Social media platforms are adopting different approaches to retail in the United States

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For social media platforms in the United States, commerce has not been driving the revenues they once hoped for. Facebook and Instagram, both owned by Meta, invested significantly in their social commerce initiatives during the global pandemic outbreak and projected higher revenue growth. However, due to a lack of consumer interest and less-than-expected revenue, these social platforms have been seen scaling down their social commerce capabilities.

• In February 2023, Meta, in a post on the Instagram help center, announced that the social media platform will stop offering its users live shopping on March 16. While users will be able to use other live broadcasting features, they will no longer be able to tag products in live broadcasts.

The post from Meta also revealed that users will be able to set up and run shops on the social media platform. The announcement to end live shopping on Instagram comes after a month when the firm announced dropping the Instagram Shop tab. While Instagram is retreating from live shopping features amid slow growth and declining consumer interest, TikTok is scaling its social commerce capabilities in the United States.

In 2023, TikTok has been seen launching more shopping features onto its social media platform, as the firm seeks to fast-track its growth and market share in the United States e-commerce industry. In partnership with select retailers such as Pacsun and KimChi Chic Beauty, TikTok has been testing the in-app checkout feature, which is currently in testing mode.

With the addition of these new features, retailers selling on TikTok will gain access to the enhanced shop tool, thereby allowing consumers to access a list of products available on sale on the social media platform. Notably, the TikTok Shop platform enables retailers to upload products and manage shipping, fulfillment, and point of purchase. On the customer side, these new features will enable customers to select colors and sizes before checking out without ever leaving the platform.

The introduction of these features is a way for TikTok to enhance the retailer and customer experience on the social media platform. Furthermore, the addition of new features also reflects the differing approaches adopted by two leading social media platforms in the United States. While Instagram is scaling back on its social commerce capabilities, TikTok is launching new features to accelerate its growth in the space.

Temu, another Chinese e-commerce firm, has introduced social shopping capabilities to drive its growth in the United States market. The discounted retailer, which launched operations in H2 2022 and climbed to the number one position in the app store shopping category, is making giant strides in the United States e-commerce industry.

• The subsidiary of Shanghai-based PDD Holdings, which also owns the social commerce platform Pinduoduo, has integrated social shopping elements into its app in the United States. To receive free gifts, shipping, and discount, Temu is allowing users to invite their friends on the platform. Recruitment of friends on the platform has, therefore, opened the doors for social shopping features, which are already available on Pinduoduo.

Along with social shopping capabilities, the newly launched e-commerce platform is also making a big marketing push in the United States. In February 2023, for instance, the firm kicked off the United States marketing campaign with two Super Bowl advertisements. Through its discounted-pricing strategy, the firm has garnered growing traction among shoppers who have struggled to keep up pace with the surging cost-of-living, amid the high-interest rate environment. The discounted-pricing strategy, coupled with the social shopping phenomenon, is expected to accelerate the growth of the firm from the short to medium-term perspective. In China, the firm has already achieved high growth through social shopping capabilities and is now seeking to replicate its success in the United States.

Consumers have continued to use social media to discover new products and brands, and connect with influencers and the trend is projected to only grow over the next five years. Even though players like Instagram and Facebook have not been able to achieve growth in the social commerce sector, Chinese tech giants such as TikTok, are well-positioned to capitalize on the growing trend. With TikTok’s strategy to launch more in-app shopping capabilities and fulfillment centers, PayNXT360 expects the Chinese social media platform to reach parity with Facebook and surpass Instagram in social buyer penetration in 2023. 

To know more and gain a deeper understanding of the social commerce market in the United States, click here.