping similar to telemarketing equivalents such as QVC. It also announced that it is looking to develop “TikTok-style” shoppable ads for its mobile app to compete with social media platforms.