ABSTRACT:
Social commerce is evolving in a big way currently, where social media networks are thinning the gap between buyers and sellers. The convenience of discovering, researching, interacting, and buying directly from brands via social media platforms, and initiating a frictionless in-platform checkout, make social commerce an appealing buying alternative for web 2.0 users, in specific to Gen Z and Millennial consumers. The emergence of recent platforms such as Amazon Live, Facebook Shop, Pinterest’s product pins, shopping via Instagram, TikTok, and WeChat, and other social media-integrated shopping channels provides brands and customers with limitless opportunities to sell and shop. Live stream facilities, in-app purchases, and evolving user behaviors are some of the prime driving factors for the growth of the social commerce market.
While social commerce also increases the economic value of social media and networking sites, there are challenges that slow down its progress. Fake social media influencers, data privacy issues, misuse of consumers' personal information, social sabotage, smear campaigns, cyberattacks, etc., dent the credibility of social commerce as a reliable means of online shopping. However, brands and social media platforms are increasingly maneuvering to eliminate these challenges and boost consumer confidence. Social media marketing is also growing with this.
GoodFirms Survey titled: ‘Social Commerce - Progress and Future’ attempts to identify and analyze the current state of social commerce, its key driving factors, opportunities, challenges, and future scope in the social commerce stream. The research aims to provide social commerce participants (social entrepreneurs, social media platforms, consumers, and brands selling through social media) with valuable insights that will enrich their understanding of the medium as a potential and convenient marketplace.
Table of Contents:
Introduction
An Overview of Social Commerce
- Instagram, Facebook, and Amazon Live are the most preferred channels for social commerce.
- 56.8% of surveyees make purchases on the advice of social media influencers.
- AR/VR Experiences in Social Commerce
- 21.6% of the surveyees have purchased products from social media live-streaming events.
- 62.2% of the respondents like to use virtual worlds created in Metaverse for social shopping.
- Common Challenges Faced by People While Purchasing From Social Commerce Platforms
- Social Commerce is the New Version of E-commerce
Introduction
The world is experiencing a new trend in shopping called social commerce due to increased social media usage and technological improvements. Social commerce expansion is resulting in new and enhanced e-commerce business models. Social commerce is the practice of conducting business in a participatory and collaborative manner using social media and a business interface that encourages social interaction. This social interaction further results in buying actions. Social commerce is made possible with the help of supporting technologies (Web 2.0, artificial intelligence, cloud computing, blockchain, 5G, and service-oriented architecture) that augment the design and utility of social commerce platforms.(1) These technologies also assist social commerce businesses in creating a framework that places social interactions with customers at the center.
‘Social Commerce - Progress and Future’ is a survey conducted by GoodFirms that aims to get insights regarding the social commerce market, the most preferred social media platforms, the rising popularity of live streaming shopping, its benefits, and its associated challenges. The survey also elaborates on determining the elements impacting consumer intent to adopt s-commerce, customer preference shifting from e-commerce to social commerce, the role of social media influencers, and the technologies that make the future of social commerce successful.
An Overview of Social Commerce
Social commerce refers to the transactional activities that occur in digitally intensive social environments. These activities range from pre-purchase activities (browsing, decision-making, purchase, and payment) undertaken by social media users to post-buying ones (including feedback, reviews, and product returns). Social media has dramatically altered how customers and businesses engage.
Social commerce (s-commerce) is a result of social media's growing popularity, and over the past several years, s-commerce usage has been rising steadily.
- Technology's rapid advancement indicates that s-commerce will be overtaking other forms of marketing.(2)
- In 2022, social media platforms will generate 992 billion dollars in global sales, and sales of social commerce will be worth almost 2.9 trillion by 2026.(3)
- The number of social commerce buyers in the US increased by 96.1 million in 2022 and is expected to reach 101.1 million in 2023.(4)
- In a survey in 2021, 35% of respondents claimed that social media marketing affected their purchase decisions. For responders from Generation Z, the percentage increased to 75%.(5)
- In 2022, 98% of consumers anticipate engaging in social shopping or influencer commerce for at least one purchase.(6)
How does Social Commerce Work?
