Social Commerce Market

Market Overview

The social commerce market size was valued at USD 575.8 billion in 2021. It is expected to grow at USD 6,191.13 billion by 2030, growing at a CAGR of 30.2% during the forecast period (2022–2030).

 E-commerce is increasingly critical in retail and is restructuring the social commerce market. Since the turn of the century, online shopping has grown considerably as access to the internet has reached all corners of the world, and smartphones have become an integral part of the lives of billions of people. Social commerce has opened an entirely new shopping realm, providing consumers with access to a much greater assortment, helping to meet the rising demand for convenience. Social commerce is gaining momentum due to the increasing popularity of online shopping and the comfort it provides. Customers can now order products from the convenience of their homes with minimal effort.

The sellers on social commerce platforms offer discounts, cashback, same-day or next-day deliveries, click-and-collect services, ESR options, and other services that make online shopping more convenient and profitable than offline shopping. To further enhance the customer experience, businesses invest in technologies such as artificial intelligence, chatbots, machine learning, and augmented reality. The increasing convenience of online shopping is anticipated to be a significant market growth driver over the forecast period. Social Commerce Social commerce platforms include market leaders like Facebook, Twitter, and Pinterest. This can help local retailers increase their customer base by bridging the gap between customers and local retailers.

Market Dynamics

Market Driving Factors

Social Networking Sites are Encouraging Companies to Reach Customers

Many businesses are utilizing social commerce to reach out to existing and prospective new customers. Several factors influence this trend, including the fact that people are spending more time on social media platforms; studies show that the average person spends more than two hours per day on social media platforms. In addition, these platforms serve as practical marketing tools, contributing to a steady increase in online shopping via social media platforms because they enable customers to make purchases more interactively than traditional e-commerce platforms. In the preceding decade, social media networks have garnered extraordinary attention and experienced an exponential increase in user base.

Access to social networking sites like Facebook, Twitter, Instagram, LinkedIn, and YouTube is now effortless. The exponential growth of these and other social networking sites' user bases encourages businesses to connect with customers via these platforms. In addition, the convergence of content sharing, shopping, payment, and messaging features has facilitated the growth of social commerce in recent years. Social commerce, defined as using a social media platform to drive and process e-commerce transactions, has spawned new forms of shopping in tandem with online environments. Consequently, the increasing adoption of e-commerce and social media platforms for shopping and information exchange is anticipated to fuel market growth in the coming years.

Shift in Consumer Mindset due to Advancement in Technologies

Social commerce platforms are attracting businesses of all sizes by providing a platform for establishing personalized customer journeys through social interactions. Long ago, social media served as a platform for users to window-shop before making purchases on e-commerce sites like Amazon.com and Walmart.com. However, social media platforms enable brands to build customer communities, relationships, and trust. By providing seamless integration of e-commerce products, visual-first platforms like Instagram and Pinterest have played a crucial role in bringing about this shift. A significant advantage of social commerce over traditional e-commerce for consumers is the time saved due to the rapid provision of comparative information.

To encourage more consumers to make direct purchases on social media platforms, social sites are adopting innovative buying criteria and features, and merchants are incorporating shop pable posts and buy buttons on their respective pages. Consumers' online shopping behavior is influenced by factors other than internet access. Demographic parameters, such as gender, age, and occupation, as well as consumers' perceptions of benefits and risk factors, are significant influences on online shopping behavior. Socially conscious consumers are influencing the evolution of the entire online retail industry. Retailers and their supply chains must be well-equipped to meet current and future customer expectations. Shortly, this is anticipated to create growth opportunities for the social commerce market.

Market Restraining Factors

Significant Concern about the Privacy of the Customers

Hackers target social media websites after realizing that social commerce platforms handle large volumes of critical and confidential information, from personal use to financial data. At this time, any data breach can result in emotional and financial losses for an individual and tarnish a company's reputation. High probabilities of data abuse are also present. In addition to maintaining backups of vital data, social commerce businesses emphasize ensuring adequate data security. Various government bodies worldwide have drafted and revised data security and privacy laws.

Nevertheless, standardizing, enforcing, and maintaining these laws for social commerce is still in flux. In the event of a data breach involving the confidential information of customers, social commerce businesses are subject to severe monetary penalties. In addition to financial penalties, they may lose existing contracts and acquire a tarnished reputation, making it difficult to reach new customers. Customers' data in a typical social commerce business is strategically important because it represents the business's accumulated experience. It can include the complete history of customer interactions, customer responses, changes in purchase decisions, outright defections, acquisitions, credit defaults, complaints about defective products, and fraudulent activities. As a result of the vulnerability of numerous social media sites to cyberattacks, users are concerned about unauthorized access to their data. As retailers/vendors collaborate with third-party payment platforms to provide consumers with a safer and more secure payment environment, it is anticipated that security concerns will be short-lived.

