Social Commerce has taken off
Social connection companies home in on the community and social aspects to promote product discovery, connection, and sales.
Social commerce has taken off, with companies like YouTube, Instagram, and Shopify focusing on integrating social and commerce over the past year to drive sales.
The rise of digital communities and influencer marketing has hinged on this direct connection with consumers. Companies like skincare and makeup company Glossier and China-based lifestyle-focused platform Xiaohongshu are known for building strong communities in their user bases.
Glossier not only markets its products through collaborations with social media influencers, it also engages more directly with its followers by allowing buyers the chance to be featured on its Instagram feed if they tag the company in their posts.
Xiaohongshu leverages community-driven reviews and livestream shopping to drive engagement. Amid the pandemic, Xiaohongshu launched livestreaming capabilities, allowing in-platform key opinion leaders (KOLs) to promote and sell products through live video.
Source: Xiaohongshu
In 2020 alone, the platform saw an average of 8B views each day on its review articles, which are contributed by users and influencers alike. These articles, which users can interact with via likes and comments, have conversion rates as high as 20%, per a KOL on the platform. In December, Xiaohongshu’s users spent 40 minutes on the app every day on average.
Livestream shopping is a critical next step for companies looking to succeed in social commerce. The trend is expected to generate up to 20% of China’s total e-commerce sales by next year, up from 10% in 2020, according to estimates by HSBC and Qianhai Securities. Rampant demand is also illustrated by China-based livestreaming app Kuaishou’s $5.4B oversubscribed IPO — the largest since Uber’s $8.1B debut — following its stellar gross merchandise volume growth in 2020.
Clothing resale app Depop also focuses on the social experience. It functions like Instagram, with sellers operating as individual brands, emphasizing personal connection in what would otherwise be a solely transactional relationship. On the platform, sellers are encouraged to message their “followers,” post frequently, and curate their feeds to showcase personal flair.
Source: Depop
As a result, it’s seen much success, especially in the Gen Z demographic. More than 90% of its 21M+ users are under the age of 26, and most users end up opening the app several times a day. Its advantage over traditional retail sites and Amazon, by comparison, is that it showcases people, not products, to facilitate a deeper connection with shoppers.
Other services focus on the broader social aspect of shopping, rather than marketing via individual influencers.
For example, resale platform Lyst focuses on organizing its items based on lists of people’s most wanted goods, specifically highlighting its aggregation of data from users across several different lists. By tracking more than 10M global searches a month, Lyst brands itself as a “unique source of global fashion intelligence” to help users see what’s trending in fashion.
Source: Lyst
In a similar fashion, Amazon has tried to offer live shopping shows in the past, to little success. Amazon holds several patents in the space, with one of them showing how the e-commerce giant plans on adding electronic commerce functionality in video overlays, indicating its continued ambition to pursue the space.
Where it may find traction is through Twitch, its game streaming service. Amazon previously hosted a Prime Day livestream to promote its products, and Burberry streamed its Spring/Summer 2021 show on Twitch.