SimplicityDX conducts research into how U.S. consumers shop, with an emphasis on the use of social media as part of their shopping process. The State of Social Commerce report, produced annually, is a roll-up of research conducted every quarter tracking emerging social commerce buying trends.

This summarizes the common themes that have emerged across these research studies.

‍

Executive Summary

Social media is a great place for discovering new products, but shoppers have a strong preference for buying directly on brand sites. The reasons for this include concerns about trust, inventory synchronization, returns, and promotions being applied inconsistently.

Brands are showing signs of rejecting social checkout, preferring to point traffic directly to their brand sites. Major drivers for this include the effort required to support multiple duplicate sites, poor customer experiences, and the absence of consent to market to customers acquired through social channels.

However, experiences when crossing channels from social to brand site remain poor, leading to approximately two-thirds of customers discovering on social and then going directly to the brand site. This leads to revenue tracking errors for brands where revenues from social are incorrectly attributed to “direct” traffic. Our research found that social revenues were underreported by as much as 245%.

‍

The SimplicityDX Research Studies

• State of Social Commerce research study (2,000 U.S. online shoppers). Research is run quarterly, report is produced annually. Latest report, January 2023, based on research throughout 2022.
• Generation Z shopping habits and preferences (1,000 U.S. online shoppers, October 2022)
• Mystery Shopping research on the 26 Instagram checkout launch brands (December 2022)
• Social buying behavior: how and when social shopping journeys convert (500 U.S. online shoppers, December 2022).
• Social Returns research study (1,000 U.S. social shoppers, June 2022)
• E-commerce profitability analysis (June 2022)

Pulling together insights from these research studies, a picture emerges about how U.S. consumers shop using social media, their preferences and concerns, what their experience is when checkout is on social, and how brands view social commerce. Let’s look at each in turn.

‍

1. The SimplicityDX Research Studies

Summary: The use of social media as part of a shopping journey is commonplace, with online shoppers using Instagram, Facebook Shops, and TikTok in particular. Only a small proportion of online shoppers have returned products purchased through social networks, suggesting it is still very early days for social checkout.

‍

• The majority of online shoppers (60%) had made a purchase in the last 90 days using social in some way. {n=1,000}
• Meta dominates social commerce. When asked to recall a recent purchase where social media was used, 79% named one of the Meta properties. However, it’s worth noting that this includes Facebook Marketplace which accounts for 37% of social commerce transactions mentioned. Excluding Facebook Marketplace, 66% of social shoppers thought first about a recent purchase using a Meta site, with Instagram in first place with 37% followed by Facebook Shops with 22%. TikTok was in third position with 23%. {n=500}. From our quarterly tracking, TikTok is increasing its share rapidly at the expense of Facebook Shops.
• Over half of online shoppers have been to live streaming shopping events. Twenty-three percent had made a purchase at one of these events. {n=1,000}
• Only a tiny proportion of online shoppers (8%) have returned a product purchased directly from a social network. {n=500}. This rises to 36% of social shoppers that have made a purchase using social media in the last 90 days. {n=1,000}

‍

2. Online shoppers’ preferences for social shopping

Summary: Social media is a great place for discovering new products, but shoppers have a strong preference for buying directly on brand sites. Many shoppers have trust concerns, spanning trust of the networks themselves and wariness about scams.

‍

• 65% of online shoppers think that social media is a good place to discover and learn about new products. {n=500}
• 68% of online shoppers prefer to buy on brand sites rather than checking out on social. {n=500} Of those that express a preference, this rises to 77%. {n=429}
• 52% online shoppers think that social media influencers are good for finding out about new products. {n=500}
• 46% of online shoppers, when watching influencer live streaming events, would prefer to make a purchase from the brand, compared with 39% preferring the influencer. {n=500}. The picture for Generation Z shows this preference is stronger: Almost 6 in 10 (59%) prefer to buy from the brand with half that number (30%) preferring to buy from the influencer. {n=1,000}
• Trust is a big issue — only one-quarter (26%) of online shoppers trust social networks not to abuse their data. Less than one in 10 (8%) completely trust social networks with their data. {n=2,000}
• Other trust-based concerns relate to product authenticity and scams, a recurrent theme across our research. When asked the open-ended question, “What is the one thing that you would change about shopping on social media?” this is a typical response: “Eliminating scammers. They are everywhere. It makes me really hesitant to buy products on social media.”

‍

3. Social shopping experiences

Summary: Shopping on social isn’t great, irrespective of where the shopper checks out. Social checkout suffers from many synchronization issues and problems with returns. Clicking through to the brand site to check out frequently results in broken experiences.

