The Social Commerce Pivot
When live commerce doesn’t take off, platforms and brands alike must reimagine social shopping
On September 13th, TikTok Shop officially rolled out to all users in the United States. While the change in user experience is fairly straightforward — TikTok Shop has a dedicated tab, and certain videos now come with a button labeled “Shop,” — it’s indicative of TikTok re-upping the ante in social commerce.
This move came at an interesting time, as social commerce in the U.S. is facing a pivotal moment in its development. For years, social media has served as a highly effective discovery channel, but it has been less successful when it comes to directly driving sales. As experiments with embedded in-app purchase and live commerce fail to gain traction among U.S. consumers, could TikTok’s latest attempt point this sector to a viable growth path?
The Fuzzy Definition of Social Commerce
When we talk about social commerce in the United States, there tends to be a conflation of concepts. Is it an online shopping experience that is socially interactive, or does it include any and all sales that originate on social platforms, regardless of where the purchase is ultimately made? There’s no clear consensus; depending on how strictly one wants to define social commerce, it could encompass everything from D2C brands using social media to drive purchase on their own websites to an independent merchant making sales via Shopify Pay’s integration with Facebook or Instagram.
Then there is live commerce, which refers to brands and merchants utilizing live streaming to engage shoppers and drive sales. Arguably the most interactive type of online shopping, live commerce holds great potential for brands looking to grow their social game to drive direct sales. As such, brands, retailers, and social platforms alike have spent the last several years investing in live commerce experiences, eager to replicate in the United States the success that live commerce has seen in China.
A Channel for Discovery over Purchase
Regardless of how you define it, there’s no denying that social platforms are powerful drivers of discovery for consumers, if not the most powerful driver: a study from Snap and MAGNA found that 82% of social media users in the U.S. had discovered a product via social media. Consider the popularity of #TikTokMadeMeBuyIt: the hashtag has 66.4 billion views on the platform, driven products as varied as feta cheese and designer handbags to sell out, and, off-platform, has inspired a labyrinthine ecosystem of affiliate-linked listicles from publishers.
That said, the very same Snap x MAGNA study also found that only 46% of that cohort has ever made a purchase directly off of a social platform. Survey data from Modern Retail and Attest corroborates this, painting an even more dire picture of the state of social commerce: just 11% of U.S. consumers say they shop on social platforms “a lot” or “often.
That’s a significant dropoff between discovery and purchase. Of the Snap x MAGNA study respondents who said they had not yet purchased a product directly on social media, 39% reported that “lack of trust” was the top barrier for purchase, followed closely by nervousness about sharing personal financial information with social media platforms (36%). (Just 13% reported they “didn’t realize [they] could do that.” Good for them!)
Despite a lack of enthusiasm from existing merchants on the platform, TikTok is seemingly going all-in on in-app purchases. Axios reported last October that TikTok was hiring staff for its own U.S. fulfillment centers, and this spring, UK users began seeing a new shopping section called “Trendy Beat,” which offers items that have proven popular in videos (e.g. tools for extracting ear wax or brushing off pet hair from clothing), an offering similar to how Amazon produces, promotes, and distributes its own range of products.
The Trouble with Live Commerce
To make matters more troubling, live commerce — the application of social commerce upon which platforms have, until recently, pinned most of their hopes and dreams — has simply not taken off in the U.S. Just 6% of respondents to an Insider Intelligence ecommerce survey indicated they had used live commerce, with 43% saying they have not used it and are not interested in doing so.
In response to this sluggish adoption rate, social platforms have spent the last year deprioritizing live commerce; TikTok abandoned its plans to bring live shopping to the US and Europe in the summer of 2022, while Instagram killed its own live commerce feature in February 2023.
Lest you think these adoption woes are limited to live commerce, both platforms have also struggled with the dedicated shop sections of their respective apps. TikTok has reportedly struggled to attract merchants to its shopping service TikTok Shop, which launched in November 2022. Instagram also removed its Shopping tab from the main in-app navigation bar in February — replacing it with Reels — reflecting the platform’s shifting priorities.
TikTok’s Latest Attempt
Despite, and arguably because of, its failure to launch live shopping features in Europe and the U.S., TikTok has started to experiment with new shopping tools that it hopes will align more seamlessly with the way consumers are using the platform for discovery. In June, outside of the U.S. it began testing a new visual search tool in its Shop tab, which allows users to take a photo of an item and find similar products across TikTok Shop listings.
Taken in this context, the TikTok Shop officially launched in September is indicative of the company’s new strategic focus in social commerce. In addition to the consumer-facing tools, TikTok has a new affiliate program that allows creators to earn commission on products they sell in their videos (both in-feed and livestream) without working out deals outside of the platform, and offers its own fulfillment centers where products can be stored and shipped by TikTok itself.
With a target of $20 billion in merchandise sales this year, TikTok is not waiting for users to discover this new section on their own; the app is actively driving content with the shop button into users’ feeds (ruining their finely-tuned FYPs in the process), offering myriad discounts and coupons to users who shop, and foregoing commissions from many sellers. TikTok is banking on these discounts to incentivize shopping during the upcoming holiday season, aiming to use the gifting period to gain a foothold with U.S. shoppers. The app has already announced it would subsidize up-to-50 percent discounts starting in late October to compete with retailers like Amazon and Walmart.
