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Shop ‘Til You Flop: Has Social Commerce Failed Again?

Tech news outlet ‘The Information’ has reported that Instagram is planning to ‘drastically scale back its shopping features,’ with the app’s shopping tab set to disappear. This is hot on the heels of Tik Tok abandoning plans to scale its livestream shopping feature into Europe, which was announced in July. Is this another sign that social commerce is set to nosedive?

Social commerce has been a primary area of development for social media platforms over the last year, with platforms keen to launch new shoppable spaces faster than their rivals, to be first to gain traction. Social commerce in China is huge right now and continues to grow. Douyin (TikTok’s Chinese counterpart) achieved $3.15 billion in gross merchandise volume for H1 2022 and in-stream commerce is the platform’s biggest revenue stream.

However, toes have been dipped in and out of social commerce for more than a decade and there have been false dawns, but the feeling this time was that consumers and brands were ready.

The pandemic was expected to result in long-term shifts in consumer behaviour towards social commerce. One of the benefits of in-app shopping for advertisers is that media optimisation is somewhat improved due to easier conversion tracking. With IOS sales journeys post-ATT, for example, consent needs to be granted to both the social app (i.e., Instagram) and the advertiser for conversion attribution to happen. Selling directly through the social platforms increases this conversion data stream and reduces acquisition costs as a result, through better optimisation.

The massive downside for advertisers is that they lose control of the shopping experience and their data. The changing data landscape has made the acquisition of first-party data more imperative for brands to understand customers and activate across multiple channels. With social commerce, brands surrender everything to the mercy of the platform owners.

Overall, there are several variables at play that have resulted in reprioritisation for Meta and Tik Tok. A slowing economy means consumers have less to spend. Social platforms are bound to prioritise by protecting investment in their more mature advertising products. Consumer behaviours have returned to pre-pandemic levels, not heralding long-term behavioural changes that were predicted in some areas.

Many brands will also be reassessing budgets, and experimentation with nascent spaces is likely to suffer. The scale just isn’t there or worth the investment, yet.

Finally, the features themselves need further development to get better traction. The user experience of the Instagram shopping tab is just not very good, while the lack of traction from advertisers limits the relevance and availability of products.

We can see growth potential in this market already from China and the Instagram announcement certainly doesn’t mean an abandonment of development. Their plans are to streamline the shopping process rather than kill it altogether. For now, how quickly things develop will be down to the economy and, once they do develop, challenger brands will find fruitful spaces to build and grow.