you could fill up your shopping carts…on YouTube

you could fill up your shopping carts…on YouTube

a few weeks ago, there was an interesting deal that happened. you may have missed it because it didn’t make too much noise. YouTube bought social commerce startup simsim for $70 million. it’s decent money but the deal’s at less than a 50% premium on its valuation from its last funding round in 2020. if you look at just the numbers, it doesn’t raise eyebrows. 

but look beyond the numbers and it is a big deal. not only because Google has made an acquisition but also because YouTube has found its way into social (live) commerce.

what’s the easiest way to describe social commerce? have you seen your favourite celebrities saying they use a shampoo that they love, it helps their hair grow longer and stronger, and if you want to buy, there is a link in the description? yes, that’s social commerce.

it has been around for a while but has now started to become an important part of the strategy for major companies, including those in India. a few years ago, Myntra decided to lean into fashion content to trigger larger sales. even Flipkart is experimenting with social commerce to boost its sales. sure, Flipkart is an e-commerce company, but why does it make sense for YouTube?

first YouTube

there are a few ways to look at this. Google has made multiple plays in the past when it comes to shopping in India. this is possibly another. YouTube has been dropping breadcrumbs for a few years. recently, it launched Super Thanks. this allows users to tip  creators for any video posted on the platform and is one of the paths to monetisation for the company. it has Super Chat and Super Sticker, both of which involve a tip during a live stream and then there is subscribing to the channel where users pay creators a monthly fee. all of these are ways to keep creators loyal and users hooked. 

Google fully plans to turn YouTube into a shopping destination. last year, the video streaming platform also started nudging creators to tag purchasable objects in their videos. it also prominently featured “live shopping experiences” at an SMB event in the US. while these are more passive ways of interactions, social commerce makes it more active. for YouTube, it automatically becomes a way to attract bigger brands to the platform with big creators who can now sell larger and more interesting objects. 

outside Google, Instagram has evolved from a photo sharing app, to a short video app, to a social commerce platform. a few months ago, Mark Zuckerberg announced during creator week that the company will be adding stores inside the app, so customers can shop on the platform directly. let’s take a second to understand how this works. a creator would suggest users to buy a pair of shoes. and in the caption is a link. the link takes the user to a store, where a special discount code is pre entered. the user places the order and goes back to looking at other videos. here, brands can track exactly which influencer drove sales and how much. it adds layers to understanding who buys the product and what triggered the buy.

Facebook, Instagram’s parent company, is taking this one step further. it is stepping into a metaverse, which involves Augmented Reality, Virtual Reality, Gaming, and NFTs to create a platform that would not only engage users but also enable the largest, most immersive shopping experience.

live video shopping is also huge in China, led by influencers who have massive followings. Alibaba’s Taobao has a lion’s share of the market there (~80%) but other tech giants such as Bytedance and Tencent are now making big investments in the space.

so huge is the potential for social commerce that research companies estimate the global market size of this sector could be $3,369 billion by 2028. in the US, social commerce clocked sales worth $30 billion in 2020.  

cometh the hour

all of this is coming to India too. currently, the share of ecommerce is 4% of India’s $800 billion retail market. reports estimate that live commerce will drive sales up to $5 billion by 2025. and this is just the beginning. fueled by the growth of short video that TikTok popularised, it is estimated that over 60% of short video consumers are from Tier 2+ cities. and most social commerce is expected to happen on short video apps. 

there are other signs as well. DealShare has raised capital not once but twice this year. short video platform Firework has entered the live video commerce arena. social commerce platform Meesho has managed to get the enviable combo of Facebook and SoftBank on its captable. they’re all betting on one thing: in a few years when you decide to buy a pair of jeans it is more likely you’ll listen to advice from someone who looks like you and talks like you, than from a traditional ad.