Key takeaways
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Online shopping growth steadies
The dust has settled on the exploding ecommerce market, but brands now find themselves up against global competitors
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Social media is taking over commerce
Brands are leaning heavily on social media to engage, convert, and retain customers
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Digital advancements revolutionize social media
Innovations that make the metaverse possible could give early adopters an edge over the competition
Ecommerce growth stabilizes post-pandemic
The nearly $900 billion US boost from store closures in the first year of the COVID-19 pandemic accelerated ecommerce innovation and tech adoption by half a decade. Around the world, new shoppers entered the ecommerce market for the first time in every category, but growth has now slowed, and 2022 saw the market recover from its breakneck rate of growth. But not all the momentum has evaporated, despite the economic situation. Ecommerce growth in 2023 is projected to be 5% higher than from before the pandemic, and will stabilize in the years following.
All values are in U.S. dollars
Projected ecommerce revenue and growth rates worldwide from 2017 to 2025
In billion U.S. dollars
Sourced from Statista
A healthy ecommerce market attracts stiff competition. Marketplace giants have dominated on convenience, speed, and low prices, while many independent digital retailers struggle to stand out in a saturated market. Cart abandonment rates are high, and consumer loyalty is harder to earn.
Brands are looking to level the ecommerce playing field by turning to social media, whose users nearly equal the number of internet users. Simply put, if someone is on the internet, chances are they’re also on social media.
Social media is infiltrating every part of retail
Social media is taking over commerce. Every month, 95% of working-age internet users visit social media platforms. Gen Z now uses social media to research brands more often than they use search engines. The rest of the population isn't far behind.
Social networks have become the second most popular method global consumers use to search for products to purchase. eMarketer estimates the social commerce sales in the United States alone will double its 2020 sales in 2023, exceeding $56 billion. Global sales will be well past the trillion mark in 2023 and break $2 trillion by 2025.
Projected social commerce sales worldwide from 2022 to 2026
In billion U.S. dollars
Sourced from Statista
Almost one-third of businesses expect to increase social media marketing to drive company growth over the next few years. This is partly because having a good experience with a brand on social media makes 78% of consumers more willing to buy from them, 77% more likely to choose them over a competitor, and 72% to spend more.
Ad reach is creeping up on all the major social platforms, helping brands connect with new customers. But another upward trend is ad spend. Spending on social media ads worldwide went up more than 38% between 2020 and 2021, rising to almost $230 billion in 2022. The cost per thousand ad impressions (CPMs) rose 15% year over year in the second quarter of 2022. Advertisers found some relief as CPMs finally started to fall in the second half of 2022, but ad spend keeps going up.
Projected social media advertising spending worldwide from 2021 to 2028
In billion U.S. dollars
Sourced from Statista
Although social advertising is a commerce trend that's here to stay, leading brands are also using digital platforms to interact with consumers in ways that transcend advertising. Jens Grede, co-founder and CEO of shapewear and intimates brand Skims, says that performance marketing is ineffective for them because they’re always running out of stock, and it doesn’t suit their long-term goals. Instead, they’ve attracted a growing audience that’s dedicated to creating user-generated content for their shapewear.
Social media–driven strategies create deeper connections and memorable experiences that will keep customers coming back for more.
Social commerce moves out of this world
Social media transformed how brands interact with consumers. Now web3 is bringing these interactions into a virtual environment, often called "the metaverse." Seamless connection will be a hallmark of these virtual spaces, just as it has become a key feature of modern commerce. And a connected brand experience across channels will be even more important to the future of commerce than in recent years, according to 84% of the businesses we surveyed.*
Few, if any, digital spaces do connectivity better than the gaming world, and Fortnite has led the way with innovative, immersive social experiences. More than a quarter of a billion players now use Fortnite every month. The game has created hype for non-players too, with Fortnite's spectator mode and the many streaming services that support tens of millions of hours of Fortnite stream views.
Spectators and players alike are captivated by the shareable moments in a game design that blurs the lines between worlds: Game items extend into real-world environments, like a supply llama in a London phone booth,and real-world experiences like movie theaters and concerts meet the virtual world. Even before the pandemic made online events commonplace, 12.3 million people virtually attended the first day of Travis Scott's Fortnite in-game concert.
Roblox, which boasts more than 200 million monthly users, is another gaming platform that creates metaverse experiences (and branded worlds) to engage their younger audiences. Nike built a space in the metaverse where customers can win points that translate to currency for digital apparel. The metaverse market is expected to explode over the next several years.
Projected metaverse market revenue worldwide from 2021 to 2030
In billion U.S. dollars
Sourced from Grand View Research
Nearly three-quarters of global business decision makers surveyed believe interacting with customers in the metaverse will become commonplace, and key pieces are falling into place to make that prediction come true.* Unexpectedly swift investments are pouring into solutions for the notoriously high energy that blockchains require. The biggest tech giants are well into the battle to nab the market share for augmented and virtual reality gear, and many consumers expect our physical and virtual realities to be interchangeable within the decade.
The global augmented and mixed reality market is growing at a whopping 79.2% compound annual growth rate. One in three shoppers already use virtual reality to shop, and soon consumers will visit pop-up shops in the metaverse. But the directions commerce takes on these platforms are still in construction mode, which means opportunity for brands that want to lead in the next generation of social commerce.
