SuperHumanAlpacaPerson578
E-commerce Global Initiative Social commerce: The future of how…
E-commerce Global Initiative
Social commerce: The
future of how consumers
interact with brands
Browsing and shopping directly on social media platforms is a core feature of
e-commerce in China. Now, this dynamic new way of buying is poised for rapid
growth in the United States.
October 2022
© Carlina Teteris/Getty Images
This article is a collaborative effort by Camilo Becdach, Marc Brodherson, Alex Gersovitz, Daniel Glaser,
Zachary Kubetz, Max Magni, and James Nakajima, representing views from McKinsey’s E-commerce Global
Initiative, NeXT Commerce.
A two-hour live shopping event on TikTok brings in
more than a week’s worth of sales at a flagship store.1
An interactive, shoppable Instagram live stream
garners 40,000 comments. Augmented-reality (AR)
lenses let Snapchat users “try on” makeup and send
the images to friends.
Welcome to the dynamic world of social commerce,
where consumers explore products and complete
transactions through social media and content
creation platforms, all in an app. This emerging form
of shopping removes friction from the buying process,
creates a more engaging journey for the consumer,
and presents new opportunities for brands to
generate consumer interest.
Already enormously popular in markets such as
China, social commerce remains a small but rapidly
growing segment in the United States (Exhibit 1).
In 2021, $37 billion in goods and services were
purchased through social-commerce channels.2
By 2025, that figure is expected to swell to nearly
$80 billion, or 5 percent of total US e-commerce.3
Globally, the social-commerce market is expected to
grow to more than $2 trillion by 2025.4
Social commerce is more than just a new shopping
experience. It represents a paradigm shift in how
consumers interact with brands: where, when,
and how they shop. For consumer brands, this
creates opportunities for a much more interactive,
entertaining, and experiential journey (see sidebar,
“Discover NeXT Commerce”). For example, leading
brands are working with platforms such as TikTok to
forge new relationships with consumers, shifting from
traditional advertising strategies to fun, engaging
content that is less overtly promotional. This content
can be used to highlight unique product features or
explain product complexities simply. For example,
rather than watching an ad for a new skin-care
formula, your favorite celebrity can invite you behind
the scenes into their daily skin-care routine, showing
Exhibit 1
Social commerce is a small but rapidly growing segment in the United States.
1 Nikki Gilliland, “Seven examples of brands engaging in social commerce,” Econsultancy, June 1, 2022.
2 “Social commerce surpasses $30 billion in the US,” Insider Intelligence, July 6, 2021.
3 Social commerce gross merchandise value (GMV) in the United States from 2022 to 2028, Statista, September 16, 2022.
4 Value of social-commerce sales worldwide from 2022 to 2026, Statista, September 16, 2022.Web 2022
Social Commerce
Exhibit 1 of 2
Social commerce is a small but rapidly growing segment in the United States.
– $ billions
Share of total retail
e-commerce sales, %
27.0
36.6
45.7
56.2
67.3
79.6
2020 2021 2022 2023 2024 2025
3.4 4.0 4.4 4.7 5.0 5.2
1 Data for 2021-25 are projected.
Source: eMarketer, May 2021
2Social commerce: The future of how consumers interact with brands
you how they use the branded product and why they
love it. Consumers can then buy the product directly
within the platform, whether it’s on Instagram or
TikTok or through YouTube Shopping.
The winning ingredients for social
commerce in China
The evolution of social commerce in China
offers a glimpse of the possibilities.5 By forging
partnerships with wildly popular social influencers
and participating in live-stream shoppingan
experience that combines instant purchasing of
a featured product and audience participation
through chat or reaction buttonsbrands in China
have achieved conversion rates of almost
30 percent on social platforms.6 This is up to ten
times higher than conversion in conventional
e-commerce. Last year, goods and services
purchased through live-stream shopping in China
represented $132 billion, or 5 percent of total
e-commerce gross merchandise value (GMV)7.
More broadly, Chinese consumers spent more than
double that amount$352 billion (or 13 percent of
total e-commerce)on all social commerce.8
5 “It’s showtime! How live commerce is transforming the shopping experience,” McKinsey, July 21, 2021.
6 Ibid.
7 Jasmine Enberg, “How important will livestreaming be for social commerce in 2021?,” Insider Intelligence, July 1, 2021.
