Social commerce happens when consumers - and business buyers - discover and purchase products through social media and content creation platforms.
And as McKinsey explains in Social commerce: The future of how consumers interact with brands, it's taking off in the U.S.
As their chart below shows (click to enlarge), social commerce is expected to grow from $45.7 billion this year to $79.6 billion in 2025.
Social commerce is being driven by social media and content creation platforms such as TikTok, Instagram, Pinterest and others.
These platforms have added shopping features that allow in-app shopping, including purchases.
And independent influencers and content creators leverage these platforms to reach and monetize their audiences.
McKinsey covers two types of independent influencers that are part of the social commerce sales and marketing mix:
- Key Opinion Leaders have large numbers of followers and fans and are either celebrities and/or experts in their field. Highly professional, they are also skilled marketers that can sell millions of dollars of products in minutes and make new products trendy overnight. Think Kim Kardashian or Mr. Beast.
- Microinfluencers drive social commerce through organic, word-of-mouth recommendations to their networks. Many receive commissions or are paid directly by the brands. But some get free products or early access to new products.
We first covered social commerce in 2014. Back then, social ecommerce companies, such as Stella & Dot, recruited independent workers to be brand ambassadors and commission salespeople.
In most cases, the business models were similar to multi-level marketing companies such as Tupperware. And these independent salespeople mainly marketed to their friends and families.
But thanks to the rise of the creator economy, many consumer companies - and a growing number of B2B firms - have influencer programs designed to incent independent influencers to help sell their goods and services.
These programs also allow independent influencers to extend their reach well beyond friends and family. which means they can build larger and more sustainable businesses.
Walmart, for example, has created the Walmart Creator Program. Key quote from the program's landing page:
Walmart is where you shop to save. Now, it's where you create to earn. Walmart Creator is a platform designed to help you monetize your content, grow your business as a creator, and keep you inspired every step of the way.
Selling merchandise (referred to as "merch" in the creator economy) has become one of the most popular creator economy income streams. And its popularity - both with creators and consumers - will likely continue to grow.