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WTF is social commerce?

  • Social commerce is the buying and selling of products on social networking websites and apps.
  • The global social commerce industry is expected to balloon to $604.5 billion by 2027.

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WTF is social commerce?

Klarna is steadily ramping up its stake in the social commerce industry. In mid-July, it acquired social shopping startup HERO in mid-July. Now, it’s moving ahead with plans to buy APPRL, an end-to-end influencer marketing software meant to help ecommerce brands connect with content creators. Klarna’s interest in the space begs the question -- WTF is social commerce? 

The term ‘social commerce’ was first used by Yahoo! in 2005, when it promoted its ‘Shoposphere pick lists’ highlighting their most popular products. Very simply, social commerce is the use of social networks to conduct ecommerce transactions. Think Instagram’s Shopping or Facebook’s Shop. Both platforms started out as social media platforms but their latest iterations allow businesses to promote and sell products on their social media pages.

Difference between ecommerce and social commerce

Ecommerce is the process of buying and selling goods online but that typically happens through the seller’s website or app or a larger online marketplace such as eBay or Amazon. Social commerce is a subset of ecommerce, the difference being that the transactions take place on a social media network instead of an online marketplace or website. 

As of April 2021, about 56.2% of all web traffic came through mobile phones -- but mobile users also have a much higher cart abandonment rate than desktop users. Social commerce eliminates some of the issues associated with cart abandonment, typically by having fewer touchpoints between browsing and purchase with the help of autofill features like autofill payments. 

What’s the big deal? 

Currently standing at $89.4 billion, the global social commerce industry is expected to balloon to $604.5 billion by 2027. In the U.S., social commerce has been projected to hit $84 billion by 2024. Some 28%of the U.S. population is anticipated to embrace social shopping by next year.

In a 2019 Facebook study, 87% of people reported that seeing a product or product information on Instagram compelled them to take some kind of action like following the brand or visiting the website. In the same study, 54% of respondents made a purchase at the moment or after seeing a product or service on Instagram.

The social commerce trend is driven in large part by the belief that young people like Gen Z and millennials shape consumer markets. Gen Z in particular is spending two to three times more shopping on social networks than the average consumer. 

While the space is still growing, there has been some movement that suggests companies are taking notice. Klarna’s purchases of HERO and APPRL speak to its interest in creating better interactive shopping experiences for consumers. Snapchat is also investing in augmented reality technology intended to help users virtually try on products and clothes before purchase. Users can also take a photo of a friend's outfit with the app and find similar looks or product recommendations.

While social commerce is still a growing market in countries like the U.S. and U.K., it’s a whole different story in some other parts of the world, like Southeast Asia. Social commerce accounted for about 44% of Southeast Asia’s $109 billion ecommerce market last year, according to Bain & Co. While transactions are much less sophisticated, occurring in a fragmented way over Facebook chat or WhatsApp and via bank transfers, and far less streamlined when compared to Instagram’s in-app checkout with autofill payments, social media is still facilitating these transactions.


Social commerce platforms


Facebook offers consumers a streamlined user experience that integrates social media, shopping, purchase and payments. Users can discuss and review products, get recommendations and referrals. The message feature also allows sellers to offer customer service within the app as well. In an earnings call in April 2021l, Facebook CEO Mark Zuckerberg revealed that 1 billion people visit Facebook Marketplace each month. Since launching Facebook Shops in August last year, there are 1 million monthly active Shops and over 250 million monthly Shops visitors. According to a June 2020 survey conducted by Bizrate Insights, Facebook had the highest penetration of social media users that had conducted a purchase on the platform at 18.3%.


Owned by Facebook, Instagram offers much of the same features and functionality, just with better aesthetics that scream lifestyle and not what a typical marketplace would otherwise offer. Instagram’s also capable of handling entire transactions within the app. 


Originally, users browsed Pinterest looking for inspiration and creativity in terms of their purchase choices. Having researched and reviewed all their options, many users are at the cusp of a purchase. Pinterest’s Shop the Look ads and Catalogs gave customers that facility. Ikea made use of this feature when it began to transition its print catalog to Pinterest. It created a questionnaire built into Pinterest that either rendered an automated Pinterest board based on user responses or offered a selection of recommended products to build their own board. All pins in the program were linked to product and catalog pages on the Ikea site.

TikTokTikTok is also testing social commerce. Early June, TikTok was piloting a social commerce program in the U.K. and parts of Southeast Asia. Moreover, TikTok’s shoppable ads, in conjunction with Shopify, have proven popular. Shopify merchants can connect their TikTok for Business account with their Shopify account and sell products on TikTok via in-feed shoppable video ads.

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