8 “Social commerce surpasses $30 billion in the US,” Insider Intelligence, July 7, 2021.
9 iResearch.cn.
10 Jessica Rapp, “How to earn brand loyalty from Chinese Gen Z,” Jing Daily, July 23, 2020.
11 Kate Chernavina, “Top 34 Chinese KOLs and influencers,” HI-COM, August 12, 2021.
12 Influencer Marketing, “#KnowyourMIV: The top 10 Chinese influencers for beauty you should know,” blog entry by Paloma Ahlstrand Byrne,
Launchmetrics, June 8, 2021.
Innovation continues to drive social commerce in
China, with challengers quickly gaining scale in
particular categories. For example, TikTok (known as
Douyin in China) has emerged as a social-commerce
leader, particularly in the apparel category. Last year,
Douyin’s apparel sales amounted to more than half of
what was sold on e-commerce exemplar Tmall, with
most of those sales coming from social commerce,
including live auctions, a successful innovation in the
China market.9 In this format, which involves both the
gamification of product purchasing and a powerful
social element with other live users, live-stream
hosts often build a rapport with their high-volume
customers, chatting with them during the auction.
This builds loyalty and a sense of community, which
are critical to Chinese consumers,10 and helps bring
VIP customers to auctions on a near-daily basis.
However, because of the emotional nature of this
format, return rates for purchases are higher than for
traditional e-commerce. Thus, ensuring that featured
products are of high quality and clear value to the
customer is critical in this medium.
Another key ingredient in China’s social-commerce
success is the power of influencers and community
leaders. Chinese “key opinion leaders” (KOLs) have
gained massive followings by becoming subject
matter experts in their respective categories. In
certain sectors, such as beauty and fashion, these
highly professional and marketing-savvy social
celebrities can sell millions of dollars of products in
minutes and make new products trendy overnight.
Doudou Babe, for example, reaches more than 13
million followers on Douyin11 and has forged brand
partnerships with Chanel, Charlotte Tilbury, Lancôme,
and YSL.12
Beyond celebrities, “key opinion consumers” (KOCs)
also have a significant influence on product sales
and brand reputations. These microinfluencers drive
social commerce through organic, word-of-mouth
recommendations to their personal networks. In
many cases, they are not paid directly by brands
Discover NeXT Commerce
Owning the next era of growth requires going
beyond traditional e-commerce and online
sales. It requires creating a personalized
experience that’s tailored yet consistent
across all channelsall backed by flexible
technology and an operating model that
places digitally driven commerce at the
center of business. Learn more about driving
sustainable and profitable growth through
next-generation e-commerce.1
1 For more, see “NeXT Commerce,” McKinsey.
3Social commerce: The future of how consumers interact with brands
but are given early access to new products or asked
to provide input on product design. For example,
Perfect Diary, a fast-growing Chinese-based beauty
brand, built a network of KOCs through product
giveaways and by engaging with thousands of people
on product review sites.13
Both KOLs and KOCs have considerable clout in
determining which platforms consumers gravitate
toward. When Douyin launched its social-commerce
features in 2018, live-streaming KOLs began to
move away from commerce-centric platforms, taking
many of their fan bases (and their purchasing power)
with them to Douyin. Douyin’s social-commerce
transactions grew from 10 billion renminbi in 2018 to
800 billion renminbi in 2021.14
Some of the factors spurring the rapid rise and
popularity of social commerce in China are unique
to the country’s particular circumstances. Thus,
although China represents a useful market for
learnings and inspiration, adoption in other countries
is likely to follow a slower trajectory. For instance,
China’s economic rise, which coincided with the
global internet revolution, helped create a deeply
digital consumer base with more than one billion
internet users (more than the United States and
European Union combined) and a population with one
of the highest amounts of e-commerce in the world.15
Over the years, megaplatforms such as Alibaba
and Tencent have used the trust they built among
Chinese consumers to create a sprawling digital
ecosystem and enable the rapid growth of social
commerce (Exhibit 2).16 Creator content, product
discovery, community sharing, and digital-payment
infrastructures are all integrated into a seamless one-
stop-shop digital universe.
