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How social commerce is driving online retail

New consumer barometer from KPMG in Germany and the IFH COLOGNE examines the importance of social commerce.

A young women doing an unboxing and filming it.

Whether via Instagram, TikTok, online games or brand websites: Many companies have long since discovered the potential of "social commerce" (purchases via "social" online channels) for their purposes. In addition to visibility and branding, the focus is increasingly shifting to purchase preparation and direct purchase transactions in the sense of a seamless shopping experience: social commerce has great potential - for both consumers and companies. These are the findings of the latest edition of the Consumer Barometer from KPMG and IFH COLOGNE (affiliated institute of the WiSo Faculty), which analyses the relevance and opportunities of social commerce. Conclusion: 87% of consumers are generally open to the concept and 75% have already purchased via social commerce. The most popular product categories - similar to traditional e-commerce - are fashion and accessories (23%), consumer electronics (16%) and leisure and hobbies (14%).

"Social commerce as a form of e-commerce has reached the masses at least since the coronavirus pandemic and has incredible potential. Retailers and manufacturers should definitely get to grips with this complex topic and investigate the extent to which social commerce concepts can be useful for their business as an additional sales channel," says Dr Kai Hudetz, Managing Director of IFH COLOGNE.

Positive effects through transparency and authenticity
If a social commerce strategy is appropriately tailored to the target group and channel, it will have a positive impact on company perception, brand loyalty and customer satisfaction, according to the Consumer Barometer. For example, 82% of consumers believe that transparent communication via social commerce is part of responsible corporate behaviour, and more than half (53 %) consider companies active in social commerce to be particularly authentic. Products recommended through social commerce are less likely to be returned and are more satisfying (58%). By presenting their brand and products authentically in social networks, online games or on their own websites, companies can avoid the weaknesses of traditional e-commerce, in particular a lack of trust in the seller (37%) or insufficient product information (30%).

"Whether spontaneous or planned, a purchase is always an expression of trust. Social commerce is a catalyst for trust, driving not only product purchases but also brand loyalty. It will therefore give a significant boost to e-commerce. Social commerce offers retailers and manufacturers the opportunity to increase the authenticity of their individual customer communications and to enhance their brand in the eyes of consumers," says Stephan Fetsch, EMA Head of Retail and Consumer Goods at KPMG.

Potential not yet fully exploited by companies
The high market relevance of social commerce is also reflected in the average spend: Four out of ten shoppers spent more than €50 on their last purchase. As a result, two-thirds of consumers currently see sales promotion and sales growth as the main reasons for companies' social commerce activities. Companies should also take advantage of the opportunities that social commerce offers in terms of customer loyalty (38% of consumers agree). Other benefits of social commerce include the ability to create a seamless shopping experience (23%) and increased social interaction (18%).

About the Consumer Barometer
The Consumer Barometer of the IFH COLOGNE and KPMG sheds light on current developments, trends and drivers in the retail and consumer goods market. For the current edition the topic "Social Commerce" was chosen. Around 500 consumers from Germany were surveyed online for the study in January 2024.