When it comes to social commerce, Amazon isn’t the only dog in the fight anymore. While Amazon may still be the top product search channel for consumers, it is ceding ground as consumers increasingly turn to social platforms for shopping. In fact, social media is shaping up as a real competitor.
Less Market Share
Declining numbers tell the story: according to Insider Intelligence, in Q1 2023, 56 percent of U.S. adults started their product search on Amazon, a drop from the 63 percent evidenced in Q1 2022. So where are consumers initiating product searches instead? One need look no further than platforms like Tik Tok, Instagram, and YouTube.
The defection from Amazon is currently a generational phenomenon that skews young: a February 2023 GWI survey reveals that for Gen Z product research, social networks have lapped search engines annually since 2020. In the United States, Gen Z is definitely the biggest group turning to social. As Insider Intelligence points out, 43 percent of Gen Z uses TikTok to search products online. By contrast, only 2 percent of Baby Boomers do so.
Money Talks
When it comes to actually making purchases on social platforms, Gen Z again leads the way. As a recent Capgemini survey points out, influencers introduced nearly 50 percent of Gen Z adults to a new brand or product in the six months prior to the survey’s publication; almost one-third of them went on to purchase that product.
Story of a Social App
Snap’s foray into shopping offers a glimpse into the real challenges Amazon faces hanging on to its share of the social commerce pie. In March 2023, Snap announced the launch of a new business unit, called ARES, to help retailers use—and make money from—AR and AI shopping tools.
According to The Verge, AR Enterprise Services (ARES) will furnish retailers with a suite of tools that will make it easy for consumers to virtually try on products like clothing, sunglasses, and shoes — from home. On a practical level, Shopping Suite features allow users to shop and make purchase decisions just as they might in a brick-and-mortar store. For example, a shopper can upload a photo of themselves, then see how a product looks on them, in real time, at home, with that fresh cup of coffee still hot from the kitchen on hand.
Other ARES tools provide recommendations, based on body size and shape, to help ensure shoppers get the right size and fit on the first try. The goal: reduced return rates, which translates into a win/win for both consumers and retailers. Finally, a 3D Viewer tool allows shoppers to examine products from different angles — again, from the comfort of home. According to Snap, more than 300 customers, including Gobi Cashmere and women’s clothing/fashion retailer Princess Polly, have embraced various Shopping Suite features.
More to Come
In the face of shopping tools such as those touted by Snap, Amazon will likely continue to feel the squeeze. TikTok appears to be a particularly strong competitor for the tech behemoth. As a February 2023 Bizrate/Insider Intelligence survey indicates, nearly 20 percent of U.S. adults aged 18 to 34 shopped (and dropped cash) on TikTok in the past month.
And the prediction is that this shopping trend will only intensify: Insider Intelligence forecasts that TikTok will enjoy an uptick in social buyers in 2023—a jaw-dropping 9.6 million, in fact. That’s more than the net increase of Facebook, Pinterest, and Instagram combined.
All This Despite the Drama
Advertisers are certainly paying attention. And even though there’s been talk of a straight-up ban of TikTok, marketers are still spending there. As Ben Jankowski, the former head of global media at Mastercard Inc., shared with The Wall Street Journal, “A lot of marketers are getting really good value out of TikTok and if something is performing really well, marketers are typically super slow to try to find alternatives.” And TikTok, by beta-testing search ads, is making it hard for advertisers to ignore the promise inherent in the platform’s 150 million American users.
Contact True Interactive
If Amazon is currently being invited to share the wealth when it comes to social commerce, that only means more opportunities for marketers to explore. Eager to get a better handle on social shopping? Contact us. We can help.
Image source: https://unsplash.com/photos/YddMIRck34I
