Economy
20 March
This Week in Commerce: Nike earnings, Fed rate decision
Check out the agenda for March 20-24.
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Welcome to a new week. Spring is here. That means blossoms, but it also means new fashion trends in the street and campaigns on our screens. On the calendar, earnings offer a bellwether for the consumer economy this week, as key brands like Nike and General Mills will report results. Elsewhere, all eyes will be on the Federal Reserve as it announces its latest decision on interest rates.
Economic indicators
Fed interest rate decision: The Federal Reserve Open Markets Committee announces its decision on whether and by how much to hike benchmark interest rates following its two-day meeting. The Fed has been hiking interest rates rapidly in an effort to bring down 40-year-high inflation, but slowed the pace at the February meeting with a 0.25% increase. (March 22, 2 p.m.)
Durable goods orders: The U.S. Commerce Department releases data on orders from manufacturers for goods that are designed to last more than three years. This is considered an indicator of business activity. In January, orders dropped at the steepest rate since April 2020. (March 24, 8:30 a.m.)
Earnings
Monday, March 20: Boxed, Foot Locker
Tuesday, March 21: Nike, GameStop
Wednesday, March 22: Petco, Chewy
Thursday, March 23: General Mills, Express
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Marketing
20h
Study: Nearly half of US consumers bought through social media
Mintel found that there's interest in social commerce, but brands must work to build trust.
Photo by Tim Mossholder on Unsplash
Shopping on social media is becoming a more popular option for American consumers, even as platforms continue to tinker to arrive at the right ecommerce experience and shoppers remain uneasy about sharing payment information.
New research from Mintel shared the following data about social commerce:
Buying from the feed: Nearly half – 47% – of U.S. consumers have made a purchase through social media, while six in 10 are interested in doing so. There are also signs of satisfaction, as 39% have made a purchase on social media and would do so again.
Growing share: Social commerce made up about 5% of U.S. ecommerce sales in 2022, and is expected to grow to 7% by 2025.
Changing channels: When it comes to a breakdown by platform, 75% of US consumers say they have shopped on Facebook – driven by Facebook Marketplace. Meanwhile, 50% have shopped on Instagram, 29% on YouTube and 18% on TikTok.
Live buying: 46% of Americans have purchased from a livestream, and would do so again, while 22% pay attention to livestreaming from brands.
The data indicates that U.S. consumers are showing interest in social commerce, but it remains a nascent area. Americans are used to discovering products through ads and affiliate posts on social channels, but largely continue to make purchases through marketplaces and brand websites.
Trailing China
While U.S. social commerce adoption is expected to grow, the pace of expansion is slower than in China, where social media platforms and livestreaming are more widely embraced shopping channels. In 2021, China saw $327 billion in livestreaming sales in 2021, accounting for 10% of overall ecommerce, according to Mintel.
There’s a continued debate in ecommerce circles about whether U.S. social commerce will ever rise to the level of China. Much of this centers on livestreaming, which has yet to find a foothold on the major social platforms. Facebook and Instagram both ended livestreaming capabilities in the last year. YouTube and TikTok’s capabilities are still nascent in this area. eBay is embracing a focused approach around collectibles. Firework is showing a different approach to livestreaming that is more concentrated on moments within the buying journey of a marketplace or DTC site, rather than a QVC-style session on a platform. There are successes to report on each of these fronts, but the right formula has yet to emerge.
To grow social commerce, the platforms must also have the right journey in place that allow brands to effectively promote and sell products, and users to check out onsite. Many of these features are still under development. This week, YouTube opted to sunset product tagging, and opt for an affiliate program. Instagram removed its Shop tab from the home navigation last month, and made room for multiple links in bio this week. TikTok and Pinterest have been loud about building ecommerce into their respective platforms, but their shopping-focused ad products are still new. While platforms work out the right configuration, marketplaces are looking more like social media. Amazon and Walmart recently rolled out features that are closer to TikTok than their traditional search-driven formats. But, as with livestreaming, these are pilots. Platforms have yet to find the approach that works at scale.
It’s a time for brands to experiment with tactics, too, said Katie Hansen, senior retail and ecommerce analyst for Mintel Reports US.
"Consumer interest in social commerce is shining a bright light on the future of the shopping channel,” said Hansen, in a statement. “Brands need to consider what consumers need to move past current hesitations and barriers. For example, getting more for less is always appealing; brands could look to offer special prices for first-time social commerce buyers. Even simple measures such as offering money-back guarantees or highlighting free returns could give consumers the confidence they need to give social commerce a try.”
Building trust
In the U.S., ushering in social commerce will require an ecommerce behavior change. Consumers are shifting from checking out on a marketplace to checking out on a social platform. This means they will be providing payment information and other key details to a platform, where previously it went to Amazon or directly to a brand. Giving up this info requires trust, and there is still a big deficit in this area to overcome.
Mintel found that while 41% of consumers were comfortable purchasing from a brand’s website, only 17% felt good about making a social media purchase.
Some of this comes down to data, as 40% say they lack trust in the security of their payment information. But there is room for gains to be made with the right education and engagement. If they knew their data was being kept secure, 35% said they would be more interested in shopping on social media.
“Trust in data security is a key concern among US consumers shopping on social media,” Hansen said. “Brands that provide testimonials to showcase the validity of their products and the security of the purchasing channel will further instill trust and win over consumers.”
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