Report: Social Commerce Market Reaches $89B
Regardless of what happens with the sale of TikTok, social commerce could become a retail factor to reckon with in Q4, and is definitely ready for its close-up in 2021. In fact a new report puts the global market for social commerce at $89.4 billion this year and says it will reach $604.5 billion by 2027, growing at a CAGR of 31.4 percent.
Of course TikTok, along with Facebook and Instagram, is the social commerce platform of the moment and whoever gets the winning bid for it will be immediately installed as the future of the category. The potential for TikTok and its 80 million U.S. users was out in the spotlight last week with Teespring’s plans to integrate with TikTok. Teespring says its integration will provide the app’s creators to generate revenue from videos by selling customized merchandise.
“Its commerce platform lets users create a variety of gear, including T-shirts, hoodies, yoga pants and smartphone covers, that could appeal to hardcore followers looking to express their passion for their favorite creators,” says Mobile Marketer. “The news is another signal that TikTok plans to diversify its business model beyond advertising by integrating more e-commerce elements — an expansion plan that has started to factor more significantly into talks of an acquisition for the app, which faces an uncertain future in the U.S.”
That future may be uncertain, but several retail categories are betting that Facebook and Instagram will be enough to sustain the category. The sustainability will depend at least in part on advertising. If a fashion company, for example, decides to put a fashion show online with links to purchasing the goods, it will need to advertise the show and its availability. Facebook has thought that through, and in fact, CEO Mark Zuckerberg mentioned it when he announced the launch of the revamped Facebook Shops.
“On Snapchat, Dynamic Product Ads (DPAs) are introducing a frictionless experience within multimedia social networks, while Instagram, Facebook, Pinterest and TikTok are likewise pursuing constant refinement of their social shopping options,” Aaron Goldman, CMO of agency Mediaocean, writes in The Drum. “The potential for this technology to target advertising more tightly than ever, to collapse the length of the funnel between awareness and purchase, and to nimbly respond to changes in the marketing context is obvious.”
Social commerce is also an essential part of the direct-to-consumer business model, even for bigger companies that are just finding their way in this space. Coty, which has Kylie Jenner and Kim Kardashian and their respective tens of millions of social media followers in its stable, has made it clear that social commerce will be part of its go-to-market plan.
“All modern beauty groups are simplifying their organizations for more clarity, and they all end up having a luxury franchise and a mainstream mass franchise,” Coty Chief Executive Officer Sue Nabi said on the brand’s Q2 earnings call. “Coty is the first and only company at this level that is exploring the potential of the new continent of the direct-to-consumer business model through personality-led beauty with strong social media engines and followers. The new Coty will be driven by three key factors for me: first, the mass franchise, which is a key one, especially in the new norm that we are in, characterized by uncertainty and, of course, economic difficulty.”