Member Exclusive   //   April 26, 2022

Modern Retail Research: How DTC brands are adopting social commerce across platforms

01
Introduction

Social commerce has exploded in recent years with $492 billion in 2021 global sales, a figure expected to triple to $1.2 trillion by 2025. Suddenly, brands that could previously only link their profiles to websites to sell goods are making more and more of their sales on the social platforms themselves. Besides providing a one-stop shopping experience, advertisers are using social commerce to give consumers a sense of community by engaging them in real-time communication with a brand — shoppers can even ask questions about products as they’re demonstrated live. 

Behind the rise of social commerce is a surge in mobile shopping. According to Shopify, 72% of the $2.9 billion in 2021 Black Friday sales came from mobile, up from 67% in 2020. The number of shoppers using digital wallets to store credit card information is up too, making social transactions faster and easier. Payments provider Paysafe found that 32% of consumers globally were using digital wallets more frequently than the year before in research conducted in May 2021. That escalation was thanks in part to the pandemic which drove consumers and retailers alike to place more trust in non-touch payment options — in April 2020, at the start of pandemic, 63% of Americans had increased their use of contactless payments. 

As consumers grow increasinging comfortable with social commerce and advertisers invest more in it, the space is ripe for experimentation and expansion. In this report, Modern Retail presents an industry-level analysis of the social commerce infrastructure and user base of four leading social media platforms — Facebook, Instagram, Pinterest and TikTok — and how five consumer-product categories are currently using the tools at their disposal.

02
Methodology

Modern Retail analyzed how five product categories are participating in social commerce on four of the major social media platforms to find out which platforms have the most-robust social commerce options, which ones are lacking and how various product categories are using the platforms to drive sales. Modern Retail also studied the platforms’ user demographics to determine which have the most potential for future social-commerce growth. 

Modern Retail editors selected 25 up-and-coming and older and established DTC brands across five product categories — apparel, home goods, travel and recreation, health, wellness and beauty and food and CPG — to measure the presence of on four of the major social media platforms — Facebook, Instagram, Pinterest, and TikTok. Instagram was identified as the most mature social commerce platform with a number of different features, and additional analysis was performed on the 25 brands’ Instagram posts in 2021. 

03
Younger consumers are more active social shoppers, but not all platforms attract that audience

When comparing the four leading social commerce platforms, Meta-owned Facebook and Instagram offer more social commerce options than Pinterest and TikTok. The two platforms notably allow non-brand-owned handles — influencer accounts — to add shoppable features to their posts, which gives brands another avenue to reach consumers. 

Pinterest and TikTok, on the other hand, only allow verified brand merchant handles to make their posts shoppable, thus limiting the extent to which an influencer collaboration can showcase products to a viewer.

While Facebook and Instagram both have the most-robust social commerce platforms, of the two, only Instagram has a pool of users most likely to shop on social commerce. (Its closest rival is TikTok.) That’s because consumers leading the charge on social commerce are younger — tending to belong to Generation Z — and are more likely to discover brands online than older generations: 59% of Generation Z shoppers versus 55% of Millennial said they often discover products on social media platforms. Instagram and TikTok skew much younger, according to measured demographics, making the two platforms a prime space for social commerce.

At the other end of the spectrum, Facebook has the most agnostic audience given its scale: While 70% of U.S. adults ages 18-29 say they use Facebook, so too do 50% of U.S. adults over 65. Its wide range of users can make it a broader social media space, but for brands targeting a younger app, it may not have features most conducive to that consumer.

04
Instagram has the most robust social commerce space — TikTok has the most potential

Of the four measured social media platforms, Instagram had the highest number of our 25 tracked brands present while TikTok had the lowest. One clear reason: Instagram has an established social commerce infrastructure with standard options for brands that want to sell on its platform, making it a strong space for brands to create social commerce shops. And while TikTok’s user base skews young, it is the newest of the four platforms. The lower brand presence on the platform indicates that it has a ways to go in building out a full social commerce infrastructure for advertisers.

Despite TikTok’s lack of infrastructure, many brands are eager to enter the space to reach a younger demographic and capitalize on viral moments when they occur on the platform. For example, Glow Recipe signed up for TikTok’s beta shopping feature in April 2021 after seeing a 600% spike in sales when a viral moment boosted awareness of the brand on TikTok in March 2021. TikTok’s aptitude for creating these sudden spikes in attention — often through participatory trends — appeals to brands, but without sufficient social commerce options, brands struggle to find a foothold outside of them on the platform.