In terms of what’s actually available in TikTok Shop… feedback has been mixed, to say the least. (Content warning for those last two links: counterfeit snail slime and parasite cleanses). Per Fortune, “Shop is plagued by the same problems with a free-for-all marketplace that Amazon has faced… Categories and subcategories of products are filled with overwhelming choice.” What’s more, the platform is reportedly filled with both counterfeit products and products prohibited by TikTok’s terms, like menstrual products and prenatal vitamins.
While some brands have built their own pages on TikTok Shop (retailer PacSun, for example), the prevalence of counterfeit goods will likely cause headaches for brands; for example, COSRX, a Korean skincare brand that’s helped popularize the aforementioned snail mucin products, has received complaints about fake versions of its products sold on the platform, priced compellingly low in comparison to the brand’s authorized retailers. It remains to be seen how TikTok tackles these issues; while the platform has said it uses “technical and human moderation to find listings that violate its policies,” TikTok’s buyer policy also states that it makes “no representations, warranties, or guarantees, whether express or implied, that any content on TikTok Shop is accurate, complete, or up to date.” That’s not exactly an emphatic defense of the products sold on its platform.
Regardless of these challenges, much of TikTok Shop’s success will necessarily hinge on the platform’s army of creators buying into the platform. Given the chaotic and oft-demoralizing experience of browsing any algorithmic ecommerce platform with third-party sellers — this is not an issue unique to TikTok — creators can offer much-needed product curation. TikTok knows this; hence its emphasis on its Shop affiliate program, through which participating creators can earn a commission from sales. According to TikTok, over 100,000 creators have already signed up for the program.
Moreover, TikTok knows that in order to compete with the likes of Amazon, it’d need to offer a fast, reliable delivery experience as well. Axios reported last October that TikTok was hiring staff for its own U.S. fulfillment centers, and while no detail about that has been made public since then, it’d be safe to assume that TikTok is quietly building out its logistics infrastructure to ensure it can deliver a satisfactory shopping experience.
New Paths Forward
All of this is to say that it’s clear that social commerce — and perhaps shoppable content more generally — needs to be reimagined. It behooves both platforms and brands to find a viable way forward for social commerce in the U.S.; brands benefit from the ease of both product discovery and impulse buying, while the platforms collect that precious purchase data to use for better targeting, thus driving more product discovery and propelling the social commerce flywheel forward, ad infinitum (or until we’re completely buried literally by impulse buys we don’t need and metaphorically by debt stemming from unfettered consumerism).
For Instagram, deprioritizing live commerce and its Shop tab has made space for a more significant emphasis on Shop ads and other tools for businesses. Meta announced that “thousands” of new U.S. businesses would have access to Shop ads, which include in-app checkout and new tools like ratings and reviews as well as dynamic product pages.
YouTube, oft less talked about in this context, is nevertheless a key platform for product discovery. According to Jungle Scout, a quarter of U.S. consumers start their search on YouTube when shopping online, more than Instagram or TikTok. To its credit, YouTube has also adjusted its social commerce strategy, leaning on creator relationships. The platform discontinued its product tagging feature, which had allowed creators to append shoppable links to their videos, and in its stead rolled out its affiliate program to all creators, allowing them to earn a commission from products featured in their videos. With this move, YouTube is looking to attract more creators to compete with TikTok, and the platform can use its strong creator relationships to entice consumers who come to the platform for shopping inspiration to make an actual purchase.
Putting Creators First
This emphasis on creators makes sense, given that social commerce is driven by the parasocial relationships consumers have with influencers (both micro and macro). These ardent, one-sided relationships are not new, but have been supercharged by the speed and accessibility of social platforms. According to a Pew Research Center survey, 30% of social media users have purchased something after seeing an influencer or content creator post about it; this percentage grows to 41% for users aged 18 to 29.
That said, the oversaturation of sponsored influencer content has made consumers more discerning about making #influenced purchase decisions; young people in particular demand authenticity from creators and grow more critical of their role in mass consumerism and its contribution to the climate crisis (despite continuing their love affair with fast fashion, a contradiction for another day). This is why we’ve seen a rise in “de-influencing” content, where creators instruct their followers on what not to buy: on TikTok, as of writing this #deinfluencing has 813.1 million views, with creators bravely foregoing an opportunity to drive affiliate sales or collect brand sponsorships to instead build trust and foster a sense of transparency with their audience.
While the de-influencing trend might initially seem detrimental to brands, it offers an opportunity to forge more meaningful connections with both creators and their audiences. By working with creators who are willing to go to bat for a particular brand or product, brands will be better equipped to show up authentically on social platforms where most brand and product discovery happens. Moreover, given the strong sway creators have over consumers’ purchase decisions and their budding interest in not shilling for every product, brands must develop strong relationships with these creators, understanding which ones share your brand’s vision and values.
Conclusion
Overall, it’s clear that social commerce is at a crossroads: adoption of tools like live commerce and in-app shopping have not taken off as the platforms wish they would, but that doesn’t mean writing off the territory altogether, as social remains the primary discovery mechanism for many consumers. As such, it’s important for brands to continue testing the platforms’ new social commerce tools, should they catch on, by, for example, testing TikTok Shop with a dedicated capsule collection of products already popular on the platform, or exploring Meta’s new shoppable ad units. Regardless of the platform, establishing these meaningful creator partnerships will ensure your brand shows up authentically in the place where most discovery happens.