- Consumers, particularly the Gen Z ones, are heavily influenced by technology and are enthusiastic about visual social networks like Instagram, TikTok, and Snapchat. This makes social media a huge platform for finding potential customers.
- Aware of this business opportunity, companies set up their social shops inside social networking apps.
- Brands use social media networks to make products available for research and purchase by showcasing product photos and details on their official social media pages.
- Brands create shoppable content on social media to make their items simple to find and purchase. That is native content that enables customers to proceed directly to the checkout or click on a link to learn more about a product.
- In many circumstances, shoppers promote their shoppable content to a specific demographic of social network users to advertise products.
- Without leaving, customers can complete the payment and checkout processes on a fully built social commerce platform.
- During their social shopping experience, customers can also interact with AI-driven chatbots that act as their concierge, product specialist, or even stylist, giving them a more everyday experience while ensuring quick response times.
- Customers can communicate directly with brands using the social media app's messaging feature.
Social commerce, in its totality, provides a platform where customers may browse, research, and purchase things in one place, just like at the company's online store.
Top Marketing Strategies in Social Commerce
A social commerce strategy uses tools to assist brands in selling their goods and services on social media platforms like Facebook, Twitter, Instagram, and Pinterest. The most appropriate strategies and methods boost brand awareness and boost sales. Brands choose the engagement model(s) that works best for them, whether content-driven, experience-driven, or network-driven, such as:
- Requesting user feedback on a product's design or options.
- Presenting customized purchasing choices.
- Using eye-catching images to entice viewers' clicks.
- Using movies to demonstrate the product in action and from various perspectives.
- Encouraging user-submitted images, reviews, and comments.
- Using famous people/influencers to promote a product line.
- Linking directly to the shopping basket or checkout.
- Providing consumers who post the goods on their feeds with discounts or incentives.
Survey And Data Analysis
GoodFirms surveyed the 370 social media users globally for various aspects related to their processes, operations, financials, social shopping features, challenges, etc. The survey revealed valuable insights into the current state of the social commerce industry.
Social commerce offers elements that allow users to share their personal experiences by utilizing social networking capabilities. With social commerce, the entire sales process or customer journey—from product discovery to contemplation, comparisons, and purchasing—takes place exclusively within a social media platform (Facebook, WhatsApp, Twitter, and Instagram). Online social engagement and purchasing are the best combinations, as evidenced by many Facebook buy-and-sell communities. 75.6% of the surveyees had initiated their purchases through social media platforms.
The prominence of social networking websites has influenced consumers' behavior on social commerce platforms. Customers are drawn to social commerce sites by the pull effects (social presence, social support, social benefit, and self-presentation). Besides watching videos and posting comments, social commerce provides special customer options and newly added features, such as augmented reality tools for trying on clothing, accessories, and makeup. Therefore there is an increased shopping craze among people from social commerce channels.
Instagram, Facebook, and Amazon Live are the most preferred channels for social commerce
Instagram: 86.5% of the surveyees prefer Instagram for purchasing products.
Instagram says one in two users uses Instagram to find new companies, goods, or services. Additionally, 44% of users shop weekly on Instagram.(7) Instagram is an excellent platform for firms to expand their reach and increase their sales, whether it's through brand awareness campaigns or by offering customers a better online purchasing experience.
People find a lot of smaller shops, and more similar shops are recommended to them based on their past purchases.(8) Users can purchase items featured in photographs and videos on Instagram. Brands can curate product collections on Instagram. Every product in an Instagram Shop catalog has its page, which includes the price, a thorough description, and any images or videos that show it.
Facebook: 62.2% of the respondents like to shop on Facebook.
Facebook established Facebook Shop as an initiative for brands and small businesses. Businesses may set up a virtual shopping store on Facebook with simple steps. Facebook offers free store customization for businesses. They can select the product images they want to highlight and the theme to go along with their brand's theme by interacting with their target audience wherever they are, at any time. In 2020, Facebook had around 10 million active marketers.(9)
Amazon Live: 31.4% of the surveyees prefer to shop via Amazon Live.
Amazon has recently implemented social ecommerce. Brands are combining social shopping and influencer marketing with Amazon Live. The main objective is to drive traffic. Brands produce live videos with influencers utilizing their products. Additionally, they provide viewers with vouchers for discounts. It persuades viewers to purchase the item. Viewers' favorite influencers show them how to use products and give them discount vouchers. Amazon Live increases revenue potential and brand engagement.
