Men, millennials and households with higher incomes show greatest opportunities for social commerce

What this means: Social commerce may represent the future of retail, but it still is not as heavily utilized as much as some in the industry think. With only 5% penetration for the social channel, brands have work to do if they wish to grow the channel, which can unlock future opportunities to engage more directly with consumers and better anticipate their needs. Social commerce in the U.S. is growing at a much slower rate than in China. Social commerce consisted of about 5% of U.S. e-commerce transactions last year and is anticipated to reach nearly 7% by 2025, according to Mintel research. On the other hand, livestreaming sales in China accounted for 10% of overall e-commerce, reaching an estimated $327 billion in 2021. Still, Mintel data shows that U.S. consumers remain engaged with social commerce opportunities. Nearly half (47%) of Americans say they have purchased through social media, 58% say they are interested in doing so, and 39% who made a purchase on social media would do so again. Men, millennials and consumers with household incomes greater than $75,000 are the most interested in social commerce opportunities, Mintel reported. “These consumers can champion the purchase experiences and lead the charge for social commerce opportunities,” Katie Hansen, senior retail and e-commerce analyst for Mintel Reports U.S., told Retail Leader Pro. “Brands can encourage them to leave reviews about their experiences or offer discounts codes to share with other consumers to inspire them to give social media shopping a try.” Power of video content When examining social media platforms, 75% of U.S. consumers have shopped on Facebook, 50% on Instagram, 29% on YouTube and 18% on TikTok, Mintel reported. The popularity of video content on social media is undeniable, as 31% of consumers often watch videos brands post on social media and nearly a quarter (22%) pay attention to livestreaming from brands. In fact, 46% of U.S. consumers have purchased through livestreams and would do so again. Video, particularly shoppable video, is a key success factor in driving social commerce. Mintel’s data shows that 65% of consumers who have participated in a livestream have made a purchase and another 65% are interested in doing so. “Growth will be slow as consumers adapt and understand what it means to shop via a livestream event,” Hansen said. Millennials, Gen X and parents are the key consumer demographics leading the charge in purchasing via livestreaming, Mintel reported. Gen Z and fathers, specifically, will drive interest in the future, as they are the two most likely demographics who haven’t yet made a purchase but are interested in doing so. “It means brands should look to cater to their current participants while keeping an eye on their future users,” Hansen said. Brands also can optimize the livestreaming option by bringing in experts and leveraging value-focused offerings, such as exclusive discount codes for those who join to increase overall participation in events, Hansen added. Facebook’s lead in social commerce is heavily driven by Facebook Marketplace. Instagram, YouTube and TikTok are making strides in social commerce. Hansen believes a shift will occur in the leading social commerce sites, and most of this has to do with what kind of shopping options platforms themselves make available. For example, Meta eliminated Facebook and Instagram’s shoppable livestreaming capabilities and removed the Shop tab. “This opens the door for platforms, such as TikTok, to double down on their livestream shopping capabilities which it has,” Hansen said. “And, as younger consumers such as Gen Z come into more spending power, they’ll gravitate to social media sites they already use often in their daily life.” With recent government hearings in regard to TikTok, Mintel doesn’t anticipate a full U.S. ban on the platform; however, should one occur, brands will seek out alternative platforms that can provide them a way to authentically connect with their consumers. For example, Snapchat and Pinterest could offer brands more social commerce capabilities. A TikTok ban would also present an opportunity for a new social platform to emerge. “Regardless of what happens with TikTok, social media will continue to be key to drive sales, engagements and form relationships with consumers,” Hansen said. Concerns over data security In order for social commerce to take off domestically, consumers need to understand and feel confident in the safety of social media platforms, Mintel research showed. Less than one in five (17%) consumers are more comfortable purchasing from a brand’s social media compared to its website (41%), and 40% lack trust in the security of their payment information. However, 34% would be more interested in shopping on social media if they knew how their data was being kept secure. Additionally, Americans seem willing to extend trust to brands online, as 35% would purchase from a brand’s social media channel if someone they trusted recommended it. “Privacy and data security will continue to be a priority for consumers who are purchasing via social media – we still see this when consumers shop online in general,” Hansen said. “Consumers are comfortable with what they know, and it will take time for behavior to change as they adapt to an unfamiliar shopping option.” To help consumers feel more confident in purchasing on social media, brands could offer money-back guarantees or highlight payment protection and security options that are in place, such as on-site anti-virus software. “The more brands can show that shopping on social media isn’t so different from shopping on a website, the more consumers could be willing to give it a try,” Hansen said. Moving forward, social media will be a place for brands to make the inaccessible accessible. Meaning, while consumers might not be able to attend events such as New York Fashion Week, they can still join in on the experience as brands post on social media or livestream from their accounts. “Events and engagements are a big opportunity for brands to leverage social media and particularly livestreaming,” Hansen said. “As they do so, consumers will be exposed to the functions and capabilities of the platform, making them more comfortable on the site which could then lead to future purchases.” What’s next: Brands must treat social commerce as another channel and invest in infrastructure, improvement in relationships with platforms and optimizing short-form video content to engage consumers.

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