One of the hottest investment firms is Ark Investment Management. Their investment focus is on firms creating disruptive innovation and their stable of exchange-traded funds has around $40 billion invested in them.
Their recent article Social Commerce: The Next Wave in Online Shopping outlines why they're forecasting social commerce to boom over the next 5 years.
As their article chart below shows (click to enlarge), they're forecasting social commerce globally to grow from about $390 billion in2020 to nearly $3 trillion by year-end 2025.
Statistically speaking, that's roughly a 50% compounded annual growth rate over the next 5-6 years. Given the large current size of social commerce, that's a pretty stunning projection.
China is the main growth driver, but they think both the U.S. and Europe will also see huge increases in social commerce.
Social commerce and social selling are defined a variety of ways, but we like LinkedIn's definition of social selling:
"Social selling is about leveraging your social network to find the right prospects, build trusted relationships, and ultimately, achieve your sales goals."
Social commerce isn't new.
The traditional direct selling industry (also known as multi-level marketing) has been around at least since the 1940's, with well-known brands such as Avon, Tupperware and Mary Kay.
But the growth of social media and social commerce platforms has made it easier and cheaper for consumers to leverage their networks to sell things.
Also, the traditional social media platforms are embracing social commerce, as are the creator economy platforms. This has greatly expanded the social commerce market.
Ark's article covers in more detail the reasons they expect social commerce to grow even more rapidly going forward. See the article for more information.