How social commerce is growing in the
United States
Although the US market is likely to evolve differently
than China’ssocial commerce, for example, may
not achieve the same levels of adoptionthe current
acceleration of social commerce has some parallels
with the Chinese market half a decade ago. Just as
the arrival of Alibaba’s Taobao Live in 2016 ushered
in a new type of e-commerce, social-commerce
adoption in the United States is being driven by
social media and content creation platforms (such
Exhibit 2
Social commerce is growing in China, driven by the rapid acceleration of
live commerce.Web 2022
Social Commerce
Exhibit 1 of 2
Social commerce is growing in China, driven by the rapid acceleration of
%
Social commerce, excluding live commerce Live commerce All other e-commerce
1 Data for 2021-22 are projected.
Source: eMarketer, May 2021
2019
9
90
1
$1.8
trillion
2020
10
87
3
$2.2
trillion
2021
9
86
5
$2.6
trillion
2022
7
86
7
$2.9
trillion
13 “The complete guide to KOC marketing in China,” AdChina.io, accessed August 5, 2022.
14 Transaction value of livestream commerce on Chinese short video app Douyin (Tik Tok) in China from 2018 to 2020 with an estimate for 2021,
Statista, November 22, 2021.
15 “The future of digital innovation in China: Megatrends shaping one of the world’s fastest evolving digital ecosystems,” McKinsey, September 30,
2021; Countries with the highest percentage of retail sales taking place online in 2022, Statista, February 21, 2022.
16 “The future of digital innovation in China,” September 30, 2021.
4Social commerce: The future of how consumers interact with brands
as Pinterest and TikTok) adding new shopping
capabilities. These tech-enabled features allow
platforms to process transactions and, in doing so,
gain access to first-party customer data and expand
their ability to offer value to advertisers. Instead of
merely targeting consumers with top-of-the-funnel
awareness campaigns, social media platforms
can now draw a much more direct line between
advertising impressions and verified sales.
Social commerce also represents an entirely new
revenue stream for platforms. By collecting a share
of each transaction, platforms can increase their
average revenue per user.
Over the past few years, US social and creator
platforms have rolled out a plethora of social-
commerce capabilities:
Pinterest. Launched in 2021, Pinterest’s
“Shopping List” feature automatically saves
users’ shoppable product pins (launched in 2019
and uploaded from verified retailers), shows
product reviews, and notifies users when a
pinned product has a price reduction.
Instagram Live Shopping. Launched in 2020,
influencers can live stream on Instagram with
the objective of introducing and selling products
to fans in real time. This builds on the ability of
influencers to add shopping tags to their posts
that consumers can use to purchase products.
Brands can also create a digital, shareable
catalog of their products on Instagram, with
customers purchasing directly on the app or
clicking through to finish the transaction on the
brand’s e-commerce site.
TikTok Shopping. Launched last year in
partnership with Shopify, these videos and
live streams allow Shopify merchants to sync
their product catalogs to TikTok and create
mini storefronts.
YouTube Shopping. In a deal between YouTube
and Shopify, companies can sell on YouTube
through live streaming, videos, or a storefront.
Twitter Shops. Shops allows companies to
showcase up to 50 products on their Twitter
profile, making the platform a place where
people buy products rather than just talk
about them.
Twitch. Brands can market on Twitch through
traditional means (video and display ads) and
through partnerships with creators and branded
stations and events. Among Twitch’s eight
million active users, 84 percent believe showing
support for creators is an important part of
the Twitch experience, and three-quarters say
they appreciate brands that help their favorite
streamers achieve success.17
Amazon Live. Launched in 2019, this
live-streaming feature enables brands and
creators to stream product demos and other
innovative content. According to Amazon, tens of
millions of customers viewed its Prime Day 2021
live streams.18
Snapchat. Snapchat has introduced AR filters, or
“catalog-powered shopping lenses,” to make the
purchasing process more experiential.
The growth of social commerce in the United
States will not come without growing pains. Meta,
which recently tested multiple social-commerce
toolsincluding a native, end-to-end affiliate
marketing programshuttered that program in
favor of its Creator Marketplace.19 Additionally, tests
of on-platform checkouts from companies such as
YouTube and Pinterest have reportedly seen slow
adoption, with Shopify continuing to be a preferred
checkout tool.20
17 “Where brands and communities intersect,” Twitch Advertising, accessed August 22, 2022.
