SOCIAL media companies Facebook, Instagram, Twitter, Pinterest and even TikTok were capitalising on the growing trend of social commerce as a new way to buy and sell goods, electronic funds transfer payment provider Ozow said yesterday.
The payment platform’s co-founder and chief executive, Thomas Pays, said this trend was redefining where and how people shopped. He said social media platforms had introduced shopping portals and added functionality to allow people to buy and sell goods directly via their platforms.
Pays said although the increased use of social commerce continued to redefine the way retailers operated, consumers’ shopping behaviour during Covid-19 cemented their value as the generation that was steadfastly transforming the economy.
“Back in 2016, Facebook launched its Marketplace to cater to people wanting to use their social media platforms to shop locally. Many of the other social media platforms followed suit, opening a whole new marketplace for consumers,” said Pays.
The latest statistics from Hootsuite found that South Africans spent an average of 3.5 hours a day on social media; hence, it had been a natural evolution for these networks to become the new marketplace for consumers.
According to the #Digital2021 report for South Africa in February, there were 25 million social media users in the country in January. The number of social media users in South Africa increased by 3 million, or 14 percent, between 2020 and 2021. The number of social media users was equivalent to 41.9 percent of the population in the same period.
Ozow said younger consumers were driving social commerce when the pandemic has amplified the use of this shopping method. He said that Gen Z (aged between nine and 25 years) and millennial (between 16 and 40) consumers had been using social media for years as a source of information about the products and services they were considering using.
“With Forbes citing that 40 percent of all shopping is currently being done by Gen Z alone, retailers would be foolish to underestimate the power that social media wields on their bottom line,” said Pays.
The Gen Z and millennial generations have fast become the largest consumer generation in history. In South Africa, he said this equated to 73 percent of the population, proving a powerful online consumer base.
The payment platform said younger consumers had moved beyond traditional e-commerce favoured by millennials and were more likely to use social commerce, which was the practice of purchasing wholly within a social media platform.
Pays said what made it work was that the algorithms provided a personalised shopping experience, thereby reducing the risk of abandoned carts, while delivering greater engagement that provided consumer with the ability to co-create an experience that was uniquely their own.
Ozow said apart from the immediate benefits, there was great value in entrepreneurs using social commerce as a way to sell their goods and services.
Pays said that according to a recent study of 23 African and Asian countries, which was conducted by the UN Conference on Trade and Development (Unctad), about 58 percent of businesses that sold primarily through their own e-commerce channels saw a drop in monthly revenue during the Covid-19 pandemic. On the contrary, businesses that used third-party marketplaces and social channels saw a collective increase of 64 percent in sales.
According to the Unctad study, survey data from South Africa showed growth across all areas of home media consumption, with the highest growth rates for social media and messaging services, YouTube and news.
BUSINESS REPORT