Future of Ecommerce

The ecommerce trends, insights, and advice you need to succeed in 2022

Executive summary

There have never been as many opportunities in the ecommerce space, nor has there been as much competition. Plummeting return on ad spend is pushing brands to prioritize customer lifetime value and promote brand loyalty.

Trust is the main currency of the future of ecommerce. Brands must be transparent, authentic, and readily available to their customers, especially where online consumers spend most of their time: on social media. Social commerce is at the center of online shopping for tomorrow’s consumer, with brands investing in video and live shopping.

Direct-to-consumer (DTC) companies are also investing in online communities to humanize their brands, increase customer retention, and overcome skyrocketing advertising costs.

Thriving in this new ecommerce landscape will require unique insight and action. We conducted extensive research with hundreds of DTC brands and thousands of consumers to identify the most important trends for 2022, as well as the strategies and products your business needs to stay ahead of the competition.

Welcome to the future of ecommerce.

Trend 1

Rising acquisition costs force brands to foster long-term relationships with their customers

Businesses strengthen customer connections by putting their brand identity front and center

Key takeaways

  • Direct-to-consumer competition is rising

    Although retail business doors have reopened, ecommerce sales aren’t slowing, resulting in an influx of DTC brands competing for customer attention.

  • Advertising costs are skyrocketing across platforms

    Digital advertising costs are eating up marketing budgets, putting performance marketing–heavy customer acquisition models in jeopardy.

  • Brand building is helping attract and retain customers

    Businesses are overcoming the competition by investing in brand building, which increases customer lifetime value, boosts conversion rates in the short term, and attracts out-of-market buyers in the long term.

Fewer barriers to entry mean more online retailers

Advancements in technology and the growth of available marketplaces have made it easier than ever to buy and sell online. As businesses came online during the COVID-19 pandemic, the global trend toward digitization surged ahead at lightning speed. Even as regions begin to reopen, ecommerce sales are still climbing.

Merchants continue to follow consumer demand online, flocking to ecommerce in record numbers. This means more brands competing for customers. As a result, digital advertising is more costly and less lucrative than ever before.

Retail ecommerce sales worldwide from 2014 to 2024

In billion U.S dollars

Ecommerce sales increased from $1.3 trillion in 2014 to a projected $6.4 trillion in 2024

Sourced from Statista

As more businesses are online, it’s harder and harder to be found by new customers. Because it’s so easy to start online now, there are definitely rising costs of customer acquisition. Paid ads are getting really expensive, not to mention the Apple iOS 14 release, which has made it more difficult to track results in ad spend.
Mel HoSenior Product Marketing Lead, Shopify

Merchants are spending more and gaining less

Competition is the biggest obstacle to achieving growth in 2022,* according to the 350 global commerce decision makers surveyed for this report. With privacy laws that limit marketers’ ability to target ads and consumers who are better at blocking ad interruptions, it’s becoming tougher to get a decent return on advertising spend. The cost per click for paid search ads increased by 15% between the second and third quarters of 2021 alone.

“Our July 2021 report showed a 15–20% drop in the advertising reach of Instagram in Europe,” says Kepios founder and CEO Simon Kemp. “That’s huge. Tens of millions of impressions disappeared because of certain kinds of laws and changes in Apple’s policies.”

Some brands are seeing ad costs go five times higher than [before] to drive the same amount of traffic.
Ben JabbawyFounder and CEO, Privy

Despite the changing digital ad landscape, 41% of brands* plan to increase investment in paid and organic search. Many hope that advances in hypersegmentation will make their advertising dollars more effective by targeting consumers who are ready to purchase. But there are at least three problems with this approach:

  • Audience segmentation is not as reliable as merchants think. Harvard Business Review tested the accuracy of the digital profiles data brokers sell, and the results were dismal. The age tier was only correct 23% of the time, and gender was properly identified in well below half of cases.
  • As advertising platforms get more competitive, brands that haven’t developed familiarity and trust with consumers will become more entrenched in a direct-marketing battle to offer customers the lowest price.
  • Even when high upfront ad costs and granular targeting create short-term wins, they aren’t long-term profit drivers. Creating a sustainable customer base will require brands to build awareness and confidence with consumers who aren’t ready to buy, or who aren’t even in the market yet.