18 Amazon staff, “Amazon’s not-so-secret way to score top Prime Day deals,” Amazon, June 28, 2022.
19 Tim Peterson, “Instagram will shut down its affiliate commerce program on Aug. 31,” Digiday, August 5, 2022.
20 “Trying to get back on topic; Social shopping takes another hit,” AdExchanger, August 8, 2022.
5Social commerce: The future of how consumers interact with brands
That said, with Americans spending more time on
social and creator platforms than ever, consumer
demand for these new shopping features is building,
especially among younger generations. A 2021
retail survey by Forrester found that 61 percent of
online adults younger than 25 in the United States
said they had completed a purchase on a social
and creator platform network without leaving the
website or app, up from 53 percent in 2020.21 And a
2022 McKinsey survey of US consumers who have
previously live shopped found that 75 percent want
to attend more live-shopping shows in the future.22
A paradigm shift for brands
As a $36 billion market, social commerce is already
too big for US brands to ignore. In fact, it has the
potential to become their best channel, given the
possibilities for new levels of engagement with
consumers and the opportunity to hyper-target
customer segments. Because consumers are
both discovering and buying products in one
medium, social commerce merges marketing and
retail channels into a single dynamic universe. As
a result, brands can work with social and creator
platforms to draw a more direct line between their
marketing spend and actual sales by customers,
enabling advertising that is far more effective and
efficient. Certain brand categories, such as fashion
and beauty, are already doing this. The specialty
skincare brand Glossy recently sold out two
product lines in a retail store by partnering with
a TikTok influencer who offered a one-day-only
discount code.23
At the same time, brands also face challenges
when wading into this new paradigm. In traditional
e-commerce, brands direct consumers toward
their own channels where they can develop a direct
relationship with customers, collect insights on
customer behavior, and capture a higher share of
customer spend. Social commerce is changing this
purchase journey, creating an experience that, in
some cases, circumvents brand-owned channels.
For instance, a consumer may discover a brand
on Instagram through a post from their favorite
influencer, then go to the brand’s Instagram page
to follow and browse products, eventually checking
out through Instagram’s shopping feature. Following
this, the consumer continues to stay within
Instagram’s orbit, receiving personalized ads and
relevant posts in their feeds that have been selected
by Instagram’s algorithm.
As consumers increasingly turn to social and creator
platforms for product discovery and buying decisions,
the customer journey will continue to shift outside of
brand-owned channels, thus threatening the status
quo of direct-to-consumer relationships.
How brands can retain control of the
customer experience
Brands have an opportunity to help shape the next
chapter of e-commerce in the United States. Given
how rapidly Chinese consumers migrated from
traditional e-commerce to social commerce, brands
that fail to accept this new normal or continue
pursuing yesterday’s strategies run the risk of
missing out on the majority of digital spending over
the next three years. To become a social-commerce
leader and gain share in the digital marketplace,
brands can consider several actions:
Develop a holistic influencer marketing strategy.
Influencer marketing has already become an
increasingly important activity for brandsand
one that will continually require optimization. In
addition to thoughtfully selecting the creators
to work with based on factors such as the
influencer’s interests, demographics, and reach,
brands need to find the right mix of macro- and
microinfluencers. US brands will want to take a
page from their counterparts in China and work
with a deeper set of KOLs and KOCs, measuring
each of these partnerships regularly and
evaluating them according to clear KPIs. Brands
will benefit from measuring the impact of their
influencer campaigns throughout the advertising
funnel, including top-of-funnel metrics such
as engagement rates and video views, which
can help brands understand how content is
performing. Although sales are the ultimate goal,
social and creator platforms still offer a healthy
dose of awareness building.
21 Jessica Liu, The state of US social commerce, Forrester, January 2022.
22 McKinsey US Live Commerce Survey, August 2022 (n = 482).
23 Traackr, “How beauty brands are advancing social commerce strategies in 2022,” Glossy, March 8, 2022.
6Social commerce: The future of how consumers interact with brands
Watch for platform winners. Because Chinese
consumers are used to interacting exclusively on
their phones and more willing than US consumers
to try new platforms and technology, healthy
competition exists among China’s platforms. Take,
for instance, Douyin’s leadership in the apparel
category. The United States, however, is more
likely to be a winner-takes-most market. Top
creators will likely gravitate toward platforms
with the strongest ecosystem and largest base of
users, giving these platforms a key advantage.
