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
Mintel found that there's interest in social commerce, but brands must work to build trust.
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.
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.”
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.”
Dealboard has funding and M&A updates from ecommerce aggregators and forecasting software.
This week, the aggregator space is active with M&A, IKEA is ready to roll out newly-purchased warehouse management software and Authentic Brands Group acquired a boot icon. Plus, there’s new investment to report for YouTube influencer Emma Chamberlain’s coffee brand and retail forecasting.
Here’s a look at the latest deals:
Chamberlain Coffee, the consumer brand founded by YouTube influencer Emma Chamberlain, raised $7 million in new funding.
The financing included backing from existing investors including Blazar Capital, Chamberlain and United Talent Agency. New investors include Volition Capital, Electric Feel Ventures, L.A. Libations and Noah Bremen, founder of PLTFRM.
The new funding follows the launch of a Ready-to-Drink (RTD) product and coffee pods. Previously, the brand raised a Series A in August 2022.
"Creating a uniquely inviting coffee brand has been my dream for so long now, and having key investors back us allows us to build Chamberlain Coffee in ways that feel fresh and exciting,” said Chamberlain, in a statement. “There are so many products I am eager to develop and projects I'm excited to get working on. With such an incredible team and group of investors I am more excited than ever to see what the future holds for Chamberlain Coffee."
Impact Analytics, a software company for retail supply chain and merchandise planning, raised new funding from Vistara Growth.
The new investment, the amount of which was not disclosed, comes after Impact raised funding in February 2021 and October 2022 from Argentum.
The funding will help Impact Analytics further develop its Impact Analytics SmartSuite product portfolio, which is designed to help optimize forecasting, merchandising and end-to-end lifecycle pricing. Rather than the traditional forecasting approach of basing decisions on the preceding year, Impact Analytics applies a model that includes 150 variables from internal and external sources, while combining recency and history. Clients include BJ's Wholesale Club, Dick's Sporting Goods, Puma and Tapestry.
Selva Ventures, a venture capital firm focused on consumer brands that promote healthier living, closed its second fund at $34 million, TechCrunch reported.
With the new funding, Selva will invest in brands across categories including health, wellness, beauty and personal care. The fund expects to write checks of $1-2 million in seed and Series A startups, while assisting in areas like finance, operations and retail partnerships.
Backers of the second fund include Unilever Ventures, PagsGroup and Obelysk.
Nautica and Forever 21 owner Authentic Brands Group acquired the intellectual property of Hunter, a 160-year-old British outdoor lifestyle brand known for its Wellington boots.
With the deal, ABG appointed longtime partners Batra Group and Marc Fisher to execute retail and ecommerce operations, as well as continue to expand the brand in the UK and U.S., respectively.
“At the intersection of fashion and outdoor, Hunter introduces another elevated global brand to Authentic’s diverse Lifestyle portfolio,” said Authentic CEO Jamie Salter, in a statement.
Terms of the deal were not disclosed.
The investment arm of IKEA parent Ingka Group acquired the warehouse management software platform Made4Net.
As a result of the deal, Made4Net’s software will be deployed across IKEA’s 482 stores and fulfillment centers. Made4Net will continue to operate as an independent subsidiary of Ingka, with a headquarters in New Jersey. CEO Duff Davidson will remain at the helm of the company.
“Our business currently requires a better fulfillment operations system with more accurate data that better supports handling for our customers,” said Tolga Öncu, head of retail at Ingka Group, in a statement. “Our goal is to become leaders of life at home, serving more people in an omnichannel reality, whenever and however customers choose to meet us.”
European ecommerce aggregator SellerX acquired Elevate Brands, a U.S.-based aggregator.
The combined companies will be known as SellerX Group. It will comprise a portfolio that includes 80 Amazon-native private label consumer brands in categories including sports and outdoors, home, mobile accessories, pets and consumables. The portfolio will span over 40,000 products.
With the deal, SellerX Co-CEOs Philipp Triebel and Malte Horeyseck will lead SellerX Group, while Elevate Brands cofounders Ryan Gnesin, Jeremy Bell and Robert Bell will remain in key leadership positions.
“This acquisition combines our know-how and diversified portfolios of strong brands with a market-leading technology platform and strong operational infrastructure,” said Triebel, in a statement. “By leveraging our combined strengths, I am convinced we are well-positioned to drive further consolidation in the industry.”
Ecommerce aggregator Society Brands acquired Wolf Tactical, a tactical gear company.
Founded in 2017 by Tim Wu, Wolf Tactical makes products including DC belts, range belts to weighted vest and tactical backpacks.
"I started Wolf Tactical by myself as a side hustle with very limited knowledge of business and entrepreneurship. A combination of hard work and relentless learning allowed me to build it into a multi-million-dollar business," said Wu who will remain as brand president, in a statement. "With the help of Society Brands, I have access to untapped potential that I would not be able to achieve by myself.”