When Nicole Mensah takes a break from schoolwork, she often goes shopping — without leaving her apartment. A self-described “skincare nerd,” the Carleton University student says Instagram is her favourite spot to explore new brands.
The targeted advertising makes shopping easy, she said: “You’ll discover one brand, and then … (similar) brands keep popping up,” said Mensah, whose homepage on the platform is full of advertisements showing people trying out skincare products.
“Those ads are very specific, curated skincare-nerd products rather than the average beauty consumer products. So Instagram definitely knows what I like,” she said.
Mensah is one of a growing number of consumers shopping through social media. Ever since the pandemic pushed more shopping online, ‘social commerce’ — using social media platforms to boost the buying and selling of products — is rapidly gaining popularity.
Global sales through social media platforms totalled about $992 billion US in 2022, according to a survey by Statista, an online consumer-data platform. That figure is expected to reach around $2.9 trillion U.S. by 2026, according to the survey.
In Canada, the gross revenue of the social commerce industry is expected to rise from $6.7 billion US in 2022 to $20.3 billion US by 2028, according to a 2022 report by Research and Markets, a Dublin-based market research company.
Social commerce includes cross-platform advertising on social media platforms and influencer marketing.
While it is similar to traditional e-commerce, it allows people to have social interactions with brands and other shoppers besides transactions, creating — and often exploiting — a sense of community and connection, experts say.
“Consumers are exposed to relevant ads that often feel aligned with their interests. The discoverability and personalization aspect is a real draw. (So) is the convenience of being able to purchase straight from the social platform,” said Sonia Carreno, president of the Interactive Advertising Bureau of Canada, a non-profit organization that promotes and develops digital advertising in Canada.
Observers warn that social commerce raises significant concerns, including how to protect personal data and the risks posed by rogue influencers, both to shoppers and brands.
One of the most pressing concerns is that this shopping trend can lead to overspending, critics say, pointing to a 2022 report by TikTok showing that 67 per cent of users said TikTok inspired them to shop even when they were not looking to do so.
Indeed, the platform’s marketing slogan is “an infinite loop of shoppertainment.”
“On social media, it’s important to remember that we are showing everything in a certain frame, in a certain lighting, that there’s a lot of work that goes into manipulating the images — when we see, who we see, or what we buy,” said Marc Alexandre Ladouceur, media education specialist at MediaSmarts, an Ottawa-based non-profit research and education hub for digital and media literacy.
TikTok is the most popular platform for social commerce in Western markets: So far in 2023, the platform has earned $205 million US more from in-app shopping than Facebook, Twitter, Snapchat and Instagram combined, according to a March 2023 article in Forbes magazine.
But other social-media companies are highly successfully in getting shoppers to buy through their platforms: a 2019 study by Meta found 54 per cent of people surveyed made a purchase immediately or shortly after seeing a service or product on Instagram.
“Consumers are increasingly targeted by social commerce platforms.” said Markus Giesler, a consumer researcher and marketing professor from York University. “And the platform is like a tunnel vision for me as a consumer. That can lead to purchase decisions that might not be as smart as they should have been.”
‘On social media, it’s important to remember that we are showing everything in a certain frame, in a certain lighting, that there’s a lot of work that goes into manipulating the images — when we see, who we see, or what we buy.’— Marc Alexandre Ladouceur, media education specialist, Ottawa-based MediaSmarts
In severe cases, consumers may become compulsive shoppers and suffer serious mental-health problems.
Carrie Rattle is a financial coach and CEO of Stopping Overshopping, a program in New York that helps people get out of compulsive shopping. People with compulsive shopping, sometimes referred to as a shopping addiction, buy things to cope with emotions they cannot bear, Rattle said. Particularly, compulsive shoppers keep purchasing items even when it means accumulating debt, lying to a partner, and committing financial infidelity by hiding debt, Rattle explained.
As a result, compulsive shoppers often become withdrawn, she explained.
“What happens with compulsive shoppers is more and more they don’t call their friends. They don’t call their family. They go shopping instead to suppress the uncomfortable emotions and become very alone, which is a cycle,” said Rattle.
Compulsive shoppers often get little support because even their family members may criticize them for their behaviours, Rattle said.
“That causes great shame, guilt and embarrassment, sometimes even more than drug addicts and alcoholics, because the world understands drug addiction, the world understands alcoholism, (but) the world doesn’t understand compulsive shopping,” she said.
People are more likely to become compulsive shoppers on social media because the platforms provide instant gratification, she said.
“It’s done in seconds. And that doesn’t occur for a lot of other shopping,” she said.
“Also, it’s private, so compulsive shoppers can’t be shamed. They can’t be caught. They can’t be embarrassed by shopping and shopping.”
People can also feel social pressure to over-shop on social media, Giesler said.
“Being surrounded by their friends (online) shapes people’s feelings and expectations. In many cases, they want to impress their friends, and this can lead to more consumption. There is social pressure and expectation to follow the latest and greatest trends,” said Giesler.
Fear of falling behind friends or the latest trends, sometimes called fear of missing out (FOMO), often fuels use of social commerce platforms, which may further result in compulsive shopping, according to a 2021 study in China published in the International Journal of Environmental Research and Public Health.
“There is more social comparison. You are seeing how other people dress, you are seeing what other people have around the world. It’s 24 hours a day and seven days a week you are in that social pressure bubble with all those reasons that drive people to shop more easily,” said Rattle.
