Will Social Commerce Stocks Soar?

Looking to the future, e-commerce is really just getting started and has substantial room for growth over the next few decades. So how will this shift toward e-commerce and increased usage and dependence on social media to sell products affect the stock market? Will this ever-changing landscape cause social commerce stocks to soar over the next several years? 

What is a Social Commerce Stock? 

An element of e-commerce is the growing social commerce industry which blends transactions with social features on social media.

Essentially, social commerce uses popular social media platforms like Facebook, Instagram, Twitter, Pinterest, YouTube, and more to promote and sell products or services. Often, a social commerce marketing campaign’s success is measured by how many consumers interact with the campaign through retweets, likes, shares, etc. 

Stocks under the social commerce umbrella include both the social media platforms and payments processing platforms that are used to accept payments on the web. Some popular or well-known social commerce stocks include: 

• Meta Platforms Inc (FB) 
• Twitter Inc (TWTR) 
• Pinterest Inc (PINS)
• Block Inc (SQ) 
• Paypal Holdings Inc (PYPL)
• Shopify Inc (SHOP) 
• JD.Com Inc (JD)
• Pinduoduo Inc (PDD)

Social Commerce Market Size Growing Fast

According to data collected by Research and Markets, the social commerce market size is experiencing a massive annual growth rate with each passing year.

In 2020, social commerce alone generated around $449 billion, which grew to $501 billion in 2021. Through their collected data, Research and Markets predict that the social commerce market size will generate around $792 billion in 2025.

With the adoption of social commerce just beginning, the market size will likely only continue to grow as social commerce becomes a staple way to obtain goods in more societies around the world. 

Social Commerce is Growing in China 

To better understand the potential of the social commerce industry, we need to look at a society of early social commerce adopters, China. It is home to the largest e-commerce market in the world. According to JP Morgan, China generates an average of $1.7 trillion in e-commerce sales each year. 

China is generating these massive numbers, all without 56% of their population having yet to make their first online purchase or joining the social commerce industry at all. This means that there is a huge untapped potential still existing in China which is already the world’s largest e-commerce market.  

An example of a social commerce platform in China is Pinduoduo. The Pinduoduo company was founded in 2015 and has quickly risen to become the second-largest e-commerce company in all of China.

Pinduoduo platform attracts more than 780 million annual active buyers and leverages China’s most popular messaging app, WeChat, to generate sales and communicate with their consumers. Through the WeChat app, Pinduoduo offers its customer base discounted bulk-buying opportunities, a strategy that has proven to be very useful for Pinduoduo’s success. 

Overall, the statistics presented are great news for the overall e-commerce industry as they indicate that social commerce is still at the origin of its mass adoption. This indicates that much more will still be coming in terms of the growing social commerce industry both in China and across the world. 

How Livestreaming Affects Social Commerce 

Along with being on the cutting-edge of social commerce, the Chinese e-commerce industry is the first to give live streaming an essential role in the overall social commerce market.

In 2016, some leading Chinese e-commerce platforms like Alibaba’s Taobao, Mogujie, and JD.com all launched live streaming services and real-time video features to increase engagement in their consumer base. 

As the 2010s closed out, many more Chinese-based e-commerce platforms like Kuaishou, Xigua Video, Meipai, Douyin, Kuaishou, and others began to jump on the Livestream train. Today, many more companies around the world are using live streaming as a means of marketing and as a way to generate more e-commerce sales.

Sites like Amazon Live, TikTok, and Popshop Live have just begun to Livestream to their consumer bases in the hopes of generating more sales. If this mass adoption of live streaming in the social commerce industry continues, it could play a massive role in the overall social commerce industry moving forward.  

3 Reasons Why Social Commerce Stocks Could Soar 

As social commerce helps to stimulate the growth of both e-commerce and social media, social commerce stocks could soar over the next several years or even decades. Outlined below are three key reasons indicate the promising future social commerce stocks have ahead of them. 

The Barrier to Entry is Extremely Low for Consumers 

One key reason that may help social commerce stocks soar is that the barrier to entry is extremely low.

Anyone can create a social media account for free, just as anyone can create a PayPal account for free to purchase goods online.

FinTech payment solutions in the form of PayPal, Square, Stripe, and more are all helping to lower the overall cost of online payment processing and democratizing finance as a whole. These elements all help make e-commerce and social commerce options available to the masses. 

Creating and Scaling Online Businesses is Easier Than Ever 

Another key reason that could accelerate the growth of social commerce stocks is that creating and scaling online businesses is easier than ever before. The off-the-shelf infrastructure allows anyone to create an online store.

Fulfillment-as-a-service solutions like Amazon and Shopify also make dropshipping a viable business for anyone to start.

With the barrier of entry into the social commerce industry being virtually non-existent for both consumers and entrepreneurs, social commerce stocks have the potential to soar as more and more individuals begin to opt-in to the industry. 

Social Media Platforms Are Accelerating Mass Adoption 

A final key reason that social commerce stocks have high potential is that social media platforms are helping to accelerate mass adoption through live shopping features.

With popular social media apps like Facebook, Twitter, Snapchat, and Pinterest all adopting and integrating e-commerce features into their platforms, the social commerce industry is being presented to millions of social media users each and every day.

In-app shopping is just getting started too, which means that there is a ton of potential for growth in the social commerce industry. 

Overall, if trends continue, social commerce stocks should rise as time progresses. With the barrier of entry into the social commerce industry diminishing, ambitious entreprenerus can enter the industry without friction.

In a similar respect, many individuals around the world have yet to even enter the social commerce industry at all. This means that there is a huge untapped market that is just waiting to be capitalized on. Ultimately, all of these elements point to a promising future for social commerce stocks in the next several years.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.