Social commerce is nearing a critical inflection point in Western markets, while continuing its rapid climb in APAC. We take a look at the growth trajectory of this new commerce channel, as well as how brands can leverage a wealth of data offered by social media platforms to drive social commerce success. 

The Social Commerce Phenomenon  

In the summer of 2021, Kim Kardashian launched her new fragrance line for the Chinese market. The launch, however, didn’t involve a lengthy trip to China and an in-person appearance at an upscale venue in Shanghai. 

Sat in front of an iPhone in a New York hotel room, wearing her iconic black turtleneck, Kardashian tapped into an audience of 13 million consumers. Lip-shaped bottles of her signature perfume sold out in minutes, in no small part thanks to Kardashian’s co-host: Chinese “mega-influencer” Viya. 

Viya (real name Huang Wei), whose following at the time exceeded 74 million people, has since vanished from public life following a Chinese government crackdown on the country’s highest-earning influencers. Nevertheless, the commercial clout that she and thousands like her wielded in the Chinese economy remains a useful lesson, especially as the impact of social commerce grows outside of China. Live streaming and posting content to apps like TaoBao Marketplace and Douyin, Viya and her contemporaries helped to drive a generational shift in the way Chinese consumers engage with brands and spend money online. China’s social commerce market grew by 40.25% between 2021 to 2023. By 2029, the GMV of social commerce in China is expected to grow from USD$425.23bn (£342.01bn) in 2023 to more than USD$745bn (£599.27bn) by 2029.

Outside of China, social platforms are scrambling to compete with foreign and domestic newcomers, after several failed attempts, social commerce approaches a critical inflection point. 

Collapsing the Gap Between Social Media and E-commerce  

Social media platforms have long been places for brands to connect with – and advertise to – consumers. The traditional goal of social media advertising, however, has always been to entice social media users to engage in e-commerce (or just traditional commerce) outside the social media platform. 

Social commerce collapses the space between social media and e-commerce. By leveraging the social features like recommendations, user reviews, and social sharing mechanics, social commerce promises each user a personalised, socially-driven shopping journey. 

Transactions take place within the social media platform itself, and the mechanics of social media become much more closely interleaved with the broader workings of e-commerce. There’s a lot of emphasis on integrating shopping experiences seamlessly into users’ social interactions. The gap between social engagement, entertainment, aspiration and, most crucially, shopping, appears to have disappeared.

“On social media, the social aspect is the key to driving successful commerce strategy,” explains Thomas Walters, Europe CEO and co-founder of influencer marketing agency Billion Dollar Boy. The chance that social media gives brands to “share, discuss and be talked about” is, he says,  what defines and drives social commerce to go beyond what traditional e-commerce can offer. Central to this distinction, Walters adds, is the fact that social commerce feels “less transactional” than other forms of e-commerce. It’s an experience, a merging of the social and parasocial relationships we engage in online and a shopping experience. “The clue is in the name ‘social commerce’: social commerce without the ‘social’ bit is just commerce, and a missed chance to tap into what people are buying, for what reason, to wear with what, to be seen where and with who,” he stresses. 

Mature in China, New Everywhere Else

China is by far the most mature social commerce market, but the rest of Asia is quickly catching up, and is noticeably more developed than the rest of the world. Vietnam and South Korea, in particular, are driving both adoption and innovation in social commerce.  

“Social commerce has had many false dawns in western markets,” Walters explains. Multiple platforms have launched social commerce tools and formats in the past, promoted them heavily, and then scaled back their efforts or pulled the plug entirely. Despite new tools and formats being developed, Walters observes that none of the US social platforms “are yet to quite ‘nail it’, and so we find ourselves back at square one in a sense with social commerce still having to prove its viability.” 

Nevertheless, a lot of what drives social commerce adoption is consumers’ overall comfort with making purchases online. Walters reflects that the pandemic “sped up consumer behavioural changes towards online shopping out of necessity.” As a result, more demographics than just Gen Z (who nevertheless account for an overwhelming slice of social commerce revenues) are now comfortable with e-commerce.  

In particular, the launch of TikTok Shop in the US last September had been seen by many as the conflation of social media platform and e-commerce marketplace that would tip social commerce fully into the mainstream. Nick Morgan, Founder and CEO of content commerce platform company Vudoo, argues that TikTok Shop “set the standard” for social commerce experiences among Western customers. “An entire generation of consumers now expect to be able to interact with and seamlessly purchase goods within the content they’re consuming,” he says. 

However, the US has since moved to ban TikTok, unless sold by its China-owned parent company ByteDance within 12 months. If the ban is actualised, this will certainly affect the US’ social commerce landscape.   

Challenges, Change, and Chances to Create Value From Data 

As social commerce increasingly blurs the lines between social media engagement and online shopping, brands looking to capitalise on this opportunity need to be prepared to move fast, be resilient, and harness the potential of data. 

The wealth of behavioural data generated by social media platforms, combined with additional purchasing data (previously isolated wherever the customer went to spend their money under an e-commerce model) provides marketers with “a wide range of quantitative and qualitative insights from hard data” such as sentiment analysis and purchase information, Walters explains. 

Essentially, because social platforms can now process transactions and, in doing so, gain access to first-party customer data, they can offer significantly more value to advertisers. Social media platforms armed with this kind of data can now draw much clearer connections between advertising impressions and verified sales. 

“It’s possible to run sales lift studies to measure the impact of your advertising campaign on your brand. A sales lift typically reveals the incremental increase in sales that occurs during a specific promotional time period versus the baseline sales that would have occurred during that same time period had the promotion never been launched. This can help to demonstrate direct purchase (which is of course just one part of the sales picture) via UTM links, affiliate links and more,” Walters continues. “This data could be used to assess demand which can then inform exclusive launches with limited availability for example.”

Social commerce in the US is expanding rapidly. Despite the TikTok ban if the video platform is not divested, Sarah Adams, Head of Social Strategy at Visualsoft, expects social commerce revenues in the US to surpass USD$100bn (£80.42bn) this year. Nevertheless, she stresses that, “when it comes to scaling, it's more than just leveraging data.” She highlights the fact that “payment gateways and delivery options also influence decisions, and in order to grow in these areas these need to be flexible within social commerce.”