Research shows five to eight per cent of people in the U.S. are compulsive shoppers, Rattle said. Recent data from the United Kingdom suggests that number may be as high as 16 per cent, she added.
Another drawback of social commerce is the risk of falling prey to misleading or even fraudulent claims about products from reviewers and influencers.
User-generated content (UGC), or product reviews by people, rather than brands, is a major strength of social commerce: shoppers feel they can trust reviews by ordinary people, or promotions by celebrities and other influencers. But trust has been recognized as a key challenge in social commerce because of the salient role of UGC, according to a study published in the Journal of Business Research in 2017.
‘What happens with compulsive shoppers is more and more they don’t call their friends. They don’t call their family. They go shopping instead to suppress the uncomfortable emotions and become very alone, which is a cycle.’— Carrie Rattle, financial coach and CEO of New York-based Stopping Overshopping
“This trust is what makes social commerce so powerful because I’m getting the (product) recommendation from a person I trust. But this can also backfire very quickly if you don’t give me good recommendations,” said Shreyas Sekar, assistant professor at the Rotman School of Management and the Department of Management at the University of Toronto Scarborough.
Ruhai Wu, assistant professor of marketing at McMaster University, said a critical issue in social commerce is how trust has been reshaped by UGC. And this is especially true with influencer marketing.
“Now what happens in social commerce is that (product) information is not created by powerful authorities, but from millions of influencers. The information creation process is very short, and it’s not costly at all. So how much can you expect about its quality?” said Wu.
“There is only one CBC. When CBC lies, CBC loses its reputation, so it really needs to be careful about it online. But for influencers, if they lie, they can change their accounts and restart.”
More than 60 per cent of Instagram mega-influencers with more than a million followers worldwide engaged in fraud in 2021, a study by Statista in 2023 found.
Nicole Mensah said she is aware of the pitfalls of buying products from influencers.
“I think there’s been so many scandals — like influencers scamming people and things like that — so I just don’t necessarily trust it. All the people I (buy) from, I personally know at one point in my life, so it feels a little bit more real,” she said.
Wu said consumers must assess the product information on social commerce platforms carefully. “If you trust too much, for sure you are being manipulated,” he said.
Lack of control over UGC is also a big challenge for businesses.
“The company pays money to display those ads, but when some people add comments on it, even negative comments will go with these ads. Basically, the company pays money to spread out those negative comments,’’ said Wu.
A past example is McDonald’s. The brand used the hashtag #McDStories in a January 2012 Twitter campaign to promote the quality of its ingredients. Instead, Twitter users began to share their negative experiences with the brand and criticize its food quality and service. Although McDonald’s pulled the campaign within two hours, people are still using the hashtag to this day.
“Companies can pay social media platforms to preclude some really negative words, but what if people just talk about somewhat negative words? This is a cost and risk for any business who wants to use social commerce,” said Wu.
Privacy concerns are another significant challenge for consumers using social commerce.
Cheyenne Hunt-Majer, tech accountability advocate for the U.S.-based consumer advocacy group Public Citizen, said there are many fraudulent websites advertising on social media. But users often have a false sense of security on these platforms and think these advertisements must be real.
‘All scammers have to do is buy an ad for a trending product, and it’s not that expensive for them to show up on your feed. And then you can click their link. Sometimes you put your payment information in there, and you either lose your money or, even worse, they take that information, and then they steal your identity.’— Cheyenne Hunt-Majer, tech accountability advocate, U.S.-based Public Citizen
“All scammers have to do is buy an ad for a trending product, and it’s not that expensive for them to show up on your feed. And then you can click their link. Sometimes you put your payment information in there, and you either lose your money or, even worse, they take that information, and then they steal your identity,” said Hunt-Majer.
Even with legitimate businesses advertising on social media, data leakage is a risk.
“These big social media websites — almost all of them have really long track records of not being responsible with user data,” said Hunt-Majer.
In August 2019, Facebook had a data breach that exposed the personal information of 553 million users in 106 countries, including almost 3.5 million Canadians.
In 2022, Twitter was also charged with deceptively using users’ data for targeted advertising.
“When you add shopping on top of that, you end up in situations where people are putting (out personal) information that’s particularly vulnerable, and that just opens the door for hackers and scammers,” said Hunt-Majer.
John Svazic, founder of EliteSec, a cybersecurity company based in Cambridge, Ont., reminded consumers that when buying products from influencers, they must also be aware of their personal data security.
“Once the influencers get money for every sale that they get attributed to them, they’ll always have an affiliate link in their profile or the comments. And when we click that link, it’s going to send you off somewhere. Just be very critical (of the link),” said Svazic.
As more and more people opt for the convenience and social experience of shopping on platforms such as TikTok and Instagram, the line between social connection and commerce is blurring.
This is nothing new, Giesler said: “If you go into churches in Europe in the Middle Ages, you can see that in the back of the church, there’s a little … area where people used to do business.
“It is important because it teaches us that all market transactions and all business is social, fundamentally. So whenever people have been social, they have done business.”
But at the same time, people must be aware of the dangers of social commerce, Hunt-Majer said.
“It’s such a profitable business model, and that’s why these companies are willing to pay for these ads, because they know that it works … that it does convert to real dollars and real sales,” she said. “But there’s ethical concerns about how that happens.”