‍

Let’s look at the two different journeys individually:

‍

Social checkout

Checking out on social is problematic due to a range of issues including:

• Inventory synchronization – Items are frequently listed on social as “in stock” that are not available to buy, or they are listed as available on the brand site but out of stock on the social store. This erodes customer confidence and results in some purchases on social being subsequently canceled.
• Limited assortment – Brands often list only a subset of their full product catalog on social.
• Search and filtering – Searching, filtering and the use of facets is very limited, making social a poor choice for exploring a brand’s product catalog with a specific purchase in mind.
• Promotion inconsistency – Seasonal promotions (such as Back to School, July 4th, etc.) are not usually reflected on the social storefront. This leads to differential pricing by channel which brands need to be wary of.
• Returns – Returns are often painful through social channels with return merchandise authorization (RMA) numbers issued by social networks not recognized in some cases by brands.

• While return processes work, they are a long way from best in class; most shoppers (69%) consider the Amazon returns experience to be much better. {n=365}
• When customers have returned a product purchased through a social checkout, their attitude toward future social purchases changes, with two-thirds (66%) stating that they are more cautious or wouldn’t buy from social in the future or would buy from the brand site instead. {n=365}

‍

Check out on the brand site

While the majority of online shoppers (77%) who express a preference prefer to check out on the brand site, crossing channels inevitably creates a break in the experience. {n=500} Eight out of ten customers (86%) complain about poor landing experiences. {n=2,000}

‍

Poor landing experiences include:

• Out of stocks – Customers frequently complain (46%) about out of stocks when clicking through from social campaigns. n=2,000)
• Loss of context – Lifestyle social campaigns which feature one or more products in aspirational settings frequently disappoint customers who have a hard landing on a product detail page (PDP) where all of the social content and lifestyle context is lost.
• Unable to find the product – Directing customers to a category page isn’t much better, where users then struggle to find the product that they had clicked on.
• Broken experiences – Forty-four percent of online shoppers complain about broken links or errors on clicking through to the brand site. {n=2,000}
• The product detail page “dead end” – It’s well known that PDPs have half the conversion rate for landing traffic than other pages. This is because they were designed for traffic progressing down the funnel and not for landing traffic. PDPs lack the right content to help customers choose and decide.

‍

4. Brand’s experiences with social checkout

Summary: Shoppers frustrations with the social shopping experience are mirrored by brands’ own frustrations with the time and effort required to maintain duplicate stores. In general, this is not done well, resulting in limited assortments, stock issues, and different promotions on different channels. Customers acquired through social checkout are not profitable, and brands have no rights to market to these customers to drive repeat sales and profitability.

‍

• One-quarter of brands in the Instagram checkout launch program are no longer using Instagram checkout, rather they point traffic directly to their brand site.
• Maintaining multiple duplicate stores on social is clearly problematic. Of the 19 remaining launch sites, only four offer the same product assortment on Instagram as on the brand site. Less than half (nine of 19) offer the same promotions as on the brand site. Only four of 19 have inventory that is synchronized with availability on the brand site.
• Customer data and consent to market to customers acquired through social media is an important factor. Our research shows that brands lose $29 for each new customer they acquire due to very high customer acquisition costs, but they make $39 on average for the second sale. Consent to market to customers is key to brand profitability, and for many brands, it makes no sense to pay to advertise on social only to not be able to then market to the customer.

‍

5. Gen Z shopping habits and preferences

Summary: Generation Z shoppers (ages 16-24) are the next generation of consumers. Gen Z shop differently, with 93% of Gen Z routinely using social as part of their shopping process.

Savvy and untrusting Gen Z expect great customer service and want a direct brand relationship, shunning buying directly from influencers or social networks. Eight out of ten (80%) of Gen Z who express a preference prefer to buy directly from a brand over buying via a social network. The prevalence of scams, fake news, and sketchy influencer endorsements has conditioned Gen Z to be wary and to seek out authenticity. The strong preference to buy on the brand site is driven by several factors: trusting the seller, product availability and assortment, returns processes, and making sure they get the best deal. Gen Z are savvy buyers that know that the brand site is the best place to be certain to get all of these. {n=1,000}

‍

6. Social revenue is significantly understated

Summary: Three-quarters (75%) of social revenue is not tracked by analytics tools as customers bypass clicking through from social and head directly to the brand site or do so in multiple sessions.

While many marketers are aware that social has bigger effects than can be measured, the size of the underreporting (2.45x) causes brands a headache when comparing return on advertising spend (ROAS) and customer acquisition cost (CAC) across channels. Social media is one of the most important channels for many brands for new customer acquisition, which accounts for about a quarter of digital marketing spend on average. This level of underreporting also suggests that CAC’s for social are typically significantly lower than current data suggests.