Spend via social platforms has increased 5-fold this year – here’s what you need to know
Social media has been an important tool for product discovery for several years but now a quarter of Australians make purchases through social media. PayPal’s Alison O’Brien explains what businesses need to know.
When COVID-19 peaked and the social distancing restrictions turned our world upside down, we went into overdrive to find ways to stay connected virtually with family, friends and colleagues. And for many of us, social media was paramount. But social media hasn’t just helped create a sense of connection in isolation, it has also influenced our spending habits.
 
Social media has been an important tool for product discovery for several years, but now the PayPal 2020 eCommerce Index reveals a quarter of Australians1 (24%) are making purchases through social media, a figure which increases for younger shoppers (Gen Z: 36%; Gen Y: 35%).
 
24percent
 

Frequency and value of social purchases have grown year-on-year

Despite social commerce adoption remaining relatively steady year-on-year, the average monthly spend via social across all Australian consumers has increased five-fold from $5 p/month in 2019 to $25 in 2020. And younger shoppers are spending even more (Gen Z: $51; Gen Y: $36).
 
monthly-spend
 
Frequency of social purchases has also significantly increased year-on-year, with daily social shoppers2 tripling from 4% to 12% since last year. And more than a third of social shoppers now make social purchases at least weekly (37%) compared to 22% in 2019. Men tend to shop on social more often than women, with males (47%) shopping on social at least weekly, compared to females (29%).
 
Social media is clearly an evolving sales channel, so it is important businesses are constantly reviewing and optimising their social commerce strategies to meet consumer expectations and maximising sales.
 

Despite security concerns, social media drives sales

Australians are not yet convinced about the security of social commerce, with more than half of Australian consumers (52%) saying they don’t want their financial information linked to their social media and two-in-five (40%) saying they don’t trust the process of buying via social media platforms. But this attitude is likely to change, particularly among Gen Z shoppers who are already a lot less concerned about sharing their financial information on social media (22%).
 
Security concerns aside, as many as a quarter of Australians (25%) said they would consider purchasing something directly from a social media post. But for those consumers that are not yet comfortable making purchases directly within a social media platform, it is still incredibly important for product discovery. More than a third of social shoppers (37%) have purchased something after seeing it on social media. This increases to nearly a half of Gen Y social shoppers (46%) and nearly a half of female social shoppers (also 46%).
 
37percent
 

Facebook remains the most popular platform, but Instagram is catching up

When it comes to which platforms social shoppers are using for purchases, Facebook tops the list (73%), followed by Instagram (49%), with Snapchat (13%) and Pinterest trailing behind (13%). However, as Instagram continues to gear its offering to younger shoppers, the platform is quickly catching up. In fact, the number of social shoppers using Instagram increased by 15% this year, while Facebook social shoppers decreased by 10%, indicating Instagram could potentially surpass Facebook in years to come.
 
social-shoppers
 
Meanwhile, Gen Z (29%) were more than twice as likely to have purchased through Snapchat than the average social shopper. Boomers (90%) and Older Australians (82%) still prefer purchasing through Facebook.
 
When it comes to the top categories social shoppers have purchased, Clothing and Accessories (54%), Health & Beauty (47%), Toys & Games (46%) and Books & Magazines (42%) top the list. These are all categories that suggest comfort and entertainment have been prioritised during the COVID-19 lockdown.
 

Businesses that do not adapt to the growing uptake of social commerce risk falling behind.

Our Index shows that social media is not only important for driving product and brand awareness, it is also becoming an important channel for driving sales.  This is a global trend, and with the recent roll out of Instagram Checkout in the US allowing consumers to check out directly in the platform, it is likely social commerce is only going to continue evolving.
 
 glance-summary
 
[1] PayPal’s research was conducted with 1022 Australian consumers over 18 years old who own a smartphone. Deloitte 2019 estimates smartphone penetration in Australia at 91% and Statista 2015-2022 estimates smartphone penetration in Australia at 71% For the purposes of extrapolation, this document has taken a mid-point for smartphone penetration in Australia of 81%.
[2] Social shoppers refers to those respondents who identified as having made a purchase through social media (n=248).

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