The $ 492 billion global social commerce industry is expected to grow three times as fast as traditional e-commerce to $ 1.2 trillion by 2025, as per the findings of a study conducted by Accenture.
As per the study, the 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 2 billion social buyers globally.
“Driven by mobile-first consumer preferences and the launch of new hyperlocal social commerce platforms, the emerging success of social commerce in India is a testimony to the power of people and communities,” said Anurag Gupta, Managing Director and Lead - Strategy and Consulting, Accenture in India.
“To take advantage of this growing opportunity, it will be crucial that these social commerce platforms offer consumers the right experience built around trust and satisfaction, and broaden their appeal through the use of local languages and video interfaces. Furthermore, brands need to work with a thriving ecosystem comprising platforms, creators, influencers, resellers that helps users discover and evaluate potential purchases.”
The report estimates that social commerce will account for 17% of all e-commerce spend by 2025.
It also states that individuals and smaller brands also stand to benefit. More than half (59%) of social buyers surveyed as part of the study said they are more likely to support small and medium-sized businesses through social commerce than when shopping through e-commerce 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.
It also estimates that millennials alone will account for nearly $ 401 billion (1/3) of social commerce spend by 2025. It, however, estimates that the Gen Z spending will grow at the fastest rate and will reach $ 359 billion, 29% of total, by 2025. Further, GenX and Boomers will account for $ 344 billion, and $128 billion, respectively.
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 e-commerce in the beginning.
The 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 e-commerce and capture over 40% of digital spend on average for this category in key markets by 2025.
The study’s other findings are that consumers in developing countries are more likely to use social commerce and do so often. Eight out of ten 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 are yet to make a purchase via social commerce.
It also reveals that 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.
Accenture Research conducted a series of studies on social commerce to better understand the nature of this opportunity.
It designed and fielded an online survey of 10,053 social media users in China, India, Brazil, the US and the UK. The online study was conducted between August 12 to September 3, 2021. In-depth interviews with shoppers and sellers from the same five markets were also held between May 26 and June 2, 2021.
Accenture’s social commerce market forecasts were produced using econometric modelling, considering the optimization of consumers’ preferences to accelerating existing market momentum. The social commerce market includes products or services ordered via social networks, regardless of the method of payment or fulfilment, covering business to consumer (B2C) and consumer to consumer (C2C) transactions.