Spending on social media platforms set to explode
Digital spending will shift to social media during the next three years, fueled largely by two groups of consumers.
The $492 billion global social commerce industry is expected to grow three times as fast as traditional e-commerce to $1.2 trillion by 2025, from $492 billion in 2021, according to a study from Accenture. The social commerce share of e-commerce spend will grow to 17% from 10% in that timeframe.
Growth is predicted to be driven primarily by Gen Z and millennial social media users, who are expected to account for a combined 62% of global social commerce spend by 2025. Millennial social commerce spending is expected to hit $401 billion (33%), with Gen Z spending at $359 billion (29%). Gen X is expected to closely follow with $344 billion (28%) of social commerce spend in 2025, and boomers lagging with $128 billion (10%).
Just under two-thirds (64%) of global social media users surveyed in Accenture’s “Why Shopping’s Set for a Social Revolution” study said they made a social commerce purchase in the last year. About six in 10 (59%) respondents said they are more likely to support small- and medium-sized businesses through social commerce than when shopping through e-commerce websites. Furthermore, 63% said they are more likely to buy from the same seller again.
Half of respondents indicate they are concerned that social commerce purchases will not be protected or refunded properly. Accenture analysis indicates trust represents the biggest barrier to social commerce adoption, as it was for e-commerce at its beginning stages.
By 2025, the highest number of social commerce purchases globally are expected to occur in the product categories of clothing (18% of all social commerce by 2025), consumer electronics (13%) and home décor (7%). Fresh food and snack items also represent a large product category (13%), although these social commerce sales are nearly exclusive to China.
Accenture predicts that beauty and personal care, although smaller in terms of total social commerce sales, will quickly gain ground, with social commerce capturing over 40% of digital spend on average for this category in key markets by 2025.
The study’s other findings include:
- Consumers in developing countries are more likely to use social commerce and do so often. Eight out of 10 respondents in China use social commerce to make purchases for a given category, while the majority of social media users in the U.K. and U.S. have yet to make a purchase via social commerce.
- Shoppers in China, India, and Brazil care more about features that help them discover and evaluate potential purchases. Respondents in the U.K. and U.S. place more importance on pricing and discounts.
- Trust is more important to older generations than younger generations. Older shoppers emphasize security features and value brand familiarity, while younger respondents are attracted to livestreams and put more faith in buyer reviews.
[Read more: Klarna moves into social commerce space]
Accenture Research designed and fielded an online survey of 10,053 social media users in China, India, Brazil, the U.S., and the U.K. in August and September 2021. Accenture also conducted in-depth interviews with shoppers and sellers from those five markets in May and June 2021.