“Where did you buy those jeans from?” someone may ask. “On Instagram,” another may say. Ten years ago, that answer would’ve received a confused, eyebrow-raising expression. Today, it is met with someone picking up their phone and logging into Instagram to get shopping. How has social media become one of our top destinations for browsing, searching for new brands and tapping “Place Order”? In fact, Forbes predicts that social commerce is set to grow faster than e-commerce to $1.2 trillion by 2025. Over the last few years, we predict that three major factors have contributed to this shift: The expansion of brands and products; the increase and ubiquity of digital marketing; and the growth of social media apps. Is social commerce proliferating to the point of taking over traditional e-commerce? And with brick-and-mortar shopping still very much holding a presence in retail, how are brands and retailers dealing with the rise of social commerce?
Instagram and TikTok: From scrolling to buying
The app that has led the way in social commerce up until now is Instagram. Its parent company, Meta, added some shopping features in 2016 like product tags, however, the shopping section of the app only truly flourished from 2019-2021 when features like a dedicated “Shop” tab was created with Instagram checkout; categories for various items for easier browsing; shopping stickers on Stories; and ads so that users can discover new brands. Each month, 130 million users tap on the Instagram Shop tab and engage with Instagram Checkout, showing just how valuable the platform can be to brands and retailers. What’s also interesting about the Instagram Shop tab is how its algorithm connects consumers with products. According to a Hootsuite study, 2 in 3 people say the network helps foster meaningful engagement and connections with brands.
Another platform that is claiming its stake among social media sites as an e-commerce powerhouse is TikTok. Although Instagram is still the bigger platform in terms of monthly users, TikTok dominated the amount of app downloads for the first quarter of 2022, achieving 175 million downloads; totalling over 3.5 billion. The last time an app had this much global reach was in 2018 when WhatsApp achieved 250 million downloads within one quarter. Another statistic that should prick the ears of retail and business leaders is the fact that the average TikTok user spends approximately 29 hours per month on the app while the average Instagram user spends only 8 hours per month. If a potential shopper is spending this much time directly engaging with content on a platform, who’s to say that this time isn’t being converted into sales and profit for brands and retailers? These numbers have - or should have - implications for a brand’s marketing and commercial strategies.
According to a Shopify survey, 21% of consumers who use social media to shop use TikTok “all of the time”, making it the platform most used for shopping. YouTube came in second at 17%, and Instagram at 16.4%. Furthermore, 67% of TikTok users say they feel inspired to shop even when they weren’t planning on doing so. What makes TikTok such a successful shopping platform is its unique algorithms, dedicated shopping features, and its focus on sharing instead of liking, which spurs the virality of a product. In addition, unlike Instagram where users primarily follow creators and see their content, TikTok users are used to receiving suggestions from the app in their stream, regardless of which creator it comes from, as long as it aligns with the kind of content they’ve already shown to like. It is therefore easier for brands, retailers and advertisers to place ads here and get into the user stream.
What are traditional wholesalers doing to combat social commerce?
If you can’t beat ‘em, join ‘em. Well, that’s the philosophy at least adopted by some traditional wholesale retailers like Target and BigBuy who are riding the wave of social commerce to increase sales and relevance - instead of standing idly by on the sidelines. As we’ve said before, if brick-and-mortar retail wants to remain significant to consumers, they need to adopt digital commerce strategies, and that’s exactly what we’re seeing develop. Scrolling through social media, you can now access high-traffic wholesale retailers like Target, who have their own dedicated Instagram Shop and Checkout - and they’re not the only ones. Walmart, Saks Fifth Avenue and the Net-a-Porter Group all have Instagram Shops that users can shop from directly. According to a Huge Inc study, 74% of shoppers say they are now more incentivised to shop on social media than before the Covid-19 pandemic, making the convergence a necessary strategy for wholesale retailers. However, some brands are still committing to brick-and-mortar expansion, like Spanish clothing brand MANGO who is planning to open 30 new stores in the US in the coming years.
A blended network
For consumers, shopping can be accessed at their fingertips, while they work, while they look for travel inspiration on TikTok, or while they lie in bed listening to a podcast. In other words, it’s more accessible than ever. For brands and retailers, keeping up with the multiple ports of shopping demanded by consumers is a must for survival. With wholesale retailers turning to social commerce, and photo-sharing platforms becoming digital marketplaces, the retail landscape is blending, blurring and converging. It is becoming a space where traditional labels and rules don’t apply in the hunt for consumer attention and loyalty.