Social commerce is a rapidly evolving area at the intersection of social media, online retail, and consumer behavior, leveraging platforms and technologies to facilitate e-commerce transactions within social networks. It integrates marketing, psychology, sociology, computer science, and more to understand and optimise the social aspects of online shopping. Key insights from research on social commerce include its definition, benefits, challenges, and the impact of social networks on consumer transactions.
Knowing Current Social Commerce Research
Current social commerce research encompasses a broad spectrum of topics, including the impact of social networks on e-commerce, the behaviour of consumers in social commerce environments, and the economic value generated by social commerce platforms.
Studies have shown that social commerce platforms create significant economic value by enhancing the accessibility of shops to customers browsing online marketplaces. The value generated is not merely through direct sales but also through the creation of a “virtual shopping mall” environment, where the interconnectedness of sellers boosts visibility and customer access.
The TikTok and Shopee platforms have become two of the many platforms that have activated features to support social commerce in less than 3 years. These two platforms provide a change in social commerce in virtual shopping malls. Every year the number of consumers on TikTok Shop and Shopee also increases, with sales of goods also becoming more abundant.
Emerging Market Focus
In emerging markets, social commerce development emphasises the role of mobile systems, trust, and word of mouth. These factors are crucial in building relationships between sellers and buyers, indicating the importance of social and technical aspects in facilitating social commerce activities.
An example is when you want to shop at a virtual shopping mall, you will most likely look at the rating of that shop first and if the rating is good then there is trust. You become brave enough to buy the products there because their quality has been recognised by other buyers. Moreover, if we want to shop at a virtual shop that has been recommended by someone we trust, then there is no need to hesitate anymore about shopping there. It is also one way to develop word of mouth promotion.
Integration with E-commerce
Social commerce is seen as an extension of e-commerce, with social media marketing, Web 2.0 technologies, and e-commerce activities blending to create new business models. This integration affects various areas of e-commerce, suggesting the need for further research on adoption and use of social commerce technologies.
The current state of social commerce research is dynamic, reflecting the rapid evolution of social media technologies and their integration into e-commerce.
Why Is Social Commerce Pivotal To Digital Transformation?
The dynamic state of social commerce reflects its adaptability and potential for growth, influenced by ongoing innovations and the evolving digital landscape. he fast-paced evolution of social media technologies, changing consumer behaviours, and the shifting landscape of online retail also contribute to the inevitable transformation of digital sales.
Multidisciplinary Nature
Social commerce encompasses a wide range of disciplines, including psychology, sociology, computer science, and marketing. This multidisciplinary approach adds complexity and constant evolution to the field, as it integrates diverse methodologies and perspectives to understand consumer behaviour and technology interaction.
Innovation and Technology
The rapid development and adoption of new technologies play a crucial role in the dynamism of social commerce. With the emergence of Web 2.0 and Web 3.0 technologies, social commerce has seen significant growth, driven by the capabilities these technologies offer for enhancing online customer interactions and economic value.
Consumer Behaviour
Changing consumer behaviours and preferences significantly influence the dynamics of social commerce. As consumers become more engaged in social networks and rely on these platforms for information and recommendations, social commerce platforms must adapt to meet these evolving needs and preferences.
Economic Value Creation
The ability of social commerce to generate economic value through networks and connections between sellers and buyers contributes to its dynamism. The concept of a “virtual shopping mall” created through these networks emphasizes the economic potential and the changing nature of how products and services are marketed and sold online.
Virtual shopping mall do influence product sales and this is proven by the many examples of cases that occur. One of the things that makes virtual shopping an influence on product sales behavior is because many people feel that virtual shopping mall is easier with the prices being cheap, plus it saves time and is practical. That is what causes product sales to increase on virtual shopping platforms.
The comparison of sales and income of virtual shopping centers and traditional shops is definitely different, where virtual shopping centers in the current era are believed to have more income or sales than traditional shops. This is because the goods sold in virtual shopping centers are much more updated than traditional stores, which makes consumers more interested in shopping from home.
These factors underscore the complex, multifaceted nature of social commerce and its susceptibility to rapid changes driven by technological advances, consumer behaviour shifts, and economic opportunities.