When considering brand usage of social commerce by category type, apparel indexes the highest, followed by home goods and travel and recreation. (Notably, no categories over-index in TikTok social commerce.) 

Food/CPG has the lowest usage of social commerce, likely because it’s difficult for the category, which consists largely of grocery products, to sell consumable items through social commerce. Products may be perishable; and because consumers are seeking more immediate gratification with food, they tend to buy from local grocery stores. The food/CPG category generally relies on social media to build brand presence while doing its selling through other channels

05
DTC food brands use Instagram as a marketing platform, not for commerce

But while food/CPG brands had the lowest usage of social commerce options out of all of the measured product categories, they emerged as the clear winner when it came to engagement. When viewing the ratio of followers to specific interactions — likes, views and comments — by product category on Instagram, food/CPG brands stood out as the category with the highest engagement ratio across all forms of interaction.

Looking at the way categories interacted with other Instagram handles helped explain the food category’s social strategy: Food brands tagged other users in their posts most often and, on average, every post had at least one tag. While not reflective of the other categories’ performance of ratio to interactions, the food category’s strategy seems to be fostering community and prioritizing awareness rather than on-platform conversions.

Food brands typically tagged retail locations or recipes from other users and chefs, specifically focusing on brand awareness and on using social media as a marketing tool rather than a distribution channel. While DTC food/CPG brands do tend to distribute products themselves more broadly, the measured DTC food/CPG brands primarily used social posts as a way to link to their own websites.

06
TikTok’s social commerce experience is subsidized by Shopify

Until recently, brands on TikTok focused more on driving brand awareness on-app and driving purchases off-app. In 2021, Shopify announced a partnership with TikTok to help the platform expand its social commerce capabilities. Prior to this, brands on TikTok could only rely on link-in-bios to help drive sales off of the platform. The Shopify arrangement gives brands the ability to add a shoppable tab to their handles, and brands can now add shoppable widgets mid-video –notably the shoppable features still require checkout on the brand website. 

TikTok’s tendency to create sudden surges in viral attention has benefited brands of all sizes. Trapstix, a small lip balm brand, had only 75 orders from its founding in 2018 to July 2020, but that changed when some of the brand’s owner’s TikTok videos hit the viral lottery, increasing sales to 50,000 units sold through February 2022. Even old-guard brands like Gap and Abercrombie have experienced a sales resurgence from posting videos on TikTok: #gaphoodie earned 9.3 million views and #abercrombie had 197.7 million views on TikTok by February 2022. 

But while the Shopify features allow brands to set up shoppable pages and in-video CTAs on the platform, the influencers who are driving the vast majority of the views can’t do the same — forcing them to fall back on the less direct link-in-bio tactic to add shoppable features, often driving users off-app. 
Fortunately, Shopify stepped in to fill this gap in 2022 by announcing a new tool called Linkpop. Linkpop lets influencers add a link in their bios that opens a shoppable page in-app rather than moving users out of the app. Although Linkpop is not exclusive to TikTok and can be used by other social commerce platforms, the tool does help TikTok provide in-app purchase options that its competitors, namely Instagram, already offer.

07
Home goods brands set up shop on Pinterest

Pinterest had a lower overall social commerce presence from our 25 measured brands, but it has been courting advertisers with some unique social commerce products. In June 2021, Pinterest began offering its “Shopping List” feature that allows users to save shoppable product pins in one place, creating a space for both product discovery and on-platform purchase. 

The platform also has a “verified merchant” status for brand partners that upload their product catalogs. In exchange for placing a product catalog on Pinterest, which improves the platform’s SEO on Google ranking, a brand appears in Pinterest’s curated shopping experiences.

Within our set of measured brands, only home goods, travel and recreation and apparel had Pinterest “verified merchant” status: 80% of measured home goods brands had verified status, while the travel and recreation and apparel categories both had less than 50% of brands with verified status. Home goods brands have clearly identified a synergy between Pinterest and their products. 

Compared to other platforms where the emphasis is on constantly offering new content, Pinterest lets users focus on evergreen content from which to draw inspiration, saving content to their “boards,” which they can revisit later. It is particularly useful for long-term projects, like ongoing home renovations or redesigns. While this might not be the hottest environment for all categories, Pinterest’s unique option for vision boarding in conjunction with its “Shopping List” feature makes it a space for home goods brands to court new customers who are looking for home décor or DIY project inspiration.

