Facebook, Twitter, Snapchat turn to shopping to drive growth: more people than ever before are buying products from social media
- Brands from Burberry to H&M have signed up social media stars to get their followers to shop from stories or posts by asking them to ‘swipe up to purchase’
- The social commerce industry is expected to balloon to US$50 billion from US$36 billion in annual sales by 2023 in the United States
Led by Facebook, social media platforms from YouTube to Snapchat to Twitter are investing heavily in shopping features to drive revenue growth, a major theme that emerged during the second-quarter results at the end of July.
The companies are vying for a piece of the “social commerce industry”, which relies on users’ ability to discover and buy products through social media apps. It is expected to balloon to US$50 billion from US$36 billion in annual sales by 2023 in the United States, according to research firm eMarketer.
The success of social commerce stems in part from product targeting based on user interests, with sales generating more data that can be used for future advertising and merchandise placements.
Retailers are increasingly hopping on to the trend as Covid-19 restrictions weigh on bricks-and-mortar sales.
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Brands ranging from luxury fashion house Burberry to fast fashion giant H&M have signed up celebrities and influencers to get millions of their followers to make purchases off ephemeral stories or posts by asking them to “swipe up to purchase”.
While the business is small for now, the social media giants are eyeing the data generated from users’ shopping and browsing habits for targeted advertising.
Facebook launched Shops in May 2020 during the height of the pandemic, luring brands with an easy way to sell items directly through Facebook and Instagram and consumers with a curated and personalised way to discover trendy clothes or home goods.
Facebook was the top social commerce platform according to a survey conducted by eMarketer in June 2020, with 18 per cent of respondents saying they had bought a product via Facebook. That compared with 11 per cent for Instagram and 3 per cent for Pinterest.
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“People have got accustomed to buying online,” said Edward Jones analyst Dave Heger. “I don’t think that they’re going to go completely back to the level they were at before in terms of purchasing at brick and mortar stores.”
Snap is investing in augmented reality technology designed to help users virtually try on items like watches, jewellery and other apparel to cut down on returns, a major problem faced by online retailers.
Snapchat users can take a photo of a friend’s outfit with the app and find similar looks or product recommendations, Snap chief executive Evan Spiegel said in July during the company’s earnings conference call.
“The holy grail of advertising is to actually sell merchandise,” said Rich Greenfield, a partner at LightShed Partners, in a recent note on Snap.
“While these initiatives are still in the early stages, we believe an increasing number of brands want to be associated with where commerce is headed.”
Popular short-form video app TikTok is testing live-streamed shopping with select brands in Britain, allowing viewers to purchase clothes as an influencer models the item in real time during a live video.
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Streaming video site YouTube, known for “unboxing” videos in which YouTubers review toys or tech gadgets, wants to integrate shopping directly into the platform, said Google chief business officer Philipp Schindler.
