Social Commerce to Reach $1.2 Trillion by 2025, Accenture Finds
Accenture has predicted that the $492 billion global social commerce industry will grow three times as fast as traditional ecommerce, reaching the $1.2 trillion mark by 2025.
Social commerce, the research firm said, will grow by 26 percent compounded annually through 2025. Currently, it makes up 10 percent of all e-commerce, but it is expected to reach 17 percent by 2025.
Growth is predicted to be driven primarily by Gen Z and Millennial social media users, accounting for 62 percent of global social commerce spend by 2025. Millennials will account for a third of all social commerce spending (or $401 billion) by 2025. Gen Z will be the next highest group, at 29 percent, accounting for $359 billion, followed closely by Gen X, which will make up 28 percent and account for $344 billion in spending. Boomers will make up just 10 percent ($128 billion) of the total.
Accenture defines social commerce as when a person's entire shopping experience, from initial product discovery all the way to the check-out process, takes place on a social media platform.
Slightly less than two thirds (64 percent) of social media users surveyed by Accenture said they made a social commerce purchase in the past year, which Accenture estimates to reflect nearly 2 billion social buyers globally.
"The pandemic showed how much people use social platforms as the entry point for everything they do online—news, entertainment, and communication," said Robin Murdoch, global software and platforms industry lead at Accenture, in the report. "The steady rise in time spent on social media reflects how essential these platforms are in our daily life. They're reshaping how people buy and sell, which provides platforms and brands with new opportunities for user experiences and revenue streams."
While the opportunity is significant for large businesses, individuals and smaller companies also stand to benefit, according to Accenture. More than half (59 percent) of social buyers said they are more likely to support small and medium-sized businesses through social commerce than when shopping through ecommerce 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.
"Social commerce is a leveling force that is driven by the creativity, ingenuity, and power of people. It empowers smaller brands and individuals and makes big brands reevaluate their relevance for a marketplace of millions of individuals," said Oliver Wright, global consumer goods and services lead at Accenture. "Getting social commerce right will require creators, resellers, and brands to bring their products and services where the consumer is and will be rather than the other way around. It means working together within a dynamic ecosystem of platforms, marketplaces, social media, and influencers to share data, insights, and capabilities to deliver the right incentives and best consumer experience across an integrated digital marketplace."
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.
Trust, the research found, is more important to older generations than younger generations. Older shoppers emphasize security features and value brand familiarity while younger generations are attracted to livestreams and put more faith in buyer reviews.
"Those who have yet to use social commerce say one reason they are held back is their lack of trust in the authenticity of social sellers, while active social commerce users point to poor policies on returns, refunds, and exchanges as an area for improvement," Wright said. "Trust is an issue that will take time to overcome, but the sellers who focus on these areas will be better positioned to grow market share."
Accenture's research also found that by 2025 the highest number of social commerce purchases globally will be in clothing (18 percent), consumer electronics (13 percent) and home décor (7 percent). Fresh food and snack items also represent a large product category (13 percent), and beauty and personal care is expected to capture more than 40 percent of digital spend on average in key markets by 2025.
The study also found geographic differences in how people use social commerce. Eight in 10 social media users in China, for example, turn to social commerce for purchases for a given category, while the majority of social media users in the United States and the United Kingdom have yet to make a purchase via social commerce. Additionally, shoppers in China, India, and Brazil care more about features that help them discover and evaluate potential purchases, while those in the United States and the United Kingdom place more importance on pricing and discounts.