Social commerce, or the process of selling entirely on social media, is a fast-growing sales tactic around the globe, quickly taking market share away from traditional retail e-commerce.
According to a Social Commerce Market Analysis Report from Grandview Research, the global social commerce market was nearly $500 billion in 2020 and is expected to reach $3.4 trillion by 2028. The report indicates that North America holds a substantial share of the global market and that usage of social commerce is highest among Millennials and Generation Z, with over 60% more likely to purchase on a social media platform when given the option.
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I spoke to Ryan Napierski, recently appointed CEO of multi-billion-dollar beauty and wellness company Nu Skin, to gain insights into how their focus on these trends has evolved.
Jeff Fromm: In your opinion, what were the key milestones that gave birth to the era of social commerce, and how did we end up here?
Ryan Napierski: We've always known that word-of-mouth marketing is highly effective and arguably the most powerful influencer. We buy what our friends tell us to buy, watch the movies they tell us to see and often seek out their recommendations. I think influencer marketing came in initially as a trusted voice. An influencer is someone the consumer trusts and respects — and that person is telling them that they really like a product. This authentic interchange is how we got to where we are today, and customers have determined what that authentic voice needed to be.
Fromm: Do you think that influencer marketing still has the same authentic power that it did a few years ago?
Napierski: One of the problems I see is the rise of inauthenticity in traditional influencer marketing. There are more influencers making more recommendations, and many influencers often contradict themselves by representing multiple brands that do the same thing. But consumers are still looking to connect with people they trust. For me, the birth of social selling goes back to when Millennials and Gen Z consumers began relying on authentic product recommendations, rather than traditional paid advertising. It’s the Kardashian effect where brands can now create billion-dollar businesses on social media. Virtually every major consumer brand is trying to leverage the power of social commerce to promote their brands and connect directly with consumers.
Fromm: We know that Gen Z makes up about 40% of total U.S. consumers, and they wield about $143 billion in purchasing power. How do you think the evolving expectations of Gen Z consumers have shaped the emergence of social commerce?
Napierski: I think the expectations of Gen Z consumers precisely correlate with where they spend their time. Both Gen Z and Millennials spend their time on social media—YouTube, Snapchat, Instagram, and Tik Tok—where you have some control in self-selecting media or getting personalized, curated content. They don't like preprogrammed media. They’re looking for endorsements from authentic sources on those platforms, and they don't trust spokespeople or actors. They want an authentic voice, which is why understanding how to use social selling on these platforms is essential for brands.
Fromm: How has the emergence of social commerce impacted or changed how you view the future of Nu Skin’s business model?
Napierski: While we’ve seen several evolutions in commerce over our 38-year history, what has never been lost is our focus on person-to-person relationships. Our products have always required personal representation, and as e-commerce and social media have merged to give rise to social selling, our model has evolved too. At Nu Skin, we work with nano-influencers who have that direct, authentic connection to Gen Z through social media sites, such as Instagram, Facebook and WeChat, rather than partner with large beauty influencers as many brands have done. We give these nano-influencers the digital tools and programs to set up their own shops and create their own personalized customer experiences.
Fromm: How do you plan on taking this nano-influencer model forward?
Napierski: Our strategy is all about providing nano-influencers with beauty and wellness products they really enjoy so it’s easy for them to make a word-of-mouth recommendation to their audiences. Moving forward, we see these influencers as a competitive advantage for companies to grow through truly authentic endorsements as opposed to mass social media advertising, which, as we’re learning, is inauthentic and fundamentally flawed for both Millenial and Gen Z audiences. And with the introduction of enhanced data privacy controls—such as the Apple update where users can choose whether advertisers can track them—digital advertising is becoming not only more expensive for brands, but also less effective.
Fromm: What do you predict the next five years will look like for social commerce?
Napierski: I believe there will be enormous growth just as the report cited above estimates that social commerce will become a $3.4 trillion global market in seven years. When you think about it, the forecast is that social commerce is going to disrupt e-commerce, which was itself disruptive from the 90s to the 2010s. Social selling seamlessly integrates all aspects of the consumer experience—from finding a trusted influencer who is sharing a product, to learning more and then making a purchase. It all happens on a single platform, while traditional e-commerce requires you to go to different pages and sites. Brands that understand how to build marketplace exchanges on their platforms are going to see the most success with social selling.
Fromm: What’s the best advice for companies who are not at the point Nu Skin is at now to get them up to speed?
Napierski: My only advice is to put the customer at the center of your strategy. If you’re putting digital or social at the center, you’re doing it wrong. But if I’m focusing on consumers and watching where they’re heading, then I know I’m making the right strategic move, and it's one I can continue to evolve.
Fromm: And do you have indications that social commerce is here to stay? I assume your answer is a resounding yes?
Napierski: I would reverse the question and ask if e-commerce and retail will be around 10 years in the future? I think we’re going to see a dominance in social commerce, particularly as a technology that enables the expanding gig economy. Everyone is acknowledging the shift and already knows how to tap into their own social media following. Social commerce then becomes a holistic integration across retail e-commerce.
