What is social commerce? Definition, examples, stats
Social commerce is the use of a social platform for e-commerce sales, and it's huge: By 2027, it's projected to drive $604 billion in sales.
When the first Apple Stores opened more than 20 years ago, Steve Jobs and his team had a vision: Rather than just moving boxes, the stores would enrich lives. As we look ahead to retail trends 2023, many of Apple’s forward-thinking principles apply in today’s ever-changing environment.
If you can, cast your mind back two decades when our only option was to shop in-store. A visit to the mall would mean visiting multiple stops or settling on whatever we could find before our time or patience ran out. Big brands didn’t have our data, and when sales assistants asked, “How can I help you today?’ it was the closest we came to personalization.
The glory days of malls are long behind us, but that doesn’t mean modern customers want to shop exclusively online. Despite the massive growth in e-commerce triggered by the pandemic, brick-and-mortar stores are very much alive. Today, consumers are engaging with brands and shopping across channels in entirely new ways.
5 retail trends for 2023
Despite facing extreme challenges – digging out from COVID, soaring inflation, and supply chain disruption – the retail industry is poised for strong growth.
Forrester Research predicts total US retail sales will reach $5.5 trillion by 2027 with online sales making up 30% of the market.
When COVID restrictions lifted, many consumers returned to physical stores, driving offline US retail sales up to record-breaking year-over-year growth (14%) in 2021, according to Forrester. In 2023, three-quarters of total US retail sales will happen offline, they predict.
The forecast points to the importance of “everywhere commerce” and cultivating omnichannel presence. Brands that embraced this early on excelled during the pandemic.
Data from McKinsey shows omnichannel customers shop 1.7 times more than single-channel shoppers – they also spend more too.
In 2023, expect these retail trends to boom:
- Social commerce growth
- Metaverse reshapes retail
- Focus on experiential retail
- Perfecting personalization
- Friction-free retail
1. Social commerce: Trending up in 2023
Shopping via social platforms has become big business, especially in China. WeChat, the country’s biggest messaging app, delivered $115 billion in social commerce sales in 2019 alone.
In 2021, WeChat’s social commerce sales nearly doubled to $250 billion.
And there’s Pinduoduo, a “group buying” app grown from a startup into one of Asia’s biggest online retailers. Pinduoduo is now eyeing the US market, with plans to launch a cross-border e-commerce platform next month. Watch out, Amazon.
Social commerce is catching on fast around the world, particularly for Gen Z, which is helping make TikTok wildly popular. Social shopping offers buyers supreme convenience and is way more entertaining than scrolling endless product pages.
Experts predict social commerce will top $30 billion in sales in 2023, making up 20% of global retail e-commerce sales.
2. Metaverse reshapes retail in 2023
In the rapidly evolving retail environment, brands need to meet their audience where they’re already consuming content, keep pace with emerging platforms and technology, and create new opportunities for transactions in both physical and digital places.
The metaverse is a digital environment where retailers can connect with their target market and new audiences – and at scale too.
Gartner predicts that by 2026, 25% of people will spend at least one hour a day in a metaverse to work, shop, learn, or for entertainment.
Gaming is integral to this emerging new channel. When rapper Travis Scott debuted his songs in a virtual concert within Fortnite in 2020, a staggering 27 million+ people viewed it – the largest in-game gathering at the time.
The metaverse is still taking shape, but many brands are already taking the plunge into this trend.
For example, the first Metaverse Fashion Week earlier this year included Tommy Hilfiger and Dolce & Gabbana. Zara, the global fast-fashion brand, in the fall announced its third collaboration with the Zepeto metaverse platform.
3. Retail 2023: Going beyond selling with experiential CX
The last few years at home have meant consumers now are craving connectivity and experiences. As a result of the pandemic and the subsequent rethink on how we spend our time and money, we’re seeing a radical shift in consumer behavior and expectations.
Modern consumers not only want brands to align with their values and provide stellar service; they also want brand experiences to move, inspire, and entertain them.
We’ve arrived at the era where the customer experience has to be experiential and frictionless.
To remain competitive, retailers need to shift their physical presence to places that surprise and delight rather than serve as end-of-funnel sales transactions. Unless, of course, that’s what the consumer wants, for example, buy online pick up in-store (BOPIS) services.
A global survey found that nearly 60% of consumers polled expect a lot of retail space – more than half – to be focused on experience rather than product by 2025.
This survey was conducted before COVID, but the results have renewed relevance for retail trends in 2023.
One brand at the forefront of customer experience is Lululemon. Proving that stores don’t have to be transactional to be successful, their largest US flagship store (opened in 2019) contained a dedicated yoga studio, gym, cafe, and meditation space over two levels, occupying more than 2,000-square feet.
Rather than view their physical presence as a place to simply buy activewear, the retailer blends into the local community and offers an experience where shoppers can take classes, meet like-minded people, and participate in brand activations that don’t feel like brand activations.
Experiential retail: Why you don’t have to beat Amazon to win
The connection with the shopper must be put first to win in retail - and you don’t have to beat Amazon to create an outstanding customer experience.
4. Tailored to sell: Personalized experiences get the best results
Consumers today want to be seen, and personalization remains a key trend for retailers.
Research by Twilio found that 60% of consumers are more likely to become repeat buyers after a personalized shopping experience with a retailer.
In 2021, fashion company StitchFix took personalization to the next level by launching their e-commerce website, Freestyle. The platform offers real-time personalization for each customer by pulling data to show them ready-to-buy clothing that matches their budget, style, body type, and preferred aesthetic.
This level of personalization also makes business sense by using the same data on buying trends to inform inventory decisions.
After COVID, many retailers are focused on improving inventory management to avoid out-of-stocks that frustrate customers and overstock problems that hurt the bottom line. They’re investing in tools to manage their sales and customer data and exploring ways that AI and automation can help align inventory with demand.
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5. No slowing down: Friction-free retail
Whether online or in a physical store, shopping needs to be convenient. Customers have no patience for long lines in stores, complicated online checkouts, or missing payment options.
For example, customer complaints about long lines are the highest in December, during the peak holiday shopping season, according to customer feedback company HappyOrNot. During all of 2022, customers found Saturdays to be the worst when it came to long lines.
Online, shoppers are quick to abandon a purchase if they encounter problems during the checkout process – the rate for abandoned carts hovers around 70%.
There are a lot of steps retailers can take to streamline the shopping experience, both in-store and online, including:
- Customer service staffing and training to handle peak periods
- Upgraded point-of-sale (POS) systems at in-store checkout
- Offer a range of delivery options and BOPIS
- Convenient returns
- Check-out free stores. About 250 stores worldwide use autonomous checkout systems; the number is expected to grow to more than 12,000 in 2027.
- Offer multiple payment options, including digital wallets, service like PayPal, and buy now pay later apps.
Finally, follow through on your omnichannel promise. For instance, make sure in-store staff have visibility into inventory before telling a customer to go online for a product they can’t find in the store.
“Molton Brown beat its 2022 Black Friday – Cyber Monday forecast expectations, yielding ~430k units across all channels, amounting to £ 6.5m. 60% of our sales are from our webshops based on SAP Commerce Cloud.” – Anjun Murari, VP of Global Sales Channels & Strategic Development, Molton Brown Global
Retail 2023 and beyond
Retailers today have the unique opportunity to reimagine the shopping experience entirely, and these opportunity areas are relevant to all retail sectors.
Leaning into personalization, becoming customer-obsessed, and having a presence where your audience is will reignite growth now and into the future.
Steve Jobs would approve.
Shifting retail landscapes.
Varying buying behavior.
What makes people click “buy”?
We’ve got the answers HERE.