Sourced from Shopify/Ipsos Commerce Trends Study. A survey covering n=900 SMBs and Enterprises in 14 countries, Aug–Sep 2022
How to wow customers in the most interactive digital landscape yet
1. Chat with consumers in real time
Well over half of shoppers say it's important to easily reach customer service in the channel of their choice.** One billion consumers are now messaging brands on a weekly basis right on WhatsApp, Messenger, and Instagram to ask for support or interact with stories. In the second quarter of 2022, WhatsApp Business entered the ranks of top 10 most downloaded apps.
Telegram now has over 700 million active global users—that's almost 45% more than Twitter—and is gaining downloads even faster than TikTok.
But app popularity varies across regions. More social shopping happens in China than anywhere else in the world, but not on Meta-owned platforms.
China’s most popular app, WeChat, evolved into both an electronic wallet and an online shopping hub, but its roots are a messaging app. The WeChat chat interface is similar to Facebook Messenger, but brand posts show up here instead of on a main social timeline, as with Facebook or Instagram. Brands can send customers promotions and updates as direct chats to keep them engaged.
But keeping up with the always-online customer is not feasible for most businesses. Turning to chatbots is one way to appease the 41% of consumers who want live chat while shopping online.** Most customers are content to interact with chatbots, especially if they have simple questions or don’t want to wait for a human. Brands can keep interactions authentic by programming social media chatbots with their brand voice, as long as customers know they're using a chatbot.
Internet users purchasing from social networks in 2021
Sourced from Statista
Jay Levitt Founder and CEO, LoftaI’m expecting to see more experiments with chatbots and chat commerce. Consumers spend more when their shopping experience is personalized. AI powers chatbots on several websites that sell products or services to consumers. This technology is on an upward trajectory.
2. Streamline social commerce with integrations
"Buy now" buttons and similar shopping tools on social platforms were a simple, friction-fighting addition that consumers quickly got behind.
Social media shoppers worldwide who buy products on select social media platforms, January 2022
Based on 14,000 Influenster community members aged 13+, surveyed December 2021–January 2022
Sourced from eMarketer
Shoppable videos lower barriers to conversion even more, with some companies reporting conversion rates near 30%. Although live commerce in China is so big it eclipses almost every national ecommerce market, live shopping has also been gaining momentum in the United States and Europe since 2019. Facebook, Instagram, Pinterest, and TikTok each invested in liveshopping capabilities on their platforms over the pandemic.
Now integrations can bring the look and feel of the online store to social media shops. To make sure customers have a fluid, cohesive experience wherever they are, brands can sync inventory and customer care across social and non-social channels. Cross-channel analytics and content management will be key to success with social commerce.
Merchant spotlight
How Superplastic creates new ways of interacting with customers for deeper brand loyalty
Superplastic, revered for artist and celebrity collaborations on collectible art toys that sell out instantly, is creating an even more engaged community with the latest technology: NFTs. NFTs also provide a unique opportunity to build customer loyalty, which Superplastic is leveraging across its various marketing channels and activations.
Superplastic’s tiered NFTs act as different levels of membership to the exclusive community. And exclusivity is baked into every aspect of the experience: Their NFTs are currently sold out but can be purchased on secondary markets.
Here’s how it works. The highest tier of NFT collectors are called “Janky GAWDZ.” These collectors receive first consideration for everything the brand does, like access to high-value giveaways or real-life events.
“We’re building a store in New York City, and at certain times, you’re not going to be able to get in unless you’ve got one of our NFTs or tokens. It’s the same thing with our website. There will be exclusive entry, things only you are able to buy,” says Budnitz. “Because if you’re willing to make a commitment and join us, then we’ll make a commitment back to you.”
Instead of simply owning a piece of digital art, NFTs for Superplastic have become a promise of community and belonging. NFTs will also get fans into Superplastic’s latest sushi restaurant, planned for Miami.
“The blockchain is the world’s biggest open-source mailing list. If you buy one of our NFTs, we probably know who you are. We can reach you and send you free stuff. All this is a great way to play games with [your consumer],” says Budnitz. “Our job is to sell you the NFTs, and then continually upgrade the artwork, so it seems more and more fun, connected with the other stuff we’re doing.”
Paul Budnitz President, Founder, and CEO, SuperplasticNFTs aren’t just products—they’re somewhere between a product, a game, and code. If you’re not using all those things, you’re really not using this medium to its full advantage. It’s all about the interactivity.
How Shopify can help
Sell on the most popular social platforms
Shopify integrates with the most popular social media platforms on the internet, including Facebook, Instagram, TikTok, and Pinterest. That means you can reach millions of shoppers where they already are, reducing friction and driving sales.
- Streamline operations by tracking your sales, customers, orders, and inventory in one place—so you can focus on creating content, not performing manual updates. All while providing a seamless shopping experience for your customers.
- Start selling on the newest channels quickly by connecting your store and syncing your products from your product catalog. Shopify’s recent launch of YouTube Shopping allows merchants to showcase their products across live and on-demand videos, building community and driving sales.
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Commerce Trends 2023p. 13, Overview