Social commerce, a seemingly natural enough concept, has struggled to get off the ground in the U.S. Social media is an excellent place to advertise goods and services, but the success rate in using it to buy and sell directly is a good deal more mixed.
That picture has started to shift in recent years, and particularly over the last 10 months as homebound consumers have rushed to social media sites with a newfound enthusiasm for transacting directly while there. It’s a reality that social media players have surely noticed — and moved in myriad ways to capitalize on.
The latest player to make a move is TikTok, which has briefed advertisers on its suite of new 2021 features that will enhance its social commerce offering for users. One of those tools allows the most influential users to share links to products and net commission on the sales they direct. The variation on affiliate sales offers users the ability to earn money from any product they endorse, not merely the ones they’ve signed official sponsorship deals with.
The new content also includes a live-stream shopping feature — TikTok’s mobile-centric answer to QVC that will allow viewers to buy what they see with a few taps.
“It feels like TikTok is about to skip [introducing a] desktop [experience] and go straight into commerce,” Jack Smyth, creative technology officer at WPP’s Mindshare told the Financial Times. “Culturally, TikTok is well placed for livestreamed commerce to capture the dissolving distinction between content and commerce because it doesn’t feel as polished as other platforms.”
The latest round of commerce-centric upgrades, along with its late 2020 partnership with Shopify to put more eCommerce sellers front and center on the platform, puts TikTok even more directly into competition with the other social commerce players lining up for big plays, most notably Facebook and its photo-sharing brand Instagram.
Over the summer Facebook announced its own set of commerce upgrades to Instagram, including Instagram Shop, an “in-app shopping destination where people can discover products and brands they love from across Instagram,” and Facebook Pay. In October Facebook announced its intention to add a home shopping feature to Reels, its short-form video answer to TikTok — though Reels has struggled in its early launch phases.
Difficulties with Reels to the side, Facebook’s stronger than expected earnings report at the end of January cemented the status of its growing social commerce offering — laying down the competitive gauntlet for the rest of the field.
“This e-commerce investment seems to have started to pay off right as offline businesses are looking for more online activity,” BofA Global Research analysts wrote, according to Reuters reports.
And while Facebook and TikTok are dominating the conversation this week, as PYMNTS reported last week, the pull to buttress social commerce offerings as a means to turn the growing eyeball count sites have netted during the pandemic into actual revenue is strong. Twitter, Snapchat and Pinterest have all notably made investments in their eCommerce architecture of late in a clear effort to make it easier for their most popular users to monetize their presence on the platforms.
That investment has been paying off for some. Pinterest, when it recently reported its earnings, saw revenue in the U.S. — its biggest market — rise 67 percent in the fourth quarter, to $582 million.
“Our investments in ad tools and sales coverage continued to pay off, especially during a strong holiday season. Advertising demand was healthy across different advertiser sizes and verticals, with retail demand further building off last quarter’s recovery,” CEO and Co-Founder Ben Silbermann noted in a letter to investors.
The question that Facebook/Instagram, Snap, Twitter and now TikTok must answer is will the social commerce boom last past the end of the pandemic — or are they all flying high on tailwinds that will ultimately turn out to be temporary? The bigger answer about how consumers will respond to getting back out there remains unanswered — though PYMNTS data strongly indicates that a whole lot of digital shifts won’t be reversing themselves anytime soon.
But in TikTok’s case, the firm is building on a rather vast green field — as some 40 percent of its young-skewing audience of users say they don’t have Facebook accounts and 63 percent do not have Twitter accounts, according to reports. Whether it can custom build a mobile-based eCommerce offering for its vast and still unadvertised base as it transitions out of the pandemic period? That might be genuinely educational to watch.
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