The brands most reliant on short-term performance marketing will struggle the most in the increasingly saturated commerce space. It’s no wonder the world’s top companies have brand building at the heart of their marketing strategies in 2022.

The brands that speak to everyone speak to no one. Whether brand differentiation means what the brand stands for, the way the product is made, or the way they engage their audience, consumers are looking for differentiated experiences and brands they can connect to.
Morgan BrownVP Growth Marketing, Shopify

Get ahead of the competition by investing in your brand

Marketers who want immediate, measurable results tend to undervalue brand, which is a longer-term investment. That’s why 70% of marketers who are cutting their budgets in 2022 will sacrifice investments in brand building, and only 13% will reduce performance marketing spending. But performance-based advertising is only part of the equation.

While conversion rates are important, most consumers already have a brand in mind by the time they’re ready to buy. In fact, Google reports that more than 80% of customers conduct their research online before making a purchase decision. A business needs a strong brand to earn their place in the minds of consumers.

A strong brand not only makes performance marketing more effective in the short term, it’s also the foundation of sustainable growth. Strong brands draw more organic acquisition, retain more customers, and can raise prices—the most powerful lever you can pull to increase profits. As the digital space becomes more crowded, brand identity and brand awareness will only become more crucial.

How to combat rising acquisition costs in 2022

Recommendation 1

Develop a brand measurement methodology
Align brand activity with your top-level brand goals

With today’s attribution modeling and data-driven performance marketing, you can show a clear line to value from your brand-building activities. No single metric will be enough to determine the success of brand activities. Instead, build a measurement framework with performance indicators aligned to your top-level brand goals, like growing share of mind, market share, or brand consideration. Expect to run brand campaigns for at least six months before seeing a measurable impact.

Gather data through consumer surveys

Consumer surveys are a tried-and-tested method for brand measurement. You can use responses as inputs to metrics like net promoter score, brand awareness, brand perception, purchase intent, brand recall, and category preference.

Monitor your site and social analytics

Record changes before and after a brand campaign by measuring direct traffic, organic traffic for branded keywords, and backlinks. On social platforms, pay attention to an increase in followers, social engagement, and especially shares. Share of voice, measured across pay-per-click advertising, search engine optimization (SEO), social media, and public relations, can also be a strong predictor of market share.

Recommendation 2

Invest in both short-term performance marketing and long-term brand building

Investing in your brand doesn’t mean forgoing performance marketing. Use both performance marketing and brand marketing to create lifelong customers and brand evangelists. You’ll need to experiment with the exact split based on your industry and current level of brand awareness, but we recommend aiming for a 60/40 split between brand building and short-term performance marketing to achieve increased return on investment from your performance-based advertising in the long term.

Recommendation 3

Diversify your advertising and sales channels to lower the cost of acquisition
Explore new channels to reach new audiences

Experimenting with new channels like voice shopping, connected TV, and messaging apps can act as a hedge against digital advertising uncertainty. Global shipments of smart speakers and displays grew 35% over the past year, and spending on connected TV ads is expected to grow by double digits over the first half of this decade.

Consider investing in niche channels with high engagement

For example, Doe Lashes, a cruelty-free lash brand, shares content on Discord, a popular group chatting platform among gamers that attracts users of the same age bracket as Doe’s consumers. And on the apartment design game, Design Home, players can purchase physical versions of products in their virtual apartments.

Don’t discount tried-and-true channels

Since the start of the pandemic in March 2020 until September 2021, email marketing integrations were among the most popular apps globally, according to internal Shopify data. Email and text continue to be two of the most powerful and cost-effective ways to nurture customer relationships.

Use marketplaces as both sales and marketing channels

Marketplaces are an effective channel for many DTC businesses to get new eyes on their products, yet 44% of the brands we surveyed* report the biggest challenges selling on marketplaces are competing on price and controlling the customer experience. Use a hero product to reach new customers, then incentivize shoppers to move to your site by creating store-only offers.

