What Is Social Commerce?

Social Commerce Explained in Less Than 5 Minutes

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Social commerce refers to an e-commerce practice where consumers place orders for products or services directly through social media platforms like Instagram. It creates new opportunities for businesses to engage with their customers while increasing sales.

If you’re a small business owner, social commerce might allow you to market to your customers in a new way, reach new shoppers, and make additional sales. Learn more about social commerce and how it works.

Definition and Examples of Social Commerce

In social commerce, consumers can purchase products and services directly through social media platforms, such as Pinterest, Instagram, and Facebook. Business owners can capitalize on this function to further engage their target markets and drive customers to their companies’ checkout screens. 

For example, Shopify became the first e-commerce platform to integrate shopping tabs on TikTok. Shopify merchants with a TikTok For Business account can sync their product catalogs to the TikTok-based storefront. While browsing TikTok, users can click links on products and services to get redirected to the store’s online checkout page, where they can complete their purchase.

How Social Commerce Works

Initially created as platforms for connecting with other people, social media tools have expanded to the e-commerce space. It has become common for businesses to use social media as a marketing tool to cultivate their brand presence, widen their reach, and engage with their target market. Now, companies can also use social media to directly allow consumers to make purchases.

Marketing and conversion—the number of viewers or visitors who turn into paying customers—has long been a challenge for marketers. The ability to purchase directly from social networks is an opportunity for businesses to increase their conversion rates.

For example, in 2021 Facebook introduced Live Shopping Fridays, which featured certain brands arranged around themes such as fashion or self-care. Consumers would join in on live video streams of product showcases and demos where they could ask questions in real time. They could then undergo a streamlined checkout process using Facebook’s Shops feature.

The ability to buy directly through social media offers convenience to online shoppers. While browsing their social media feeds, consumers can view products, study reviews, and engage with like-minded consumers. They can also share certain products with their friends and networks, allowing products to be naturally marketed through engagement indicators like comments and tagging. 

The number of social commerce buyers in the U.S. has grown from 80.1 million in 2020 to 90.4 million in 2021. Social commerce seems to resonate especially with Gen Z and millennial shoppers, who often use social media to discover new products—even preferring it to traditional search engines. One 2020 survey showed that social network users between the ages of 14 and 34 have purchased at least one product via social commerce. Another study showed that Gen Z shoppers spend triple the amount of time shopping on social media as the average online consumer.

The apparel and accessories category has experienced the largest boost in social commerce sales in 2021, according to research firm Insider Intelligence. Businesses that sell consumer electronics, home decor, cosmetics, and consumer goods are also faring well.

Benefits of Social Commerce

Steph Liu, CEO and the founder of e-commerce marketing agency Levitate Foundry, told The Balance in an email how social commerce presents new opportunities for businesses to connect with their customers and increase revenue.

“Engaging in social commerce allows businesses to meet their customers where they are in a new way,” Liu said. “It generates leads, allows for a more seamless curated shopping experience, delivering the right product to the right customer while removing additional steps a customer has to take to make a purchase.”

What Social Commerce Means for Business Owners

Social media apps have transformed the way people socialize—and now how companies and consumers do business with each other. A 2021 survey showed that nearly eight out of 10 U.S. businesses had plans to sell on social media.

“Social media and engagement are critical to businesses now—Instagram, TikTok, and Snapchat continue to grow their user base[s], and people are spending more time-consuming content on these platforms,” Liu said. “Facebook also is constantly innovating new shopping capabilities on its site and Instagram.”

Social commerce also presents an opportunity for small- to medium-sized businesses to test their business ideas without investing in the infrastructure of an e-commerce site.

“Social media platforms are where you can get great feedback from your customers on what they like and do not like,” Liu said. “Use your posts to collect information by connecting with your customers in the comments or even by making a connection in direct messages.”

If you're a small business owner, when planning your social commerce strategy, look for ways to market and sell your product at the same time. Livestreams, for example, are unique opportunities to engage your audience while demoing your product. Some businesses have reported a boost in sales, fewer returns, and even happier customers. 

Notable Happenings

There is a correlation between the rise in social commerce sales and the coronavirus pandemic. The number of social buyers in the U.S. increased by 30% in 2020 compared to 2019. With many regions implementing stay-at-home orders, business owners began integrating social media and online marketing into their business models.

Key Takeaways

  • Social commerce is a blend of e-commerce and social media in which consumers can purchase products and services directly through the social media app.
  • U.S. social commerce buyers are expected to grow to 90.4 million in 2021—up from 80.1 million in 2020.
  • Apparel and accessories are the most popular purchase categories in social commerce in 2021.
  • Millennials and Gen Z shoppers are more likely to engage in social commerce than other age groups.