The social commerce space is rapidly growing globally. According to a report by Essence, the social commerce market size was valued at US$ 474.8 billion in 2020 and is projected to grow at a compound annual growth rate of 28.4%, from 2021 to 2028.
Another report states that social commerce in India is expected to reach US$ 16-20 billion by 2025, and US$ 60-70 billion by 2030. The digital boom, backed by internet and smartphone penetration is further aiding the growth of social commerce. As a result, new players are entering the space.
BestMediaInfo spoke to leaders from the industry to get a better understanding of the space.
A social commerce platform is usually aimed at making the purchase experience smooth for the end consumer. Globally, around 41% of internet users make purchases or intend to make purchases on social media platforms. Social commerce is increasingly getting popular in a lot of Southeast Asian markets. In certain markets like China, social commerce accounted for 13% of total e-commerce sales in 2021. As per WARC report, around 70% of people in China have made purchases from social media websites, it also states that Singapore, India, and Indonesia are next in line with 50%, 49%, and 48%, respectively.
In this scenario what kind of returns can brands expect?
According to Mansi Jain, GM and Vice-President, Roposo and Commerce for Glance, a lot of B2C brands are looking at social and live commerce as a completely new channel to the consumers. She said brands get ROI as high as 15% in terms of revenue, engagement, and conversion rates.
Giving an example of ROIs, Pulkit Agrawal, Co-Founder and CEO, Trell, stated, “Our solutions are enabling brands to drive and amplify their communication throughout the awareness, consideration, and purchase sales cycle. We have observed that brands are investing more in engagement with Trell Influencers as they see a 25X growth in product page views on Trell Shop and a 25X increase in sales on the platform.”
Agrawal explained that in India, where majority of people depend on word-of-mouth for purchase decisions, social commerce has the power to bridge the gap of discovery through personalized recommendations and reviews. Commerce platforms allow brands to expand their reach to newer markets and promote their products in newer geographies.
Sunil Kumaran, Country Head, Product, Marketing and Thwink Big, Big FM, that recently launched Big Living, a social commerce space, said social commerce will further push the growth of e-commerce in the country. He also said that when it comes to digital, getting to big numbers does not take much time.
“In southeast Asia, this has rapidly grown in the past two years and we are also on a similar path. E-commerce has really boomed in the country; digital and smartphone penetration is extremely high. Because digital is becoming almost a way of life, we will likely follow the same path which most of these evolved Southeast Asian countries are on.”
Will the social commerce space be cluttered?
There is a notion that since so many players are venturing into the space, it might end up being cluttered. Experts say that the only way to avoid being a part of this clutter is to keep innovating and deliver continuously.
Agrawal said the video content and social commerce platforms will continue to gain further traction in the coming years. He also said platforms need to do a lot more than just entertaining short videos linked to products. “To gain a competitive edge in this space, customer-centricity and innovation are essential for survival. Simplifying the journey for each stakeholder in the ecosystem is essential to ensure long-term success,” he added.
Speaking on similar lines, Kumaran explained that social commerce is an extension of e-commerce and as e-commerce evolves, social commerce will become a very big part of it.
“Because it will be large, it is likely to get cluttered. Having said that, what happens with any category is that differentiation will start playing a big role. Like you would see with any of the content platforms, which have become very cluttered, unless you have a strongly differentiated product, you will not stand out. This will happen with social commerce too,” he explained.
Social commerce is the next big thing but not the next big advertiser?
While in any space, growth in the market size leads to increased ad spending, this might not be the case with social commerce players.
According to Kumaran, there will be slightly increased advertising from the players although it likely won’t translate into mass advertising.
“We are a very large media and yes, so for us, our presence in media is largely dictated by our channel. If you get an e-commerce player getting into social commerce, they will primarily promote that on their platform itself. So, there will be advertising but I’m not sure if there will be big mass media advertising,” he said.
Similarly, Jain said the creator economy is booming. She said for them they mostly rely on Glance- an AI company that delivers personalized content to the lock screens of smartphones. Jain said this gives them access to more than 1 million social media users.
“We have an unfair advantage with Glance, so unlike others, we don’t have to invest in advertising per se. The majority of our spends are on Glance,” she said.
Agrawal stated, “60-70% of our growth has been organically generated through word of mouth and the incredible community we have built over the years.”
When it comes to social commerce, lifestyle, beauty and retail fashion are the top categories that partner with these platforms. However, as marketers are exploring the possibilities of social commerce, categories like travel and crypto have also started to invest in the space.
According to Kumaran, the biggest challenge for the category is to gain trust and get credible influencers on board.
“Social commerce is not any form of advertising, or it's not just simple influencer marketing. Social commerce is done on the foundation of credibility and trust. It works through genuine, authentic, credible influencers, who have certain respect amongst the audiences that they interact with. Unless you have a really good list of influencers, the platform will not flourish,” Kumaran said.
On the other hand, Agrawal said there is a lot of scepticism in India as a market and especially when it comes to online payments. He stated, “Most of the Indian population is non-English speaking, whereas the internet primarily serves the English-speaking community. As a result, when individuals use the internet, they often do not relate to content or understand the descriptions provided, which leads to hesitancy in making purchase decisions. To survive and flourish in the social commerce sector, companies must quickly adapt and build innovative solutions to solve issues faced by the customer.”