Social commerce: The ultimate evolution of digital’s “shop now”

Jul 21, 2023

This blog post examines the opportunities that social commerce provides, and touches on what to look out for as well as the ROI myth for Canadian marketers. Let’s dive in.

It’s an exciting time for marketers – never have we had so many opportunities to engage with consumers – from social media and digital advertising to CRM programs and short message service (SMS) marketing and even buying digital Out-of-Home (OOH) advertising. However, most exciting is the social commerce trend.

Kantar has found that almost two-thirds (64 per cent) of digital buyers discover brands and products via social media. Social platforms are becoming one-stop-shops, reducing friction along the path to purchase.

The opportunity

The social commerce opportunity will nearly triple by 2025. Globally, sales made through social commerce in 2021 are expected to reach $492 billion, according to Accenture. Increasing at a compound annual growth rate (CAGR) of 26 per cent, the social commerce opportunity will reach $1.2 trillion by 2025. This accounts for 16.7 per cent of the $7 trillion ecommerce total spend.

While the majority of the growth will continue to come from China, India and Brazil, the Generation Z consumers in North America are helping to drive adoption locally. Social commerce is picking up traction in the USA, estimated to surpass five per cent of total retail ecommerce sales in the USA by 2025. This offers a glimmer of optimism for social commerce to be an area for future growth in Canada, where social buyers now exceed one-quarter of the population. In 2022, the approximate 10 million social buyers in Canada drove up the digital buyer count. This is supported by platforms like Facebook, Instagram and emergent TikTok, which are building out more robust social commerce capabilities and payment options.

What to watch out for

The ideal scenario for brands is to create a seamless online experience for consumers that blends well with the overall omnichannel experience, resulting in a full 360-degree shopping experience. It’s still most likely that 100 per cent of your target audience is not active on social media, after all.

Getting the user experience right is key – and not to be undervalued. Consumers will leave a website or app if it’s not easy to navigate. Technology and cross-functional teams will be required to pull off a seamless consumer experience. Successful social commerce teams and tools can include data analytics, merchant feeds, shipping and logistics, creative, integration specialists, inventory management, customer service for returns, and more.

One recommendation is to find clarity on the role that influencers will play in the overall experience. Findings from Kantar suggest that 67 per cent of social media users would consider purchasing a brand or product if it was endorsed by their favourite influencer.

The myth of low ROI

Look to China, but do not expect a rip and reapply for instant results. This is where an argument can be made for utilizing social commerce on behalf of the brand equity benefit. While we might not be seeing the immediate ROI that some of our counterparts in more developed countries are, there is still an overall benefit to the brand perception – that the brand is viewed as being instantly accessible and modern. This value, especially with the younger cohorts, could be vastly underestimated.

And while the ROI might not be there today, it’s important for brands to continue to test and learn to be ready for the near future.

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Ariane Friesen

Director eCommerce, Commercial Strategy and Growth | Mondelēz International




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