Snapchat: 22.7% of surveyees prefer shipping through Snapchat.
Since January 2022, more than 250 million users of Snapchat have used AR shopping lenses more than 5 billion times to try on and visualize goods from international brands and merchants.(10) Augmented reality (AR), which has intriguing social commerce potential, was supported by Snapchat, known as Snapchat AR lenses. Selfies can be taken using a lens that allows users to virtually try on accessories like makeup, sunglasses, or any apparel.
Pinterest: 18.1% of people choose Pinterest for shopping purposes.
Pinterest is an image-focused search engine and social networking site. Users pin vacation destinations, make mood boards, and, most crucially, find new items. Every month, more than 445 million users use the platform to look for products and get ideas.(11) Merchants can attract potential customers who still need to be made aware of their products by uploading product listings from their online store to Pinterest.
TikTok: 17.8% of the surveyees like to shop via TikTok.
Through in-feed videos, LIVEs, and a product showcase tab prominently displayed on their TikTok profile page, merchants, brands, and creators may now promote and sell their products directly on TikTok through the innovative new shopping tool known as TikTok Shop. 39% of users say they have learned about a business or product on TikTok that they were unaware of. Nearly half of users have bought what they saw on the app.(12) With a TikTok For Business account, businesses can add shopping tabs to their brand profiles, giving consumers access to a virtual storefront without leaving the app.
Apart from the most preferred social media platforms, 5.7% of the respondents say they like to shop via WeChat, and 2.6% of people choose to shop through Verint.
56.8% of surveyees make purchases on the advice of social media influencers.
"The parasocial ties between consumers and influencers significantly influence purchase intention. Influencers commit to prioritizing their fans and building communities of shoppers with like-minded interests. Consumers, in turn, rely upon influencers for trustworthy product suggestions and frank product reviews. By saving customers' time and making influencers the go-to authorities, parasocial relationships reduce friction in the purchasing process." - says Dr. Jenna Drenten, Department Chair & Associate Professor of Marketing, Loyola University Chicago(13).
Social Media influencers on s-commerce sites use live broadcasting to advertise their recommended products. The s-commerce influencers increase consumers' confidence in the online community and s-commerce intention, influencing their plans to make online purchases. Since influencers are subject-matter experts, they are good at influencing the audience and acting as a natural source of recommendations for people. Collaboration between brands and social media influencers (such as Facebook group administrators, Instagram bloggers, vloggers, and TikTokers) is a great approach to reaching a sizable audience simultaneously.
AR/VR Experiences in Social Commerce Attracts Users
According to the GoodFirms survey, 48.6% of the surveyees prefer virtual try-on clothing and accessories on social commerce platforms.
Social media is a significant force behind the use of AR. When users of Snapchat, Instagram, or TikTok use a filter or lens, they first encounter augmented reality. Businesses and companies can showcase their goods and services, interact with customers in virtual reality via avatars, and develop their custom surroundings using social virtual reality platforms. In other words, all the elements required for social shopping are present, enabling retailers to combine the best virtual reality (VR) product showcase with 3D products while empowering social shopping communities to interact via avatars in real life. This feeds the sense of social reward associated with sharing information with the community.
"AR Try On is an intriguing new Facebook venture that’s already helping people shop online more confidently." Through this new integration with L’Oréal, customers can expect a more personalized buying experience from even more of their favorite brands right where they already go for beauty inspiration: on Instagram. - Sue Young, Head of Spark AR, Facebook’s AR Platform(14)
People can interact, discuss, share, and obtain information about goods, costs, and features within social VR stores. For a realistic product evaluation, VR is the ideal medium that is convenient for customers at home. People can use a VR headset to visit their favorite retailers via social media platforms and see the products in depth and in various combinations instead of going out and searching through several stores for a particular item.
21.6% of the surveyees have purchased products from social media live-streaming events.