Key Market Opportunities

Exposure to Big Data Analytics and Artificial Intelligence

Big data and artificial intelligence (AI) have recently evolved and are rapidly adopted. Social commerce companies are aggressively adopting AI and big data technologies to optimize their service offerings. Big data, a vast collection of online and offline data, has evolved into a valuable resource for analyzing past trends and gaining valuable insights into customer behavior, allowing for greater customer satisfaction. Integrating big data into social commerce can provide businesses with access to data that can be utilized to maximize revenue, acquire new customers, and streamline operations.

AI enables e-commerce companies to enhance the customer experience, optimize brand competitiveness, and cultivate brand loyalty. It provides buyers with accurate product recommendations and improved search results, allowing them to find what they want with the fewest number of clicks. The increased adoption of AI in the social commerce industry has enabled businesses to meet rising customer demands precisely and effectively. AI and big data are the major transformative technologies impacting how businesses interact with data and business processes. The technologies facilitate the construction of digital data models and the collection of data; utilize data from various sources as a knowledge repository, resulting in an accurate prediction of customer requirements. Numerous advantages of these technologies for the social commerce industry are compelling businesses to leverage big data- and AI-based applications to improve customer experience and convert dissatisfied customers into loyal customers.

Regional Analysis

The global social commerce market is segmented into five regions, namely North America, Europe, Asia-Pacific, the Middle East and Africa, and Latin America.

Asia-Pacific held a significant market share and is expected to grow with a CAGR of 30.7% during the forecast period. Rising investments in the telecommunication infrastructure, the proliferation of the internet and smartphones, and the widespread use of social media websites such as Facebook, Instagram, and Twitter are primarily responsible for the expansion of this region. In addition, the increasing number of smartphone and social media users in countries such as China largely favors regional market expansion.

North America has emerged as the second-largest market and is anticipated to grow incredibly during the forecast period. Compared to developing countries, the U.S. e-commerce and social commerce landscapes are significantly more fragmented, with different consumer attitudes and behaviors toward social media consumption, digital shopping, payments, and online privacy. According to GWI, 51 percent of U.K. and U.S. consumers will use YouTube to find products and conduct additional research before making a purchase.

Segmental Analysis

The global social commerce market is segmented by business model and product type. When segmented concerning the type, it is further classified as – Business to Consumer (B2C), Business to Business (B2B), and Consumer to Consumer (C2C).

In 2022, the B2C market category held a sizable market share. During the forecast, it is anticipated to increase at a high rate. The increasing demand for the business-to-customer (B2C) business model results from changes in consumer behavior and thinking and the expanding usage of digital technology. Social commerce platforms enable customers to quickly browse, choose, and order products while comparing them to one another by reading user reviews.

The C2C category is anticipated to increase at a profitable CAGR throughout the projected period. Websites that serve as go-betweens for clients are referred to as C2C businesses. With this paradigm, sellers can act as buyers, and buyers can act as vendors. Depending on their needs, customers might switch positions. The B2B sector is anticipated to experience consistent expansion in the upcoming years.

Various firms typically use this model for marketing their goods and services to other buyer enterprises. The B2B strategy satisfies customers' needs while catering to specialty markets like pet stores and pet foods. One of the newest mobile social networks, WeChat Business, uses personal and professional connections to strengthen client interactions.

The dynamic pumps are more prevalent in the global social commerce market and are expected to grow with a CAGR of 4.8% during the forecast period.

Based on product type, personal and beauty care's global social commerce market has the most dominant revenue generation growing at a CAGR of 34.8% during the forecast period.

Online shoppers do so because they are fully aware of what to expect from the user experience once they have made a purchase. Data is a top priority for personal and beauty care brand owners and marketers regarding client targeting and product development. Without purchasing or hiring local merchants and distributors, using social commerce beauty brands opens up the possibility of a large global audience and foreign markets. Sellers on social commerce platforms provide various services that make online shopping convenient and profitable, including cashback, discounts, same-day or next-day deliveries, EMI possibilities, click & collect options, and many more.

The apparel sector led the market in 2022. The clothes and apparel industry is more significant than any other internet business because of its widespread popularity and high demand on social media platforms. Fashion businesses found novel ways to create purchasing experiences, include influencers and creators, and forge new connections during the COVID-19 pandemic when most people were online for the majority of the time. For instance, Express, a U.S.-based fashion company, "empowered everyday consumers and influencers to become the Style Editors," set up Express stores, and received compensation for increasing sales and luring new customers.

Recent Developments

• In September 2022, Pinduoduo will introduce a global e-commerce platform.
• In January 2023, An exclusive video content agreement between Condé Nast Entertainment and Pinterest was announced to motivate Pinners everywhere.
• In November 2022, Afrikaans, Croatian, and Bulgarian versions of Pinterest are now available.