Is E-Commerce Over? Social Media is changing the rules
E-commerce is one of the fastest-growing and most competitive sectors in the global economy. With the rapid development of technology, consumer behavior, and market trends, e-commerce businesses need to constantly adapt and innovate to stay ahead of the competition and meet the changing needs and preferences of customers. According to Statista, global e-commerce sales are expected to reach $6.5 trillion by 2024, up from $4.3 trillion in 2021. However, not all e-commerce businesses are equally profitable or promising. Investors need to consider various factors, such as market size, growth potential, competitive advantage, customer loyalty, and profitability when choosing which e-commerce businesses to invest in. In this article, we will explore how TikTok and social media influence this landscape in 2024, and what businesses and investors need to know to leverage these opportunities. Likewise, we will also include some of the growing, and potentially upcoming trends within this incredibly profitable market.
Statista, 2022
TikTok is not just a platform for viral videos and entertainment, but also a powerful driver of social commerce and e-commerce growth. According to a report by Insider Intelligence, 68% of Gen Z users are likely to buy products directly on TikTok in 2024, equal to YouTube and just behind Instagram. TikTok has also released its 2024 trend report, which predicts the future of user behavior and content patterns on the platform. The rise of trend forces, which are enduring, large-scale behavioral transformations that shape the way people consume and create content on TikTok. Examples of trend forces are hyper-personalisation, community commerce, and immersive entertainment. The emergence of trend signals, which are new user interests or content patterns that reveal the potential for future trends.
The expansion of TikTok Shop is a feature that allows users to discover and buy products from small businesses and creators on the platform. TikTok Shop has helped many online businesses grow and sell thousands of products, such as shapewear, skincare, and t-shirts. TikTok is aiming to increase its e-commerce revenue tenfold in 2024, by offering more features and services to its users, such as food delivery, livestream shopping, and digital gifts. For Shopify and e-commerce businesses, TikTok is an important platform to leverage, as it offers a large and engaged audience, a creative and authentic way to showcase products, and a direct and seamless way to drive sales.
This type of business would fall under the category of social e-commerce, in which it integrates social media into the model where users can discover and browse new potential products. It allows e-commerce businesses to leverage the power of social influence, user-generated content, and viral marketing to drive sales and engagement, buying products directly on platforms such as Instagram, Facebook, TikTok, and Pinterest. Social e-commerce is expected to grow at a CAGR of 28.4% from 2021 to 2024, reaching $3.4 trillion by 2024. Investors can benefit from this trend by investing in social media platforms that offer social e-commerce features, such as Facebook, Instagram, TikTok, and Pinterest, or in e-commerce businesses that have a strong social media presence and strategy, such as Glossier, Gymshark, and Fashion Nova.
E-commerce is a dynamic and evolving sector that requires constant innovation and adaptation. TikTok and social media are among the most influential factors that are shaping the e-commerce landscape in 2024, as they provide new opportunities and challenges for e-commerce businesses and investors. By understanding and leveraging these platforms and trends, e-commerce businesses and investors can create value and growth for themselves and their customers.
TikTok is not the only factor that is shaping the e-commerce landscape in 2024. There are also some general trends that are not related to TikTok but are equally important and influential for e-commerce businesses and investors. Customers expect a seamless and consistent shopping experience across different channels, such as websites, mobile apps, social media, and physical stores. e-commerce businesses need to integrate their data, systems, and processes to provide a unified multi-channelled experience that is personalized and engaging. AI is not only a tool for chatbots and product recommendations, but also a way to optimize various aspects of e-commerce, such as pricing, inventory, marketing, and customer service. AI can help e-commerce businesses analyze data, predict customer behavior, automate tasks, and generate insights.
Customers are becoming more conscious of the environmental and social impact of their purchases, and they are looking for e-commerce businesses that share their values and offer eco-friendly products and practices. This represents a growing concern for sustainability. e-commerce businesses need to demonstrate their commitment to sustainability, such as by using recyclable packaging, reducing carbon footprint, supporting social causes, and providing transparent information.
Cross-border e-commerce is the process of selling and buying products online across different countries and regions. It allows e-commerce businesses to expand their customer base, diversify their revenue streams, and leverage lower costs and higher margins in different markets. Cross-border e-commerce is expected to grow at a compound annual growth rate (CAGR) of 17.7% from 2021 to 2024, reaching $4.8 trillion by 2024. Investors can benefit from this trend by investing in e-commerce platforms that facilitate cross-border transactions, such as Shopify, Amazon, and Alibaba, or in e-commerce businesses that have a strong global presence and brand recognition, such as Nike, Apple, and Zara.
One of the possible scenarios for the future of e-commerce is the emergence of a fully immersive and interactive online shopping experience, powered by technologies such as virtual reality (VR), augmented reality (AR), and artificial intelligence (AI). Imagine being able to browse, try, and buy products in a virtual store, customized to your preferences and needs, without leaving your home. You could also interact with other customers and sales assistants, get personalized recommendations and feedback, and enjoy a realistic and engaging shopping journey. This would not only enhance customer satisfaction and loyalty but also create new opportunities and challenges for e-commerce businesses and marketers. How would they design and optimize their virtual stores? How would they measure and improve their performance? How would they differentiate themselves from their competitors? These are some of the questions that the future of e-commerce might pose. These are questions that the market has yet to answer, but should expectedly be answered soon given the rapidly innovative changes within this market. Closely following the news and production of tech giants like Meta should hopefully give you early insight into these questions, giving clarity for your potential investments before others.
