Social commerce: the next wave of online shopping

According to SeekingAlpha, the world's largest investment community, as e-commerce shopping and social media play an increasingly important role in consumers' lives, social e-commerce that combines both is rising.

Consumer trust is the main pain point of traditional e-commerce. To address this, e-commerce platforms have launched solutions ranging from buyer shows and buyer reviews to platform-sponsored products. The survey shows that product ratings and reviews have the greatest impact on American consumers' purchasing behavior.

But over the past five years, U.S. consumers’ trust in online product ratings and reviews has declined.

Although platforms are strengthening their control over the authenticity of reviews, if the problem is not fundamentally improved, consumers may increasingly use proxies such as brand reviews and evaluations on social platforms as a measure of quality.

Social commerce can combine the convenience of online shopping with the network effect of social media. If implemented properly, it will form a powerful growth momentum, which has also attracted social media platforms to join the e-commerce team. By the end of 2025, the share of the social commerce market in the estimated $17 trillion global e-commerce market will increase from approximately 7% to 17%.

China is undoubtedly the leader in social e-commerce. Of the $390 billion in e-commerce sales in China in 2020, social e-commerce sales accounted for 22%. In contrast, in the United States, social e-commerce accounts for only 1% of e-commerce sales.

Furthermore, given its success in China, live streaming will play an important role in the development of e-commerce around the world. In the United States, live streaming and social commerce may cannibalize TV shopping channels such as QVC and the Home Shopping Network.

Elsewhere in the world, livestreaming is also being tested. While Amazon Live is trying to capitalize on this shift in trends, TikTok, Popshop Live, and established social platforms like YouTube or Instagram have far greater visibility and success.

In the United States, the correlation between e-commerce retail sales and social media monthly active users (MAUs) is almost exponential, and the booming social e-commerce is also happening with the development of relevant infrastructure, including:

1. Reduce payment friction thanks to fintech solutions

Payment solutions like PayPal (PYPL), Square (SQ), and Stripe (STRIP) are democratizing finance, and any social platform or business can now add an e-commerce presence to these sites.

2. Existing infrastructure

Back-end services that connect inventory management, logistics, front-end user interfaces, and third-party integrations cut down on the capital, expertise, and R&D required to build an e-commerce business. Companies like Amazon, Shopify (SHOP), and BigCommerce (BIGC) allow their customers to easily create and scale online businesses.

3. Accelerated adoption of traditional social media platforms

Social commerce adoption is accelerating as traditional social platforms, Facebook (FB), Twitter (TWTR), Snapchat (SNAP), and Pinterest (PINS) are integrating commerce features. Facebook offers live shopping features for merchants, while Instagram attracts users through extensive commerce features.

Editor ✎ Xiao Zhu/

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