As a direct impact of the pandemic, live-streaming viewership increased significantly over the past years. During the first month of lockdowns, 24% of US internet users aged 16 to 64 started viewing more live streams.(15) The live streaming market was already becoming increasingly popular for interacting with influencers, attending virtual events, watching video game content, and, more recently, finding products through live purchasing, propelled by stay-at-home regulations.
Benefits of Live Commerce:
- Live commerce via social media channels offers immediate engagement, which can increase customer loyalty and confidence.
- One of the most crucial aspects of live commerce is the ability to make in-the-moment purchases. It simply works for higher sales and naturally encourages quick purchasing.
- Product reservations with live commerce are made by sending a single message on the stream.
- A live video enables the seller to demonstrate the product thoroughly.
- Through live streaming, customers can ask questions via embedded chat options in social media networks and receive immediate responses, which is a tremendous benefit for providing top-notch customer support.
These days, video content, especially live video events, has a lot of influence. Live streaming on social media enables businesses to engage their audience in fresh and creative ways. It's a potent, economical way to engage prospective leads and gain loyal consumers.
Common Challenges Faced by People While Purchasing From Social Commerce Platforms
Redirection to another website: 45.9% reported being redirected to another website. Page redirection occurs when customers click a URL to go to the brand page but are instead taken to other pages internally. This kind of redirection to another website creates a sense of distrust among people for social commerce platforms.
Customer service issues: 40.2% of surveyees are unhappy with customer services offered by social commerce brands. Customers always expect brands to answer their queries promptly or must be readily available for before/after-sales services. A happy and satisfied customer stays with the brand in the long run.
Unavailability of the preferred payment option: 37.8% of the customers do not find their preferred payment mode while purchasing via social commerce channels. Customers frequently give up on purchases when they cannot pay with their preferred method. Customers also find it frustrating and discouraged when they cannot complete their online purchases.
Spam: 27% of the respondents reported spam selling on social commerce platforms. Many social media networks now feature markets and vendors offering items and services, including clothing, footwear, jewelry, etc. Some of these may be spammers posing as authentic businesses. Customers get links or unauthorized offers from them to purchase goods and services. The seller's payment connections are fraudulent, and customers end up losing money
Coupon code invalid: 18.9% of the customers find the available coupon code invalid issue while making payments for their purchases. Customers very often quit their purchases when they face coupon code invalid errors.
Refund issues: 16.2% reported refund issues for the purchases they made from social commerce channels. When brands do not have flexible return policies, there are higher chances of losing more customers.
Server issues on the social media website: 13.7% of surveyees had server error/connection issues with social media websites while making their purchases. Customers get irritated and annoyed when they face server connection problems regularly.
Checkout issues: 13.5% of respondents had faced checkout issues. Most people abandon their cart because the checkout process is too complex for them. To provide a smooth user experience, brands must streamline their checkout processes.
Stockout issues: 10.8% of consumers cannot make purchases of their choices due to stockout issues on social commerce platforms. Companies should always keep an eye on availability issues for their items. Customers believe that advertised goods would be readily available, but when advertised items run out of stock, it frustrates them.
8.1% of the surveyees said they had opted for the wrong platform for purchasing. 2.7% of consumers say their money was deducted, but the order was not placed. Whereas 10.8% of respondents say, they had a flawless and seamless buying experience on social commerce platforms.
Key Driving Factors of Social Commerce
More people are using social media to shop for goods and services and to socialize. The most recent development in e-commerce is social commerce, which uses improved consumer-to-consumer interactions to facilitate the purchasing process.
Social commerce is a valuable tool that can help businesses reach and effectively engage customers. It can revolutionize how people shop, pay and receive customer service. By understanding the key driving factors of social commerce, businesses can ensure they are maximizing their use of this powerful tool.
The following are the main forces behind the growth of social commerce:
Increased Customer Engagement
Social media is the most popular platform for customers interacting with brands, especially Gen Z consumers.(18) A two-way communication link between the company and customers is created through social media, making it possible for audiences to connect with the businesses. It gets easier for social media users to make instant buying decisions when they read original customer feedback, such as reviews, comments, and opinions, right on the same platform.
Consumers trust their friends more than brands—and they're looking for ways to get recommendations from people with similar lifestyles or interests. Social commerce allows consumers to see what others are buying, which helps them make informed decisions about what they should buy as well.
