Never Mind the Metaverse—Social Shoppers Are Here Now
For businesses large and small, 2022 will become the breakthrough year when sales registers grasp the impact of social media. By year's end, we will better understand social shoppers and the role companies can play in terms of selling, branding, and marketing.
Social commerce sales grew about 36 percent in the United States in 2021 to around $36 billion. This was powered by more than a quarter of Americans (90 million people) making purchases inside social apps. These figures are set to grow again in 2022 and double within the next four years.
A confluence of factors contributed to this scenario.
Stay-at-home orders compelled people to connect virtually and accelerated the adoption of online retail. Through spending more time online, consumers began to expect better ad experiences. Meanwhile, marketers sought faster return on ad spend while creators pursued frictionless mechanisms to make money. And social apps, motivated to diversify revenue and reach the scale of social shopping in China, made their moves.
Broadly speaking, Facebook, Instagram, Pinterest, Snapchat, TikTok, and YouTube are diverging in their approaches to developing social commerce solutions. (Twitter, by and large, is sitting this one out.) These six platforms are variously focused on product discovery, live-streaming, and interactive experiences, and removing barriers to produce creative. The competition is really heating up, underlined by the velocity of innovations, acquisitions, and integrations.
In October, Mark Zuckerberg expressed his view that Marketplace is "already at scale," and indicated that Facebook is focused on improving Shops. This followed fast on the heels of an Ad Age op-ed by his global business group director, Brooke Ramsey, where she wrote that Facebook is making a long-term bet that people will come to social with an "always shopping" mind-set.
To support this strategy, Facebook is developing a suite of tools for companies to find customers based on behavior, while simultaneously guiding users to discover new products. In the same vein, Instagram is leaning into the very current limited-edition trend to help small businesses organize upcoming product launches, with Drops. The feature empowers customers to find, browse, and share wish lists with friends.
Meanwhile, with the April acquisition of Screenshop, Snap entered the realm of augmented reality-driven product recognition. Incredibly, Snapchatters can upload photos of apparel to receive recommendations for similar looks. These items can be tried on virtually, shared with friends, sold, and dispatched—all without leaving Snapchat. It's the next generation of discoverability.
For at least the past five years, short video reigned supreme as the dominant content format on social media. However, starting in 2022, live streamed shoppable video will assume the throne as the most engaging, best-performing media.
With eMarketer forecasting U.S. live-streaming sales to grow 55 percent this year and 53 percent next year, and with the ongoing declines in footfall for high streets and malls, all eyes are on TikTok and, following its lead, Facebook and YouTube.
On TikTok, audiences discover products in live feeds. Oftentimes, these videos are hosted by ordinary influencers who provide credibility for brands, building on the erstwhile "brought-to-you-by" ideal. These events are how audiences shop in the app with friends, as a community. And as TikTok thrives on its product-meme economy, a showcase of an item's satisfying utility can gather power when audiences mimic the "demo-tainment" and their homage propagates.
With the video-sharing app slated to surpass 1.5 billion global users this year on the back of its algorithm and shoppable live-stream solution, TikTok's competitors are trying everything they can to imitate its magic.
According to Gartner, 100 million consumers are already shopping using augmented reality (AR)—online and in stores. And a study Snap commissioned from Deloitte Digital reveals customers who use AR are 33 percent more likely to share brand experiences and 53 percent more likely to purchase products. No wonder Snap believes AR is an inflection point for mobile engagement, and no wonder Snap acquired Vertebrae in July. With Vertebrae technology, companies on Snapchat can replicate 3-D versions of products and, reportedly, achieve costs as low as one cent per interaction.
Pinterest launched a series of new features in recent months, each of them progressive, if not necessarily wholly unique. The exception is Takes, an interactive response to an Idea Pin. With Takes, Pinners can respond to a company's (or influencer's) Idea Pin with their own spins. Takes has the potential to increase demand and expand the market for all manner of items.
Removing Creative Barriers
One half of TikTok World, the inaugural business showcase, was dedicated to introducing entry points for advertisers to collaborate with creators on branded content. Two features that stood out are the Creator Marketplace, where companies brief creators and creators pitch for work, and Creative Exchange, a self-service portal where companies connect with creators and manage work.
Elsewhere, Snap's new global creative studio, Arcadia, will help companies build AR experiences—and not just for Snapchat. Instagram’s new feature, Collabs, is ideal for companies and creators to share a spotlight, while Creator Subscriptions offers a way in to instigate relationships with creators. And YouTube’s $100 million Shorts Fund—once matured—should become another example of how social apps are making it easier to work with creators who've mastered their platforms.
How to Grasp the Nettle
Right now, we're in the early stages of an exciting new chapter in the relationship between e-commerce and social media. It is true that the fastest-moving current is live-stream video, which is forecast to represent more than 50 percent of the U.S. social commerce market by 2024; it’s also true that not everything lends itself to "demo-tainment" and easy purchase decisions. (Sources: US Livestreaming Ecommerce Sales, 2019 - 2024 and Social Commerce Trends Roundup.)
Yet this opportunity will not be restricted to just retail and CPG. As social apps become ever more shoppable, it's time to test and learn. Start a live stream. Ask an influencer to create a Take. The algorithms are designed to find customers. Explore Creative Studios to aspire to better content experiences. Build new connections and foster communities, which is, after all, what social media is intended to achieve anyway.
Graeme Jamieson is director of strategy for Merkle.