The Trend Of Social Commerce In Several Markets
In Australia, social commerce showcases significant engagement across major platforms like Facebook, YouTube, Instagram, and TikTok. In early 2023, notable statistics include Facebook’s reach of 67.1% of the eligible audience, YouTube’s penetration of 81% of the population, Instagram engaging 52.5% of the eligible users, and TikTok reaching 40.3% of adults aged 18 and above.
Social commerce trend was first backed by one of the largest countries in Asia, Indonesia. In Indonesia, the trend of social commerce has been showing a significant upward trajectory, backed by robust growth forecasts and adoption rates among consumers. In 2023, the gross merchandise value (GMV) of social commerce in Indonesia was estimated at approximately $8.2 billion USD. This value is forecasted to increase almost threefold, reaching $22.1 billion USD by 2028 .
Further supporting this growth, the social commerce industry in Indonesia was expected to expand by 55.0% on an annual basis to reach $8,675.5 million USD in 2022. This growth trend reflects the increasing popularity of social commerce platforms and the rise of innovative shopping formats like live shopping commerce. In fact, a notable rise in live shopping commerce has been observed, with 69% of Indonesian shoppers engaging in such activities, highlighting the country’s tech-savvy consumer base and their openness to new online shopping experiences .
These statistics underscore Indonesia’s significant potential as a social commerce market. The country’s digital landscape is rapidly evolving, with social commerce playing an increasingly crucial role in shaping the future of e-commerce. The rise of social commerce in Indonesia is not only transforming the way consumers shop but also offering businesses innovative opportunities to connect with their audiences.
The Future Growth of Social Commerce
In Australia, the trend of social commerce points towards continued expansion. The increasing adoption of platforms like Facebook, YouTube, Instagram, and TikTok, as indicated by their substantial user base and engagement rates in early 2023, suggests a vibrant landscape for social commerce. With platforms like TikTok experiencing a 12.4% increase in ad reach and LinkedIn growing its potential ad reach by 7.7% between 2022 and 2023, it’s clear that social commerce platforms are poised for further growth.
The social commerce industry in Australia was expected to grow by 12.3% on annual basis to reach US$1.83 billion in 2024. The social commerce industry is expected to grow steadily over the forecast period, recording a CAGR of 10% during 2024-2029. The Australian social commerce GMV is set to further increase from US$1.63 billion in 2023 to reach US$2.95 billion by 2029.
While Australia shows a promising future for social commerce, The future growth of social commerce in Indonesia indicate a vibrant and rapidly expanding market, driven by technological adoption, innovative business models, and changing consumer behaviors. Here are several key aspects that highlight the expected future growth dynamics of social commerce in the country:
Rising Popularity of Livestream Commerce
Livestream commerce, a subset of social commerce that combines live video broadcasting with online shopping, has seen a notable rise in Indonesia. With 69% of Indonesian shoppers engaged in live shopping activities, this trend offers businesses innovative ways to interact with consumers, showcase products in real-time, and drive sales through interactive experiences. The popularity of livestream commerce is expected to continue growing, further fueling the expansion of the social commerce sector.
Increasing Internet and Social Media Penetration
Indonesia has one of the highest rates of internet and social media usage in Southeast Asia, creating a fertile ground for social commerce. The high digital adoption rates among the population, coupled with the increasing comfort level with online transactions, provide a strong foundation for the future growth of social commerce in the country.
High Hopes in Social Commerce for Ease of Life in the Future
The optimistic outlook on social commerce is well-founded, particularly when considering its potential to significantly ease and enhance the quality of life for consumers in the future. The intersection of technology, commerce, and social interaction through social commerce platforms presents numerous advantages that cater to the evolving needs and preferences of today’s digital consumers.
In conclusion, the high hopes placed in social commerce for easing life in the future are grounded in its ability to merge convenience, personalisation, community, economic empowerment, digital inclusion, and sustainability. As technology evolves and consumer behaviors shift towards more integrated and interactive shopping experiences, social commerce stands as a beacon of innovation, offering a promising outlook for improving the quality of life for consumers around the globe, particularly in dynamic markets like Indonesia and Australia.