It provides a Seamless Shopping Experience for Buyers
Social commerce eliminates the chances of cart abandonment. Customers can skip registering, logging in, or filling out time-consuming customer information forms to check out from within the app. With social commerce, the customer is already signed in to the app and is prepared to make a purchase anytime.
For customers, some social media platforms contribute to a seamless purchasing experience. Instagram's Shoppable Instagram Feed enables users to tag products from businesses compiled from user-generated content or on their posts and embed them right into eCommerce websites. Customers may easily navigate to the appropriate product page and make that special purchase with just two or three clicks.
Consistent Social Media Audience Growth
There are several key driving factors of social commerce. One is the increasing popularity of social media platforms. More and more people are using social media to connect with friends, family, and businesses. This allows businesses to reach a larger audience through social commerce.
Businesses that engage in social commerce have accessible and expanding fan bases. Millions of people are already using social media. Thousands of new users sign up for social media platforms every day. Facebook had 1.98 billion daily active users in the third quarter of 2022, a slight rise from the second quarter.(19) Due to the increased number of social media users, more and more people are attracted to purchasing via social commerce platforms.
Effectively Caters to Customer's Demands
Direct customer interaction and feedback are made simple by social media. 59% of US consumers use social media to acquire customer care, and 68% of consumers use it to interact with brands directly to address their queries.(20) Social Commerce businesses use platforms that integrate polling software, comment sections, and IM applications to engage customers, allowing brands to adjust their offerings to match customers' expectations. Brands also get an opportunity to improve their customer service, add additional product size options, or launch a new apparel line.
Improved Customer Insights
Customer data can offer crucial insights into how customers engage with a company and their unique needs throughout the social commerce channels. Customer information and data are provided via customer interactions through social commerce channels, chats, and forums. By using this information to serve customers better, brands can boost their social commerce shopping and enhance serving customers better.
Increased Customer Loyalty and Retention
Brands aim to sell and advertise their goods and services when they use social commerce for business. They want to cultivate positive relationships with customers. A business can create and maintain relationships with prospects to strengthen trust and loyalty, which results in higher customer satisfaction and boosts social commerce shopping.
Broadens Consumer Choices
18.9% of respondents use social commerce to know and compare the prices of products, and 48.6% of surveyees prefer social media to learn about newly launched products. Many brands use social media to promote and offer their goods and services to people. Social media allows buyers to easily compare the quantity, quality, size, and price of products one brand offers to others and find the best deal. As a result, social commerce is creating better opportunities for customers, new sellers, and reputed brands.
Increases Spot-buy Capability
Social media platforms make it easy for people to buy products online instantly. Users can simply click on a product image or link and purchase it without having to leave the platform. This convenience helps drive sales, especially for impulse purchases. In addition, social media platforms offer discounts and other incentives that encourage people to shop online.
Buying over social media is made simple by features like in-app checkout, buy buttons, and instant messaging facilities. By using social commerce, extra steps in the purchasing process can be cut out, which fastens the transaction process.
Social Commerce is the Future of E-Commerce
"Despite the challenges, the future of social commerce is looking bright. As more and more people join social media platforms, the opportunities for businesses to connect with customers and build relationships will only continue to grow." - Martina Bianco, Co-Founder at TelevisoriTop.
51.4% of the surveyees believe that social commerce is the future of e-commerce. The rapid adoption of social commerce has significantly altered corporate and consumer landscapes. More social media platforms are focusing on adding all features that can support social commerce and this has improved customer and business communications to a greater level.
As a result of the rapid use of social media platforms, the social commerce industry worldwide is gaining popularity. The shifting preferences of Gen Z and millennials and the rising trend of more B2C and C2C products are the factors promoting the growth of the social commerce industry. According to the survey conducted by GoodFims, 54.1% of the participants indicated personalized buying recommendations feature as their most preferred facility in social commerce platforms. Brands and retailers can reach their specific target audience with the right products and offer personalized items on social media platforms.
The Rising Trends of Social Commerce
- The rise of group buying and community buying is a crucial driver of growth to serve socially aggregated customers. According to the GoodFims survey, 23.5% of the surveyees like group shopping with friends on social commerce platforms.
