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The growth in online shopping has led to the acceleration of alternative shopping habits like social commerce. Growing at a 31.4% compound annual growth rate (CAGR) between 2020 and 2027, the global social commerce market is estimated to grow to $604.5 billion by 2027.
A good number of eCommerce companies are either already selling or planning to sell via social media. According to the research data analyzed and published by Stock Apps, 15% of these companies worldwide are already selling on social media while 25% are planning to start.
On the other hand, China’s social commerce market is estimated to grow at a 30.5% CAGR over the period of the analysis. According to eMarketer, the country is estimated to have 357.2 million social buyers by the end of 2020. That would be equivalent to 30.6% of the total population.
In 2021, the figure will rise to 392.2 million, 420 million in 2022 and 446.8 million by 2023. At the end of the forecast period, China is set to account for 37.9% of social buyers worldwide. Based on data from Statista, the number of social commerce users could be even higher as its 2020 estimate is 713 million.
eMarketer projects that retail social commerce sales will reach $242.41 billion in China in 2020. The sector is expected to account for 11.6% of total retail eCommerce sales in the country this year. By 2023, the figure is estimated to almost double to $474.81 billion.
US Social Commerce to Generate $23 Billion in 2020
China has been far ahead of the US in social commerce. In 2019, eMarketer reported $186.04 billion as the sector’s total sales. That was close to ten times the US total of $19.42 billion.
Tencent’s WeChat has been at the forefront of the trend, particularly since 2017 when it launched Mini Programs. Since that time, major online retailers create Mini Programs to make direct sales within the app.
According to its 2019 annual report, Tencent announced that it generated over $115 billion in total transaction volume from its Mini Programs.
In the US, the sector is projected to be worth $26.9 billion in 2020 according to Research and Markets. The eMarketer projection is slightly less optimistic, projecting sales worth $23.26 billion by the end of 2020. It estimates that the figure will rise to $31.35 billion in 2021, $38.22 billion in 2022 and by 2023, it will reach $45.63 billion.
Statista projects that by 2024, the figure could be as high as $84.2 billion, accounting for 7.8% of retail eCommerce sales in the US.
Douyin Creators to Generate $11.8 Billion in 2021
In view of the success of the trend in China, top-ranking US companies like Walmart and Facebook seem to be taking cues.
In August 2020, Walmart announced its intention to buy a 7.5% stake in TikTok. According to its CEO, the move is based on the fact that it sees a huge business opportunity in social media.
A look at how Douyin, the Chinese version of TikTok, embraced social commerce provides handy insights. In 2018, Douyin partnered with Alibaba introducing a shopping feature on the app and has refined its offering to include product search features and native storefronts.
As of August 2020, Douyin had 600 million daily active users and was the country’s most popular platform for shoppable videos. At the time, the app had more than 22 million creators, who made over $6.15 billion over the trailing 12-month period.
In 2021, Douyin announced that it would invest traffic resources worth $1.5 billion so as to generate $11.8 billion in income for creators. The competition is, however, rather stiff as its main rival, Kuaishou, announced a total of 500 million eCommerce orders in August 2020. Daily active users on this app numbered around 300 million at the time.
Moreover, Facebook introduced a live shopping experience similar to Taobao Live on Facebook Shop. This is a dedicated section for eCommerce within the app, allowing businesses to go live and feature their products.
It is worth noting that during the pandemic, Taobao Live saw impressive growth. In February 2020, the number of streaming events on the platform increased by a whopping 110% according to Caixin. During the first quarter of 2020, the platform posted a sales increase of 88% year-over-year (YoY).
From September 2019 to September 2020, Taobao Live GMV surpassed $53.2 billion according to China Internet Watch.
Nica is a BA Political Science graduate, startup founder and financial expert. She has an entrepreneurial spirit and started several startups from a young age, eventually becoming fascinated with stocks, cryptocurrencies and the blockchain economy. She specializes in financial tech and her expertise is in writing detailed tutorials and guides on how to invest in stocks and cryptocurrencies. Nica has written for many other websites, including Crypto Browser, Coin Review, LearnBonds, and Inside Bitcoins.