Move the center of gravity to brand-led
accounts. Although much of the activity on social
platforms centers on influencers and celebrity
creators, brands can draw consumers to their
own channels with engaging and innovative
short videos and live streaming. By creating
compelling content and drawing influencers onto
their channel, brands have an opportunity to
build enthusiasm, provide an interactive forum
for feedback and questions, and develop a new
sales channel. Nike is one of the most followed
brands on social media and has a staggering 234
million followers, thanks in large part to Nike’s
engaging content featuring star athletes. Nike
has also built considerable followings on channels
specific to certain audiences; the Nike Football
account, targeted at soccer fans, has more than
45 million followers. Nike has been a true brand
leader, going a step beyond with an ecosystem of
its own apps (Nike Shopping, Nike SNKRS, and
Nike Training Club), which has contributed to 18
percent of Nike’s annual revenue growth in its
digital business.24
Add a brick-and-mortar element. Many brands
in China have developed distinct accounts
for specific cities, such as one account for its
Shanghai store and others for the Beijing and
Shenzhen stores. In each account, content is
targeted to the profile of local customers and
tailored with special offers and events. US
brands could borrow this approach to personalize
their social-commerce marketing. Imagine, for
example, a sports apparel brand that conducts
a live sale for sports bras and yoga pants in a
city with a disproportionate number of female
followers, or a footwear company’s live sale
for a limited-edition shoe drop in a city with a
disproportionate “sneakerhead” followership.
Building for a new customer journey. Social
commerce will revolutionize the consumer
journey, and brands must adapt their
e-commerce offering accordingly. For example,
search in e-commerce has historically oriented
around text- or picture-based shopping. Social
commerce will feature a different approach.
In China, platforms such as Douyin and Tmall
use short videos for content seeding and live
streaming for conversion, and transactions are
finished in a platform-based webstore. Actions
such as making shopping-tag-enabled posts,
optimizing strategy for marketplaces such as
Meta’s Creator Marketplace,25 and developing
content and promotions for live-shopping
formats are just a start.
24 Robert Williams, “Nike attributes digital revenue growth to demand across mobile apps,” Retail Dive, July 5, 2022.
25 Instagram, August 5, 2022.
By creating compelling content and
drawing influencers onto their channel,
brands have an opportunity to build
enthusiasm, provide an interactive forum
for feedback and questions, and develop a
new sales channel.
7Social commerce: The future of how consumers interact with brands
Anticipate and partner with new creator
brands. Mega-influencers and other celebrities
are increasingly interested in using their large
audience of fans to become entrepreneurs with
their own product lines. Rather than compete with
these creators, brands can partner with them,
setting up spin-offs in which creators take a stake
and retain major creative control, while brands
bring strengths in areas such as manufacturing
and omnichannel distribution. Numerous
brands have pursued this route, including
fashion company Revolve, which partnered with
influencer Aimee Song to launch Song of Style, a
clothing and accessories line.26
Build global capabilities by experimenting
in the Chinese market. Brands will need
new capabilities to deliver successful social-
commerce offerings in the United States. With a
large and dynamic social-commerce ecosystem,
China offers an ideal test market. Multinational
brands have an opportunity to test and scale new
capabilities with Chinese consumers. However,
brands need to ensure they have the talent and
expertise to execute these initiatives in the United
States, which thus far has been a major stumbling
block for brands trying to import social commerce
from China.
Social media and content creation platforms can be
the new secret weapon that lets brand marketers
deliver significant growth for their products. As
social and creator platforms move rapidly to
incorporate innovative buying options, consumers
will follow with their wallets. Brands that fail to
understand this transformation of the customer
journey or acknowledge the reduced relevance of
their traditional, website-based channel could be
devastated by both competitors and smaller brands
taking share. To adapt, brands will need a holistic
strategy for influencer partnerships and for social-
first content. The time for brands to act on social
commerce is now.
Q1. What is social commerce and how has it is impacting the world of marketing?
Q2. What are the winning ingredients for social commerce in China?
Q3. How social commerce is growing in the United States
Q4. How brands can retain control of the customer experience