- Instagram’s visual storefront - Users can also shop from the images and videos on Instagram. The platform also allows brands to customize by grouping products according to themes.
- The next big thing is live-streaming e-commerce, which significantly impacts the market. When video and retail come together, it boosts engagement, reduces the distance between consumers and the products, encourages purchases, and raises the average sales price in situations where bidding is present.
- One of the most well-liked social commerce trends is shoppable Instagram, employed extensively by brands to transform their Instagram feeds into shoppable stores.
- Increase in Conversation-Led Commerce - Individual conversations and improved communication through chats accentuate the use of additional dialect and voice commerce.
- Brands can work with influencers in genuine, inventive, and cost-effective collaborations and employ their micro-influencers, who have a more extensive audience engagement, on every step of the customer journey, from introducing a new product to sharing reviews to driving sales.
- Removing the add-to-cart option and integrating shoppable user-generated content (UGC) on product pages. This lessens the likelihood of cart abandonment, a big concern for online firms.
- More social media platforms plan to have robust social commerce features
- Another social commerce trend that businesses have been utilizing is to include a link to a shoppable gallery in the profile description of social media sites. Brands have been using it to increase sales and attract traffic from social media platforms.
These trends prove that social commerce has a promising future.
Key Findings
- Social commerce provides a platform where customers may browse, research, and purchase things in one place.
- 86.5% of the surveyees prefer Instagram for purchasing products.
- 62.2% of the respondents like to shop on Facebook.
- 31.4% of the surveyees prefer to shop via Amazon Live.
- 56.8% of surveyees make purchases on the advice of social media influencers
- 48.6% of the surveyees prefer virtual try-on clothing and accessories on social commerce platforms.
- 21.6% of the surveyees have purchased products from social media live-streaming events.
- 62.2% of the respondents like to use virtual worlds created in Metaverse for social shopping.
- 45.9% reported being redirected to another website.
- 40.2% of surveyees are unhappy with customer services offered by social commerce brands.
- 37.8% of the customers do not find their preferred payment mode while purchasing via social commerce channels.
- 27% of the respondents find spam selling on social commerce platforms.
- 10.8% of respondents say they had a flawless and seamless buying experience on social commerce platforms.
- 54.1% of the surveyees prefer personalized buying recommendations features in social commerce platforms.
- 75.6% of the surveyees had initiated their purchases through social media platforms.
- 18.9% of respondents use social commerce to know and compare the prices of products.
- 48.6% of surveyees prefer social media to learn about newly launched products.
- 23.5% of the surveyees like group shopping with friends on social commerce platforms.
- 51.4% of the surveyees believe that social commerce is the future of e-commerce.
Conclusion
Along with the expansion of social media and online shopping, social commerce is a dynamic and expanding part of digital marketing. This approach mixes social media and eCommerce to increase audience retention and enhance sales. Interestingly, retail innovators are focused on enhancing the capabilities of ecommerce right into social media channels. The market for social commerce is predicted to flourish further.
When social media emerged, most brands concentrated on growing their online communities and engaging their audiences. Its primary function was at the top of the funnel. Social media has become the most effective direct marketing tool in the world. This changed the emphasis from sales to community building and engagement. With the expansion of social commerce, this trend is still in motion. Facebook and Instagram set the bar high by introducing tools allowing users to buy things without leaving their own sites.
In conclusion, social commerce has created improved opportunities for new sellers and reputed brands by allowing them to reach more customers and establish trust with existing ones. It also gives businesses access to influencers, who can help promote their offerings and increase the company’s sales potential. Social commerce is a valuable tool for any business looking to expand its reach and grow its profitability. It is also giving customers easier access to the products they want. This makes social commerce a powerful tool for both buyers and sellers alike.
We sincerely thank our Research Partners for their valuable insights.
Survey Participant Demographics:
Age Group:
- 18-24 (30%)
- 25-39 (52.9%)
- 40-59 (13.5%)
- 60+ (3.6%)
Gender:
- Female: 56.8%
- Male: 43.2%
According to the GoodFirms survey, 86.6% of the respondents have been using social media platforms for more than five years. 9.7% have been using social media for 3-5 years.
GoodFirms survey shows that 45.9% of the surveyees use social media platforms for personal and professional purposes.
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