Why Social Commerce Has Stalled and What’s Next

Is social shopping ever going to become a mainstay outside of China? Known as social commerce, it’s when customers make a purchase directly from a social media channel.

There’s no doubt social media can help build awareness and engagement with your products and services, driving conversions to your website or mobile app.

Analysts, media outlets, and pundits, myself included, have touted that social shopping is the next wave of e-commerce, and is here to stay, but is that what’s happening?

Sort of. The push to make social shopping work and drive transactions directly from platforms in the U.S. and Europe has seen many stops and starts.

TikTok , Instagram , Facebook , and Amazon have recently shuttered a range of social commerce features like live shopping due to low adoption from Western users, among other factors.

At the same time, forecasts suggest the social commerce market in the U.S. will grow by 30% to an estimated $69 billion in 2023.

This is actually a reason the market seems slow to take off given it's quite small in comparison to the Chinese social commerce that’s forecasted to reach $500 billion in retail sales value by 2024 and the overall ecommerce market in the U.S. estimated to reach $1 trillion dollar in 2023.

The sluggish growth can be attributed to many factors, one is how the Chinese market is more saturated across fewer platforms, compared to the more complex, fragmented US landscape.

“Honestly, a lot of it is market dynamics. The social platforms that showed up first and grew to prominence in China (and Asia in general) were closer to "super apps" where consumers were used to doing a number of different things at once, and most/many of those activities were commercial,” says Jeremy Goldman , Senior Director of Briefings at Insider Intelligence. “Consumer behavior tends to get relatively set at the dawn of any new technology, and it's hard to shift how people behave later, albeit not impossible.”

It’s been difficult for social commerce to gain the same level of traction in the U.S. because there are more shopping options for consumers to choose from and it wasn’t an initial use case.

“I would disagree with the statement that social commerce is yet to take off in the US,” added NYU Stern School of Business professor Anindya Ghose . “China is about three to four years ahead of us with respect to social, but mainly because of the adoption of live stream. So I think what US platforms and companies need to do is adopt creative uses of live streaming to further trigger social commerce.”

Another reason social commerce hasn’t seen a huge growth spurt in the West is that many of the interactions on social media between consumers and brands happen higher in the funnel.

The marketing funnel is the framework used in marketing to understand the decision-making journey customers most often take across channels and touchpoints toward a purchase.

Often the engagement a brand has with customers happens at the top of the funnel as they seek to make them aware of its offerings for the first time and start building a connection.

As such, customers aren’t always going to make a purchase after the first few interactions as they frequently need more time and information before they decide to buy.

It can be a lengthy timeline between someone first seeing a product and buying it, leading to social media influencing purchases, but not being the destination where the transaction occurs.

Next, checkout technology has kept pace with social shopping innovations leading to more seamless, frictionless shopping experiences across devices.

This has reduced the value of checking out directly on the social network you’re using as the transactions are often just as straightforward and smooth on a company’s ecommerce store.

“Social platforms need to add value to the shopping experience. They haven't really done that yet. If a consumer discovers a new book on TikTok and wants to buy it with one click later on Amazon, there's not that much friction to that experience,” added Goldman.

Another big factor slowing the rise of social commerce is diminishing trust in social media.

Despite it being one of the top news sources U.S. consumers reference daily, it’s the least trusted because the insights available on these channels aren’t vetted, and are frequently inaccurate.

Due to the proliferation of misinformation and disinformation, frequent missteps from the social media companies themselves, and numerous privacy issues, it’s understandable why shoppers are necessarily interested in sharing their payment info and transacting on these platforms.

Lastly, social commerce has stalled because brands have rightfully prioritized how social media can support the customer’s shopping journey and less about where the transaction takes place.

“The key thing here is to not worry about where the conversion is happening; worry about being able to track the conversion and attribute how social media helped you net the sale. It doesn't matter if your customer used a social checkout or heard about your brand from a well-designed Instagram ad, then jumped over to your D2C site to check out; what matters is that you can credit social media with the assist,” says Goldman.?

Focus instead on how your social media activities can assist with product discovery and research, and most of all, partnering with creators to further drive purchases of your offerings.

“The rise of features within social media platforms to generate income for creators will help to make this more mainstream in the years to come,” added Laurie Wang , a digital marketing strategist based in London.

“I think the social platforms in the West are catching up to be more creator and commerce friendly, albeit behind what platforms in Asia are offering their creators,”

“But with recent additions in the last few years, such as Instagram badges, Instagram Subscriptions, TikTok Shopify partnerships, for example, are ways that creators are increasingly motivated to participate in social commerce and building their audiences online.”?

If the social platforms popular in the West continue to invest in helping creators earn income and brands make use of these features in creative ways, social commerce may grow more quickly.

An indicator that some of these commerce features are having a positive impact is the creator economy has expanded to include a wider range of influencers with different backgrounds.

“An interesting trend over the last few years is that influencer marketing in social commerce has taken off not because of the role of celebrity or macro influencers but because of the rise of micro-influencers,” added Ghose.

Yet a 2022 report from Linktree found that only 12% of full-time creators are making over $50,000 per year, an indication that much more progress is needed to properly support creators.

Social commerce will mature in the U.S. and European markets as long as the platforms, brands, and creators thoughtfully collaborate to offer a superior shopping experience.

“The future of social and the future of commerce is giving the customer more choice, not less,” added Goldman.

For more insights on how social media continues to evolve, listen to my LinkedIn Learning audio course on?Social Media Marketing Trends .