Understanding the future of social commerce

User-generated-content (UGC) has grown exponentially and has coincided with the growth of content creators across social commerce platforms, such as TikTok, Instagram, and Facebook. UGC growth on social platforms has created communities loosely organized around shared affinities. These communities interact with creators via “likes,” “comments,” and “tips” and can influence consumer purchasing decisions. The intersection of the 4 Cs: Content, Creators, Community, and Commerce has led to social commerce. Social commerce is a consumer experience on a social platform that blends the point of inspiration with the point of purchase. Brands, retailers, and social commerce platforms need to better understand the implications of each of these 4 Cs to drive a greater share of wallet from the future of social commerce.

1. Content is the glue connecting creators, brands, social platforms, and users

Through a mix of a social platform’s content presentation algorithm (what powers the user feed or “For You” page) and content created by creators, engagement is developed as users consume and interact with creator marketing. Creators are often seen as authentic and relatable, making their “stamp of approval” on products valuable. Especially as it relates to sponsored content in which the creator is paid for posts, brands are balancing the need for control over brand messaging with the benefit of leveraging a creator’s authenticity. To the extent these interactions are collaborative, they lead to a better experience for all.

In addition, social commerce platforms are enabling content to be closely tied to the commerce experience in the form of shoppable content, ads, and videos. For example, social platforms have created product tags—the ability to click on “purchasable” goods on an image-based or video-based creator post and then check out. In addition to innovating how content can be used to buy, platforms need to look at how creators can be monetized to ensure they continue to create content. After all, creator content also increases user stickiness to social commerce platforms.

2. Creators can help reduce leakage at the top of the funnel

Creators have transformed the typical purchase funnel by creating more stickiness at the top of the funnel—the early stage of creating the point of inspiration. Historically, social platforms had static ad content to engage users in commerce activity. But advertising-generated engagement can be difficult to track and hard to measure for return on ad spend. Creator content allows for easier discovery as users watch content from their favorite creators. It’s no wonder that brands are heavily investing in creators, with creator marketing set to reach $4B in 2022¹. Brands understand the power of creators, but the challenge of finding the right creators to collaborate with still exists. Social commerce platforms are starting to support this goal with brand/creator marketplaces where both brands and creators can identify partnership opportunities. In addition, 3rd-party creator marketing platforms are making it easier for brands to find the right creators. Finally, content creators aren’t just Gen X to Gen Z individuals who create content as a hobby or as a full-time job. Organizations are increasingly turning to employees into creators. For example, at the end of 2020, Walmart made its employees creators promoting products and services on their personal social accounts².

3. Communities offer rich customer insights

Communities are the reason creators are attractive to social commerce platforms, brands, and retailers. Communities span multiple social platforms and affinity areas, as well as age groups and geographies. For example, according to the Deloitte Digital Media Trends report, 50% of Millennials have made a purchase on social media, compared to only 11% of Boomers³. Amongst these diverse communities, social commerce platforms and brands try to uncover insights to better tailor messaging and inform brand/creator partnerships. For example, the comments section of a YouTube video can often take up far more real estate than the video itself and can reveal information about product preferences. Imagine a creator conducting a sneaker review. The comments may feature lines and lines of community chatter highlighting competitor products or uncover previously unknown brand perceptions.

4. Seamless commerce should integrate social platforms, brands, and retailers

The first 3 Cs make the 4th C possible. Social commerce has been enabled through a range of social platforms and 3rd-party tool enhancements. Social platforms were not originally developed with commerce transactions in mind but have quickly adapted. In 2019, Instagram introduced a checkout feature that included stored user info (e.g., shipping address), product tracking, return procedures, and merchant contact⁴. In August 2021, TikTok expanded its partnership with Shopify to allow merchants on TikTok to create shopping tabs in their profiles and sync their catalogs. These features are as important to the bottom of the sales funnel, as creators are to the top. By reducing new windows, additional clicks, and the need for user information to be input multiple times on the social platform itself, leakage is minimized, and more first data can be captured by the platform, which can then be shared with brands. The opportunity for commerce has also led to new alliances and ecosystems. For example, BigCommerce partnered with TikTok to allow merchants direct access to TikTok for Business to sync their product catalogs and run ad campaigns. Building digital shopfronts and transaction capabilities are also opening up new creator opportunities such as custom-curated storefronts and creator recommendations for products that can be bought directly.

Creating the new frontier of e-commerce

Taken together, the new 4 Cs are creating the new frontier of e-commerce, transforming how brands and retailers think about their marketing spend. Deloitte has a full suite of capabilities to support you on your journey to navigate the 4 Cs to win in social commerce.

Endnotes

¹ US influencer marketing spending will surpass $4 billion in 2022
² 3 Brands That Turned Their Employees Into Brand Ambassadors
³ 2022 Digital media trends, 16th edition, Deloitte Consulting
⁴ Introducing Checkout on Instagram | Instagram Blog

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		Dennis Ortiz Managing Director Technology, Media & Telecommunications			Abhilash Thalathoti Senior Manager Strategy & Analytics			Weiner, Marc Senior Manager Customer Strategy & Applied Design