Recommendation 4

Highlight your unique differentiators and values at every customer touchpoint
Revisit your brand story and differentiators

Why does your brand exist? What’s your origin story? What are your brand values? What needs does your brand meet and for whom? These fundamental questions differentiate you from your competitors, fuel your brand identity, and should form the foundation for any brand-building initiative.

Show your customers you share the same values

Fifty-two percent of shoppers we surveyed are more likely to purchase from a company with shared values, and 53% of brands* are creating products in 2022 that align with their values. Be consistent. If you take an ethical stance on social or environmental issues, demonstrate how those values run through your brand, from the top of the business to your customer service representatives.

Patagonia, a brand that actively campaigns for environmental causes, spreads their values through every facet of the company: Its "Worn Wear" program encourages consumers to buy and sell used items, and its "Drive-Less" program rewards employees for reducing emissions on their commute to work.

Treat your employees as a target audience for your brand

As your company grows, it’s easy for your brand’s purpose to get lost further downstream. But your employees (including in-store retail staff and customer service teams) are a key part of how consumers experience your brand at every touchpoint. Thinking about your employees as a brand audience, and running marketing programs to help educate them on your brand purpose, experience, and messaging, will improve the consistency and quality of how your employees communicate your brand value to customers.

Merchant spotlight

How Pai Skincare leads with its values on owned channels

Pai Skincare, a United Kingdom–based brand selling sustainable skincare, is investing in brand awareness by leading with its values. As stores in the United Kingdom began to open up, they saw massive fluctuations in online traffic and revenue.

“We have experienced 51% cost-per-click increases in the United Kingdom year over year on our brand,” says Roz Brabner, head of ecommerce at Pai Skincare. “This in itself is forcing us to look outside of performance [marketing] and into more [organic] ways to increase traffic.”

Digital marketing costs skyrocketed in 2021, so the brand is looking to make large investments into a long-term acquisition strategy through brand building.

Customers are looking for brands to align with their values. They are calling out complacency and demanding transparency. A purchase now represents your values, a demonstration of shared beliefs between customer and brand.

Sarah BrownFounder, Pai Skincare

The brand undertook a site rebrand to bring its values to the forefront, highlighting clean, organic ingredients (accredited by Cruelty Free International, The Vegan Society, and the COSMOS Natural Certification) on product pages, as well as a commitment to sustainability.

Every component of product development and packaging was recently reviewed to improve the company’s carbon footprint or recyclability. Pai Skincare’s recycling scheme makes it as frictionless as possible for consumers to dispose of parts of the product packaging through household recycling and to send the rest back with a prepaid shipping label for the company to specially recycle.

How Pai Skincare improved sustainability through packaging
How Pai Skincare improved recyclability in shipping

Beyond the website, the brand is evangelizing its values across email, social media, its skincare coaches, and on live shopping streams.

“We have a brand founder that’s great in front of the camera. Sarah, who is a really confident host, knows every single ingredient in every single product,” Brabner says. “We get a lot of compliments about the kind of content we put out.”

How Shopify can help

Create consistent customer experiences

How you tell your story and what you stand for, while creating a consistent end-to-end customer experience, will be a critical differentiator in 2022. Consistency is key to unlocking repeat business and customer lifetime value, but requires the technology and infrastructure to embed your brand wherever your audience happens to be, at every touchpoint in their journey.

  • Build a standout brand experience that highlights your unique differentiators and values with the Online Store sales channel—equipped with easy-to-use templates and drag-and-drop technology that requires little to no code to bring your brand to life

  • Deliver a consistent online and offline shopping experience by bringing your products to life online with interactivity and digital immersion from augmented reality (AR), virtual reality, and 3D media

Use custom storefronts to build cutting-edge experiences

Build one-of-a-kind shopping experiences anywhere—from video games to smart mirrors—with custom storefronts, Shopify’s solution to going headless. A headless architecture separates your front-end storefronts from your back-end tech stack, giving you more control over your buyer and developer experience.