08
Facebook Shop focuses on customer service

Facebook offers a full suite of social commerce features, and the majority of measured brands sell through the platform. Facebook’s main feature, aptly named Facebook Shop, allows for brands to link their product catalog to the app and directly checkout in-app. Facebook Shop has partnerships with Paypal and, more recently as of 2021, Shopify’s Shop Pay to help power checkout. Its partnership with Shopify directly appeals to DTC brands, as many DTC businesses’ own websites are powered by Shopify solutions. 

Warby Parker, one of the DTC brands measured on our list, started selling through Facebook Shop in 2019 and has benefited from its customer service features. By connecting with consumers through Facebook Shop, Warby Parker can communicate with them seamlessly through WhatsApp, Facebook Messenger, and Instagram direct messages. This gives the brand an additional SMS shortcut to keep conversations going wherever their customers are most comfortable.

Along with the direct messages, Facebook Shop also allows for consumers to comment directly on the product pages in a Q&A section similar to a Facebook post. Customer service reps can then respond on the page in a setting that feels more familiar to their users, building a sense of community and a trove of real consumer feedback which can help guide other customers.

09
Facebook Marketplace best supports both ends of the spectrum – small and large brands – but misses the middle

While Facebook offers its Facebook Shop feature, Facebook also offers a marketplace option unlike other platforms. Facebook Marketplace operates much like any other marketplace: Any user can set up a product page and upload items to sell; and the platform receives a percentage of the sales. Users often sell locally through their friends list or regional Facebook groups.

Compared to the other social media platforms, which generally require user verification and authentication, Facebook provides a set up process with less red tape. It also heavily emphasizes selling to connected users curated from a friends list, rather than offering an explore page of potentially relevant user posts, as seen on Instagram, Pinterest and TikTok. This selling structure biased toward known friends or local users has positioned Facebook Marketplace as a unique social commerce option for local small businesses and neighbors, who often rely on connecting through degrees of separation. 

At the other end of the spectrum, Meta has been investing in features like Facebook’s shoppable livestream to attract larger companies. For example, Petco collaborated with Facebook to create a shoppable live fashion show for pets in April 2021, capturing over 500,000 views on Facebook and leading to a 1.9 times return on ad spend. But for livestream shopping to work, the collaborating brand needs to have a large Facebook following to tap into, making the feature less viable for small- to medium-sized businesses. 

With Meta’s recent push to host livestream shopping events for big brands and Facebook Marketplace originally intended for local small businesses, Facebook lacks social commerce options for medium-sized businesses looking to expand beyond their local market.

10
Conclusion and key takeaways

With all of the growth around social commerce, brands have a number of new options to choose from to sell directly to consumers. While Instagram has the strongest social commerce foundation, competitors are starting to break into the market through unique approaches. TikTok, Instagram’s rising competitor, has set its eyes on social commerce in the U.S. 

Notably, TikTok’s Chinese counterpart Douyin has a well-built social commerce infrastructure in China. Individuals, small businesses and major franchises can set up in-app shops on the platform. It’s likely only a matter of time before TikTok sees similar features cascade into its U.S. market – and their commerce-minded younger user base is ready and waiting. 

With both the present and future of social commerce at stake, brands have to carefully choose platform partners to chart their early course – and keep tabs on developments to see where to pivot quickly.

Here are some takeaways from Modern Retail’s analysis:

  • Younger consumers, particularly Gen Z, make for more avid social commerce consumers; that demographic is specifically concentrated on Instagram and TikTok.
  • While Instagram has the most robust social commerce space, TikTok has the most potential for future social commerce growth given its audience, and brands of all sizes have benefited from its ability to generate quick viral trends that lead to sales.
  • Food brands focus on brand awareness strategies rather than commerce tactics on social media, which helps to explain the category’s lower use of social commerce options – along with the category’s fulfillment barriers.
  • Facebook Shop focuses on customer service and community building.
  • Facebook Marketplace’s unique friend-to-friend positioning focuses on local small businesses and interactions between neighbors. Despite its bias toward smaller businesses, Facebook has started courting larger brands through new features, such as livestream shopping.
  • TikTok only allows brand owners, not influencers or individual content creators, to use its shoppable video feature. That forces influencers to utilize a link-in-bio to add shoppable features, often driving users off-app. Shopify’s new Linkpop tool works to solve that with link-in-bios that allow for in-app shopping.
  • Pinterest’s unique option for vision boarding using its “Shopping List” commerce feature makes it a space for home goods brands to court new customers who are looking for home décor or DIY project inspiration.