8 takeaways: Accenture’s social media commerce report
In just one day in October 2021, two of China’s top live-streamers, Li Jiaqi and Visa, sold US$3bn worth of goods. That’s roughly three times Amazon’s average daily sales.
That is the power of social commerce, and it’s set to sweep the world, growing into a US$1.2 trillion industry globally by 2025, a new Accenture study has revealed.
According to the report, Why Shopping’s Set for a Social Revolution, the global social commerce industry is expected to grow three times as fast as traditional commerce to US41.2 trillion by 2025, with social media spend reaching 17% of the US$7 trillion e-commerce spend by 2025 compared to 10% today.
This offers a great opportunity for brands, big and small, to get in on the social media commerce opportunity now, delivering new user experiences and revenue streams.
Here are eight things brands interested in getting in on social media commerce should know about.
1 China will remain the most advanced market
Already ahead in the social commerce stakes, China will remain the most advanced market in terms of size and maturity, though developing markets like India will witness the highest growth with 59% CAGR growth expected from 2021-2025. Social commerce on platforms like Taobao Live, Xiaohongshu (Little Red Book) and others generated more than US$400 billion in sales in 2021 alone, and 463 million people in China are already making money through social media. Eight out of 10 social media users in China use social commerce to make purchases for a given category. This is in stark comparison to the US and UK where most social media users are making any social media commerce purchase.
2 Millennials will account for one-third of social media spend
The Millennial generation will account for one-third of social commerce spend in 2025, 33% compared to 29% Generation `Z, 28% Generation X and 10% baby boomers. That said, it will be Generation Z where spending will grow fastest, at a rate of 43% CAGR compared to 21% for Millennials. When it comes to routes to purchase, younger consumers are most attracted by live streams, experience-driven channels that enable shopping within an overall experience.
3 Social commerce offers SMEs a greater opportunity than traditional commerce
Social commerce is a democratising force, opening up new avenues of opportunity for small businesses, resulting in a power shift from big to small. For example, 59% of social buyers say that they are more likely to buy from a small business when shopping through social commerce versus online, while 44% are more likely to buy a brand that they have not previously encountered. As Oliver Wright, Accenture’s global consumer goods and services lead says: “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.” The result is that big brands will continue to face growing competition from thousands of smaller businesses.
4 Chinese food brands have a big opportunity to sell
While the highest number of social commerce purchases globally will be the segment of clothing (18%) by 2025, according to Accenture’s report, in China specifically, fresh food and snack items represent a large product category (13%), as does consumer electronics (13%), and home decor (7%). Beauty and personal care, while smaller in total sales, is predicted to quickly gain ground on e-commerce and capture more than 40% of digital spend on average for this category by 2025. Take independent beauty brand Glow Recipe – it only joined TikTok’s shopping program in April 2021 and now 90% of the traffic it generates are first-time buyers. The brand first hit the headlines when its sales surged 600% after it was featured in a TikTok video by an influencer with over 7 million followers.
5 People buy based on recommendations and social commerce delivers this
People want to buy products and services based on recommendations and inspiration from people they trust. That could be family, friends and communities, and it can also be authentic influencers they follow on social media. They want to feel inspired, informed and confident in what they buy. Social commerce serves these needs, providing an enhanced shopping experience that sparks discovery, enables personalisation and leverages individuals’ expertise and authenticity to build trust
6 Chinese and Indian shoppers enjoy experiential shopping
Shoppers in China and India care more about features that help them discover and evaluate potential purchases, compared to other countries like the US and UK which place more emphasis on pricing and discounts.
7 Trust is the biggest barrier to adoption
Half of social media users surveyed indicated they are concerned that social commerce purchases will not be protected or refunded properly, with trust the biggest challenge for brands to overcome. This was a more important concern for older generations who emphasise security features and value brand familiarity. “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,” says Wright. However, this was the same for e-commerce at the beginning where it took time for buyers to start trusting more, and so will be the case for social media commerce with sellers who focus on these areas likely to be “better positioned to grow market share” when trust does increase.
8 Policies on returns needs improvements
When it comes to areas of improvement needed in the social media commerce space, the majority of active social media buyers pointed to that of returns, with many feeling there were currently poor policies on returns, refunds and exchanges.
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