Many Shopify merchants are already using custom storefronts to build unique commerce experiences:

  • Allbirds’ mobile app lets customers try shoes on virtually with AR
  • Off-Limits created a vending-machine-like buying experience that - led shoppers to a gamified checkout to make buying cereal fun
  • Yolélé created a one-of-a-kind visual product explorer for its products
  • Zsa created a user-friendly customization process allowing every shopper to personalize their ergonomic Moonlander keyboard

Explore custom storefronts

Trend 2

Death of third-party cookies forces brands to rethink personalization

Online retailers rehumanize their brands through communities, transparency, and shared values

Key takeaways

  • Consumers are demanding personalization

    Consumers continue to demand personalized shopping experiences, even as regulations make data tracking harder, and the biggest players phase out support for third-party cookies.

  • Personalization isn’t a magic bullet for customer engagement

    Brands innovate with first-party data, but personalization isn’t enough to create long-term relationships with customers.

  • Brand communities are building customer loyalty

    Brand communities become key to building trust and brand equity, and improving customer retention.

Consumer behavior and privacy laws complicate personalization efforts

Internet users are exercising their privacy rights, and governments are making it easier for them to do so. In November 2021, China’s Personal Information Protection Law came into effect. And only a few months before, Brazil began issuing penalties to violators of the country’s General Data Protection Law. California’s Consumer Privacy Act put data transparency into state law immediately before the pandemic, and The European Union’s General Data Protection Regulation (GDPR) has cost some businesses dearly in fines since its institution in 2018.

Compliance costs aren’t the only problem these laws pose to businesses. At least 28% of technology decision makers* around the world expect changes to customer data and privacy regulations to hinder their 2022 growth goals.

Apple, Firefox, and Brave already automatically block third-party cookies. Google Chrome, representing over 60% of search engine market share, announced in July 2021 that it will delay third-party cookie blocking until late 2023. But that doesn’t mean brands should rely on Google’s cookies in 2022. In a commerce world where omnichannel is king, the fragmented customer experience offered by the third-party cookie isn’t cutting it anymore. More importantly, customers are more privacy aware than ever before and trust is getting harder to earn.

Brands are turning to first-party data to fill the void third-party cookies will leave. This is the data a brand collects directly from their customer, with their customer’s consent. Our survey showed that in 2022, 42% of brands* plan to offer their customers personalized product recommendations through tools like quizzes, custom mobile apps, and first-party or third-party behavioral data. And to encourage data sharing, 44% of brands* already plan to be more transparent around how they use customer information.

Personalization isn’t making brands more personable

Although personalization is now standard fare for online shopping, what personalization means to consumers and marketers doesn’t always match.

85% of brands believe they’re offering personalized experiences, while only 60% of consumers seem to agree The State of Personalization in 2021, Twilio Segment

Consumers are over three times more likely to abandon brands that “over-personalize,” compared to brands that fail to personalize enough. Including too much personal data in customized communication can make consumers feel stalked by brands.

But there’s a nuance here: Forty-four percent of consumers say they’re OK with brands they like using their personal information to deliver relevant content and offers, according to our survey.*

Consumers are willing to share personal information with businesses that align with their identity. If businesses want access to customer data, they need to do it in a way that builds trust.

Consumers want to know how brands use their data

Consumers want data transparency and 46% of consumers will give their personal data to brands they like

Sourced from Shopify eCommerce Market Credibility Study: Data Review, a commissioned Forrester Consulting study conducted on behalf of Shopify, September 27, 2021

Generate customer loyalty and data through community

When access to customer data is so dependent on trust, it’s no wonder that brands will invest more in customer loyalty and connection* than almost any other customer acquisition and retention strategy over the next year.

As brands look to strengthen relationships with customers, many have turned to community building. Brand communities have been rising in prominence over the last several years, and for good reason: Communities increase customer retention and brand awareness, and decrease customer support costs.

Percentage of brands creating more ways for customers to interact with them in 2022

(E.g., recipe sites, community hubs)

To retain customers in 2022, 40% of brands globally are investing in customer engagement and interaction, with 41% in North America, 42% in Europe, the Middle East, and Africa, and 34% in Asia Pacific

Sourced from Shopify eCommerce Market Credibility Study, 2021

Community and customer retention will be what many DTC brands lean on to thrive in 2022.

So what is community? The three markers of community are a shared identity, rituals and traditions, and a sense of responsibility to serve one another.

