Will Gen Z Put a New Face on Social Commerce?

Meta’s recent news that it is seeing a surge in younger users may help set the stage for a rising tide in social commerce.

The platform model — not just for Facebook, but for X and for others — connects users and advertisers and merchants. Earnings results underscore the momentum of online creators seeking to monetize their content, sometimes on a global stage.

As reported this week, Meta (Facebook’s parent company) said in a blog post that with five quarters of what it termed “healthy growth in young adult app usage in the US and Canada,”  there are more than  40 million young adults are daily active users.

“This number is the highest in three years,” the post continued.

In reference to payments, the company noted that it changed its payout model to pay creators based on how well their content performs on the platform, “simplifying how creators earn and expanding monetization opportunities to all formats — photos, videos and text.”

In its latest earnings report, Meta detailed that its family of apps ad revenue was $35.6 billion, up 26% year on year on a constant currency basis. Management noted during the call that within ad revenues, the online commerce vertical was particularly strong.

CEO Mark Zuckerberg, who as has been well-documented is bullish on artificial intelligence (AI), said that “the biggest clear opportunity is all the work around business messaging … whether it’s a creator or one of the 100-plus million businesses on our platform, we basically want to make it very easy for all of these folks to set up an AI to engage with their community. For a business, that’s going to be, to be able to do sales and commerce and customer support. And I think it will be similar for creators.”

The digital wallets held by these consumers of social media — willing to transact as they watch videos and scroll and post — will be the glue that cements the ecosystems together. Meta Pay (formerly Facebook Pay), of course, remains part of the equation for Meta.

Separately, X, as detailed here, has been actively building out its wallet capabilities in a bid to build financial services and in-app payments this year, and to enable payments to be sent to any X Payments user.

The regulatory landscape is still in flux. Late last year, the Consumer Financial Protection Bureau (CFPB) proposed to supervise larger nonbank companies that offer services like digital wallets and payment apps. Under that proposal, Big Tech and other firms handling more than 5 million transactions per year, under the same regulatory scrutiny as large banks, credit unions and other financial institutions already supervised by the CFPB.

Lots of Browsing — and Room for Buying to ‘Catch Up’

PYMNTS Intelligence research studied the digital browsing, connecting and shopping habits of younger consumers. In the report titled “Tracking the Digital Payments Takeover: Monetizing Social Media,” we found that Generation Z consumers are more likely to use Instagram and TikTok to search for products than other generations — and use those channels before turning to Google. And 68% of Gen Z consumers searched for products on social media, and 22% ultimately completed a purchase.

Taken altogether, the data show that that 43% of consumers — an estimated 110 million individuals — browse social media to find goods and services, but just 14%, or approximately 36 million individuals, ultimately purchase those goods and services via social media. Apparel and clothing remain the most popular items to buy via social commerce interactions, at 45% of all transactions across all social media platforms. Beauty products came in second, at about 33% of purchases.