The $492 billion global social commerce industry is expected to grow three times as fast as traditional e-commerce to $1.2 trillion by 2025.
The growth is predicted to be driven primarily by Gen Z and Millennial social media users, accounting for 62 percent of global social commerce spending by 2025, experts believe.
Social commerce means a person’s entire shopping experience — from product discovery to the check-out process — takes place on a social media platform. Also, it uses networking websites such as Facebook, Instagram, and Twitter as vehicles to promote and sell products and services.
Just under two-thirds (64 percent) of social media users said they made a social commerce purchase in the last year, which reflects nearly 2 billion social buyers globally, according to a report by Accenture.
“Driven by mobile-first consumer preferences and the launch of new hyperlocal social commerce platforms, the emerging success of social commerce in India is a testimony to the power of people and communities,” said Anurag Gupta, Managing Director and Lead - Strategy & Consulting, Accenture in India.
“To take advantage of this growing opportunity, it will be crucial that these social commerce platforms offer consumers the right experience built around trust and satisfaction, and broaden their appeal through the use of local languages and video interfaces. Furthermore, brands need to work with a thriving ecosystem comprising platforms, creators, influencers, resellers that helps users discover and evaluate potential purchases,” Gupta further stated.
While the opportunity is significant for large businesses, individuals and smaller brands also stand to benefit. More than half (59 percent) of social buyers surveyed said they are more likely to support small and medium-sized businesses through social commerce than when shopping through e-commerce websites, Furthermore, 63 percent said they are more likely to buy from the same seller again, showing the benefits of social commerce in building loyalty and driving repeat purchases, the report further said.
Also, half of social media users surveyed, however, indicate they are concerned that social commerce purchases will not be protected or refunded properly, making trust the biggest barrier to adoption, as it was for e-commerce at its beginning.
Understanding Consumer Demand
By 2025 the highest number of social commerce purchases globally are expected in clothing (18 percent of all social commerce by 2025), consumer electronics (13 percent), and home décor (7 percent), the report further added.
Fresh food and snack items also represent a large product category (13 percent) although sales are nearly exclusive to China. Beauty and personal care, although smaller in terms of total social commerce sales, is predicted to quickly gain ground on e-commerce and capture over 40 percent of digital spend on average for this category in key markets by 2025.
If we look at it globally, consumers in developing countries are more likely to use social commerce and do so often. Eight out of ten social media users in China use social commerce to make purchases for a given category, while the majority of social media users in the U.K. and the U.S. have yet to make a purchase via social commerce.