Cultivating a community of brand fans isn’t restricted to any one medium. It can happen on traditional social channels or proprietary channels. It can extend to chat rooms, the blockchain, and in-real-life experiences. The key is to choose (or create) a medium where not just your brand can connect with customers, but fellow supporters can form deep and lasting connections with one another.

Some brands have yet to even explore digital marketing or paid advertising because their community is so strong. They spend so much time [building] it that it drives the direct-to-consumer revenue.
Kimberly SmithFounder, Marjani and Board of Directors, National Retail Federation

How to build community in 2022

Recommendation 1

Invest in the right team to help your community grow

Strong brand communities don’t emerge by accident, but are a significant commitment of time and resources. As the face and voice of your brand community, community managers:

  • Learn about and build relationships with your customers, making it easier to retain and increase community fans.
  • Serve as the liaison among customers, industry professionals, journalists, and other company departments like development and sales.
  • Plan and implement social media and communication campaigns that support your overall marketing strategy.
  • Establish community rules, filter hateful language, and put resources in place to protect members from toxic or abusive conversations. It’s crucial to maintain the tone of the community so it reflects the heart of your brand.

Recommendation 2

Find ways to tie your community back to business results
Set your success parameters

Use data to measure the effectiveness of your community. Aside from seeing success in member growth and retention, your brand community can support your brand’s overall marketing and sales goals. Determine which metrics will validate your goals, whether it’s lead generation, conversion, decreased costs to customer support, average order value, or customer lifetime value.

Gather and mobilize first-party data

Consumers feel comfortable sharing personal data, as long as they trust who they’re giving it to. Feed the results of your community data back into your community strategy and your customer relationship management system to create personalized touches at scale.

Brand communities are also low-risk hubs for testing and iterating new products, and great sources of customer data and real-time feedback. Doe Lashes uses feedback from its Discord community members to inform product innovations and new designs—and they’re not alone. According to our study, 47% of brands plan to use customer feedback to improve products or customer experience within the next year.

Recommendation 3

Give members a clear reason to keep coming back
Define your community purpose upfront

With all the work it takes to maintain a healthy community, you need to be clear on why the group exists and how it will give back to both your members and your brand. Are you helping others get answers to questions on your product? How will your community support your business goals? For example, how will a brand community help marketing, support, or sales?

Be intentional about your community’s rituals and traditions

A sense of belonging is created through shared values, traditions, and norms. For example, Legos Ideas is a community centered on collaboration. Community members show off their Lego creations and share images of new product ideas. These fan designers also become brand advocates because the only concepts that make it to expert review must have over 10,000 supporters.

Create a feeling of exclusivity by gating your community

While an open community can get you in front of a wider audience, creating “members-only” content or spaces can be a strong incentive for fans to avoid missing out. Your "gate" can be a simple email sign-up, a purchase or series of purchases, a certain number of referrals, posting a review, a donation to a shared cause, or a non-fungible token (NFT).

Offer fans a way to own a piece of your brand

Globally, NFT sales grew 8.5 times between the second and third quarters of 2021 alone, bringing the worldwide total to nearly $11 billion. The non-fungible aspect of NFT means that each token is one of a kind, coupling the allure of exclusivity with scarcity. Customers can also show off their brand association as a badge of honor on social channels. Consider offering tiered digital or physical membership benefits with your brand, and leveraging the blockchain and NFT space as proof of authenticity or to track the providence of physical products.

NFTs tie the physical good with the digital experience in a unique way that mimics some of the popular limited-release physical good drops we’ve seen rise in popularity. Translating that into a scarce asset is really valuable to the communities and their passionate fans.
Nicholas BrownCo-founder and Managing Partner, Imaginary

Merchant spotlight

How Superplastic creates an exclusive personalized experience with its loyal fan base

Superplastic, revered for its collaborations with artists and celebs on collectible art toys that sell out instantly, is creating an even more engaged community with the latest technology: NFTs.

NFTs aren’t just products—they’re somewhere between a product, a game, and code. If you’re not using all those things, you’re really not using this medium to its full advantage. It’s all about the interactivity.

