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Social Media Has Become The New Marketplace

Since the late 2000s, social media has become an integral part of our daily lives – whether to connect with friends and family, share information with others, or stay updated on the latest news and trends. 

With an average of 3.5hrs spent on social media each day by South Africans, according to the latest stats from Hootsuite[1], it has been a natural evolution for these networks to become the new marketplace for consumers.

Coined social commerce, social media platforms have introduced shopping portals and added functionality to allow people to buy and sell goods directly off their platforms. 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.

Thomas Pays, Co-Founder and CEO of Ozow – a leading Instant EFT payment solutions provider, says that Facebook, Instagram, Twitter, Pinterest, and even TikTok, have capitalised on this trend by introducing social commerce on their channels as a new way for people to buy and sell goods online. “The move has helped to redefine where and how people shop.”

Younger consumers driving social commerce

While the pandemic has amplified the usage of social commerce, Gen Z (aged between 9-25yrs) and Millennial (aged between 16-40yrs) consumers have been using social media for years as a source of information of products and services that they are considering using.

“With Forbes citing that 40% of all shopping is currently being done by Gen Z alone[2], retailers would be foolish to underestimate the power that social media wields on their bottom line,” points out Pays.

Combined, the Gen Z and Millennial generations have fast become the largest consumer generation in history. In South Africa, this equates to 73% of our population[3] – a powerful consumer base online.

Younger consumers have moved beyond traditional eCommerce favoured by millennials and are more likely to use social commerce — the practice of purchasing wholly within a social media platform. What makes it work is that the algorithms provide a personalised shopping experience (thereby reducing the risk of abandoned carts), all while delivering greater engagement that gives them the ability to co-create an experience that is uniquely their own.

Benefits of social commerce

Apart from the immediate benefits, there is tremendous value in entrepreneurs using social commerce as a way to sell their goods and services.

“For novice digital entrepreneurs who are just entering the market, social commerce acts as the perfect gateway to more formal eCommerce platforms that they may use in the future. Platforms like the Facebook and Instagram marketplaces, for example, have been designed to be simple enough that anyone can buy and sell online – opening up the eCommerce system to millions of new users,” adds Pays.

According to a recent study of 23 African and Asian countries, which was conducted by the United Nations Conference on Trade and Development (UNCTAD)[4], it found that 58% of businesses that sold primarily through their own eCommerce channels saw a drop in monthly revenue during the Covid-19 pandemic. In comparison, businesses that used third-party marketplaces and social channels saw a collective increase in sales of 64%.

“While the increased usage of social commerce by these consumers continues to redefine the way retailers operate, their shopping behaviour during this pandemic cemented their value as a generation of consumers steadfast on transforming the economy,” says Pays.