Growth to be driven primarily by Gen Z and Millennial consumers, says Accenture.
The $492 billion global social commerce industry is expected to grow three times as fast as traditional ecommerce to $1.2 trillion by 2025, according to Accenture. Growth is predicted to be driven primarily by Gen Z and Millennial social media users, accounting for 62% of global social commerce spend by 2025.
According to Accenture’s report, “Why Shopping’s Set for a Social Revolution,” social commerce means a person’s entire shopping experience—from product discovery to the check-out process±—takes place on a social media platform. Just under two thirds (64%) of social media users surveyed said they made a social commerce purchase in the last year, which Accenture estimates to reflect nearly two 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 & platforms industry lead at Accenture. “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 brands also stand to benefit. More than half (59%) of social buyers surveyed said they are more likely to support small and medium-sized businesses through social commerce than when shopping through ecommerce websites. Furthermore, 63% 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. According to Accenture, online demand will soar for beauty and personal care products by 2025.
“Social commerce is a levelling 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, as it was for eCommerce at its beginning.
“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,” said Wright. “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.”
Who Is Buying What
Accenture’s report found that by 2025 the highest number of social commerce purchases globally are expected in clothing (18% of all social commerce by 2025), consumer electronics (13%) and home décor (7%). Fresh food and snack items also represent a large product category (13%) 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 eCommerce and capture over 40% of digital spend on average for this category in key markets by 2025.
Among the study’s other findings:
• Consumers in developing countries are more likely to use social commerce and do so often. Eight out of 10 social media users in China use social commerce to make purchases for a given category, while the majority of social media users in the UK and US have yet to make a purchase via social commerce.
• Shoppers in China, India and Brazil care more about features that help them discover and evaluate potential purchases while those in the UK and US place more importance on pricing and discounts.
• Trust 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.