Paul BudnitzPresident, Founder, and CEO, Superplastic

Superplastic’s animated celebs, Guggimon and Janky, have been featured as Gucci models and Fortnite skins, and will appear in a pop band and motion picture this year. The characters move seamlessly from the digital space to the real world, appearing as collectible toys. Soon their digital selves will also unlock new real-life experiences for superfans.

“We’re building a store in New York City, and at certain times, you’re not going to be able to get in unless you’ve got one of our NFTs or tokens in your wallet. It’s the same thing with our website. There will be exclusive entry, things only you are able to buy,” says Budnitz. “Because if you’re willing to make a commitment and join in with us, then we’ll make a commitment back to you.”

Artwork for an NFT and physical product collaboration
Artwork for an NFT and physical product collaboration

Instead of simply owning a piece of digital art, NFTs for Superplastic have become a promise of community and belonging. NFTs will also get fans into Superplastic’s latest sushi restaurant, planned for Miami.

An NFT from the Janky Heist collection
An NFT from the Janky Heist collection

“The blockchain is the world’s biggest open-source mailing list. If you buy one of our NFTs, we probably know who you are. We can reach you and send you free stuff. All this is a great way to play games with [your consumer],” says Budnitz. “Our job is to sell you the NFTs, and then continually upgrade the artwork, so it seems more and more fun, connected with the other stuff we’re doing.”

How Shopify can help

Sell everywhere your customers are

With Shopify, you can build a community around your brand by using multiple distribution channels to create a natural feedback loop with consumers about your products, services, or story. Shopify’s connected platform helps you manage and analyze those channels, all in one place. Seventy-three percent of shoppers surveyed use multiple channels before making a purchase.

Make every touchpoint your next point of sale with our omnichannel guide

Add NFTs to your Shopify store

Non-fungible tokens are an exciting opportunity for businesses to reward loyal fans, and create demand around their brand. Shopify has made it easy for eligible Shopify Plus merchants to sell NFTs online.

Right now, both Etherum and Flow are available to vetted merchants as part of the NFT beta. In the future, merchants will be able to choose which blockchain they want to sell on, based on their products and customer base.

Join the NFT beta

Trend 3

New commercial opportunities emerge on the biggest social platforms

Brands embrace experimentation to take advantage of social commerce

Key takeaways

  • Ecommerce is migrating to social media platforms

    Ecommerce activity is congregating on social media platforms, from brand marketing to customer service to shoppable advertising.

  • Social platforms are presenting new ways to engage customers

    Diverse platforms and rapidly evolving features lend themselves to unique customer experiences, encouraging brands to reimagine consumer engagement.

  • Video is making social commerce more sociable

    Video is key to unlocking the power of social commerce. Leading brands are focusing on social-first approaches like behind-the-scenes livestreams, video consultations, and personalized product recommendations.

Social commerce is on the rise

Sales through social media channels around the world are expected to nearly triple by 2025. Although about 30% of internet users in the United States already make purchases directly within social platforms, China is the clear global leader. Almost half of China’s internet users shop on social networks, generating more than 10 times the sales of the United States.

Retail social commerce sales in China versus the United States, 2021

In billion U.S. dollars

Social commerce sales in 2021 totalled $351.7 billion in China, compared to $36.6 billion in the United States

Note: Includes products or services ordered on social networks like Facebook, Instagram, Pinterest, WeChat, Line, and VK, and excludes travel, events, tips, subscriptions, bill payments, money transfers, food and drink services, gambling, and other regulated industries.

Sourced from eMarketer

In Southeast Asia, social media is the number one channel for discovery. One in five dollars spent on online retail in Southeast Asia now happens through social media.

After more than a year of working from home, people around the globe are spending even more time scrolling through social feeds. The typical social media user now spends about 15% of their waking life using social platforms.

Social commerce will only get bigger, with more than one-third of Facebook users planning to make a purchase directly through the platform in 2022. And video has become a clear powerhouse, illustrated by Instagram’s pivot to video reels. Instagram product head Adam Mosseri grabbed headlines when he declared Instagram is no longer a photo sharing app, and would be competing against rapidly growing video sharing platforms like YouTube and TikTok.

