Social commerce: the merging of social media & marketplaces

Written by The RI Team | Read Time: 4 mins

Over 60% of global e-commerce takes place on online marketplaces. Over 60% of the world’s global population use social media. It’s no surprise they're a match made in online heaven. 

From PPC advertising on Facebook to influencer marketing on Instagram, brands traditionally ‘marketed’ their products via social media and ‘sold’ them via their own site or marketplace store (i.e. Amazon). But recently, the merging of social media and marketplace functions enables online sellers to ‘cut out the middleman’ and embed the full discovery-connection-sale process on one platform - a phenomenon known as ‘social commerce’.

Here’s the lowdown.


Social media platforms adding marketplace functions

Almost half (46%) of online shoppers have made a purchase after seeing a product on social media with Facebook (47%), Instagram (32%) and TikTok (24%) the leading trio. For brands targeting younger generations, the stats are even more favourable: 85% of Gen Z make purchases influenced by social media and 79% of Gen Z start their buying journey on social platforms. 

In the past, boosting visibility (i.e. marketing) was the main goal of a brand’s social media strategy - be it via organic posts, friends’ posts, influencers, partners or ads - but now social media platforms are moving into the ‘sales’ space too. 

Take TikTok, for example. The world’s third most popular social media platform recently decided to evolve from ‘product promoter’ to ‘product seller’ with the launch of TikTok Shop. Launched in the UK in 2023, TikTok Shop offers in-app purchases, on-platform listings, in-built promotion tools and even Fulfilled By TikTok (FBT). In other words, it’s copying the key features of online marketplaces while maintaining its social media viewership and engagement USPs (it even matches brands with content creators). According to Fortune, TikTok is also aiming to ‘make every post shoppable’ using technology to auto-identify objects in video content and point viewers towards similar products in the TikTok Shop. 

But TikTok is not the only social media platform trying on marketplaces’ clothes for size. ‘Shopping on Instagram’ enables brands to make on-platform storefronts with product descriptions and images just like a marketplace. Meanwhile, the likes of YouTube and Pinterest use Shopify integrations to enable a seamless transition from videos and storyboards to shopping pages. It’s increasingly clear that social media platforms want more than a piece of the marketplace action. 


Online marketplaces adding social media functions

Unsurprisingly, ‘social commerce’ is currently a major focus for social media platforms as they look to muscle in on marketplaces’ turf, but the dial swings both ways. Just as social media adds retail functions, retailers are adding social functions. 

For example, Amazon Live enables brands to engage with shoppers through real-time videos with in-app purchasing links. Last year, Amazon also launched Amazon Inspire, its new “in-app shopping feed that's personalised with shoppable photos and videos tailored to your selected interests and engagement,” which covers similar ground to social media. Although Amazon's first foray into social media style functions, Amazon Spark, was closed down in 2019, their decision to try again is a clear sign of their intentions. Amazon is not known for lying down without a fight, after all. 

Alternatively, some marketplaces might adopt a ‘if you can’t beat ‘em, join ‘em’ approach by collaborating with compatible social media platforms. For instance, on the back of a successful pilot, Walmart Connect has partnered with TikTok to boost engagement among their target market: cash-strapped young people. By sharing data, advertising, and even offering some exclusivity, they’re helping to grow each other’s user base. 


What does social commerce mean for online sellers?

More competition and more innovation = more opportunity for brands. On the one hand, the merging of social engagement and sales functions makes it easier for sellers to convert prospects by reducing friction in the marketing-sales funnel. On the other hand, brands will have to adapt their marketing and sales operations to meet the new set-ups, such as how they manage advertising on ‘social marketplaces’. Seeking advice from marketplace experts will be crucial to making this transition, so get in touch with Rich Insight to find out more. 


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