The emergence of social commerce is also an opportunity for businesses to take back control of their brands in digital channels. This is especially important as marketplaces continue to dominate around the globe. Our study found that a total of 38% of consumers* purchase products through marketplaces at least once a month. But the product-centered nature of marketplaces make it easy for brand identity to be overlooked. Through social commerce, businesses can build the brand equity and engagement lacking in most online marketplaces.

Brands build loyalty, not products. It’s key for brands to develop their own DTC strategy and model to be able to build a strong, independent brand. Social commerce is definitely an opportunity for brands to reclaim their destiny by owning the customer experience and the relationship with customers, versus selling on Amazon, where price is king and your brand is an afterthought.
Étienne MérineauSenior Director of Marketing, Heyday by Hootsuite

Businesses scramble to update their approach as live shopping explodes

The competition is already heating up: 49% of brands* plan to increase their investment in social commerce in 2022, according to our study. But businesses that try to take China’s social commerce blueprint and translate it directly to other regions will struggle. China’s borders house the most digital buyers in the world, and those online purchases make up over 50% of all retail sales. The pre-existing fusion between shopping and entertainment in China helped livestream shopping—the rising star of social commerce—emerge almost effortlessly.

Live commerce, which uses social media platforms to fuse livestreaming and commerce, is more fragmented in North America and Europe. This makes it difficult for merchants new to the format to know where to begin. Some companies have partnered with mainstream social media platforms (Walmart and TikTok, Sephora and Facebook), while others have created their own channels outside the well-established platforms. For example, Nordstrom launched its own shopping channel, and Best Buy plans to use its fulfillment center to have associates do livestreams around their products.

61% Growth in livestream selling app installs globally between January 1, 2021 and September 30, 2021, compared to the same time period in 2020 Internal Shopify data

As consumers buy more on social media, platforms will become more shoppable—as well as more crowded and more transactional. Global ad spend on social media in the third quarter of 2021 was 26% more than the same period in 2020. But if brands view social media as merely another channel to run ad campaigns, they will hit the same ad-spend walls and fail to build trust with their audiences.

To break through the noise, brands will need to bring the social elements of offline shopping to online spaces.

Live chat and video make social commerce more sociable

Two tactics that will help brands put the “social” back into social commerce are live chat and video.

Live chat

Fifty-eight percent of the shoppers we surveyed say an excellent past customer service experience is a driving factor to influence their purchase decision, and 54% of shoppers* say the ability to easily reach customer service in the channel of their choice is important to them.

Percentage of consumers who say the ability to easily reach customer service in the channel of their choice influenced their decision to purchase

Customer service channel choice impacts 63% of purchases in North America, 59% in EMEA, and 55% in APAC

Sourced from Shopify eCommerce Market Credibility Study, 2021

Live chat is an important channel for 2022, with 43% of consumers surveyed for this report saying they’re likely to use live chat in the next year. Consumers will also expect to interact with brands in the same way they chat with their friends: through social apps.

Video

Video is now the default expression of the internet. From web searches to livestreams, video is becoming the primary way the next generation of shoppers make buying decisions. In fact, we found that 46% of consumers* want to watch product videos before they buy. Eighty-one percent of companies* plan to either increase or maintain investment in livestream selling to drive sales over the next 12 months. And some brands are seeing conversion rates of up to 30% through livestream selling, along with lower product return rates.

My prediction is that in a couple years, the hottest role for a brand to hire is going to be a head of live shopping.
Kevin GouldCo-founder, Glamnetic

How to win at social commerce in 2022

Recommendation 1

Create live commerce experiences tailored to your audience
Find the right format
  • Take advantage of special events like Black Friday, Halloween, and Singles’ Day, and host themed live events that allow customers to shop in real time.
  • Livestream your product launches with QVC-style product demonstrations or influencer-led product recommendations.
  • Go behind the scenes with your consumers, giving them a peek into how you make your products, how they’re sourced, or how they’re styled.
  • Consider time of day, how long you’ll be live for, and which channel will best reach your audience. Whatever the format, have team members on hand to answer questions, moderate the discussion, and guide the conversation.
Choose the right platform

Choose a livestream platform that lets customers purchase without leaving the social channel they’re already on. Fewer clicks means less friction and a greater likelihood to convert. Experiment with strong calls to action like "click to buy," rather than "learn more."

Make your live content visually appealing

If you’re creating a virtual shopping experience, dress your set with as much care as you would your storefront. Consider using visual prompts and animation, like NYX has mastered for its virtual cosmetics shops.

Visually appealing doesn’t always mean polished. Selectively broadcasting less refined livestreams—like lo-fi unboxing videos—can make your current customers feel more connected with your brand.

Collaborate with influencers and creators

Half of surveyed merchants* plan to work with influencers to develop co-branded products next year. Influencers can engage a broader audience and enable product cross-promotion. Influencers also have high trust with their audience. For example, 89% of Youtube viewers trust the recommendations YouTube creators provide.

Make sure you have inventory available

Successful livestreams will lead to high short-term demand for your products, so be ready. Coordinate with your ecommerce teams ahead of your livestreams to have enough product in stock to meet increased demand.

Recommendation 2

Design a social commerce experience that converts
Create a social storefront

Craft your social storefront with care, whether that’s replicating your website experience to provide familiarity, or curating top-performing products to feature on social media. Then encourage social sharing with exclusive discounts, promotions, or contests.

Format your videos so they’re shoppable

Stick to one or two products per video and show them in action. Film with interactivity in mind, providing clickable calls to action throughout the video. Shoppable videos are still new to some viewers, especially those outside Southeast Asia, so let your customers know that your videos are shoppable.

Develop a shoppable attribution model

Use shoppable video ads for a clear view of conversion data, including click-to-view, click-to-buy, and click-to-share interactions.

Because every attribution model is only an approximate picture of how each touchpoint affects a customer’s path to conversion, use a combination of data sources to validate your top-performing channels and activities. Besides using UTM parameters in Google Analytics to study your users’ behavior flow, look at your ad account data, study your click journey, and ask customers how they found you with app integrations like Enquire Post Purchase Survey.

Merchant spotlight

Glamnetic uses videos and livestream shopping to expand its reach

Glamnetic, a DTC beauty brand that can also be found in retail stores like Sephora and Ulta, has built up a loyal online audience—the Glam Fam—through its Facebook group and Instagram followers. The brand’s social channels started with founder and CEO Ann McFerran inviting her audience into the process of building the brand with videos explaining how the product worked and how it was different from competitors.

Glamnetic founder and CEO Ann McFerran explaining the process of building the brand
Glamnetic on Instagram Live

“The videos blew up and became really popular on social media,” McFerran says. Just three years later, “I would say we’ve hit a lot of female U.S. audiences at this point but I wouldn’t say we’ve reached even close to 10% of the rest of the world. So we’re setting our sights on that right now and seeing how we can expand our markets, because I think there’s a lot of low-hanging fruit there.”

When it comes to connecting with this expanding audience, they’re going all in on live shopping, which combines the experiential elements of shopping in real life with your besties or, in this case, well-loved makeup artists and influencers.

“We already have a head of live shopping and she’s setting up multiple Facebook Lives on a daily basis,” says McFerran. “We’re on the precipice, and so we’re strategizing: How can we continue to improve and get even more revenues through that platform?"

[In China,] they’re selling $30,000 vehicles through live shopping. We’re behind.

Ann McFerranFounder and CEO, Glamnetic

How Shopify can help

Optimize campaigns across social media

  • Create, run, and optimize your social campaigns across TikTok, Instagram and Facebook—right from the Shopify admin
  • Get insight into which products, images, and messaging resonate most with your audience with social data across channels and regions
  • Turn those insights into action items for targeted marketing and cross-selling across your customer segments

Turn followers into customers with social media selling

Make your content shoppable

  • Improve brand and product discovery by showcasing your products on livestream shopping events, and create checkout moments on every major social channel, including Facebook, Instagram, Snapchat, Pinterest, TikTok, and WeChat
  • Sync your product catalog with your business accounts, so users can make purchases directly on social media
  • Increase product discovery and conversions by tagging your products in TikTok videos, as well as Facebook and Instagram images and stories

Sell your products on TikTok with Shopify