The battle for Gen Z social shoppers

Shopping habits haven’t been the same since the Covid pandemic and subsequent lockdowns.

For many, and especially younger shoppers, it has seen the lines between social media and e-commerce blur.

With the inability to buy in person and the growing number of TikTok downloads, a trend started that could be described as a cultural phenomenon: #TikTokMadeMeBuyIt.

The hashtag, where users post what they’ve bought through in-app product recommendations, has now been shared more than seven billion times.

For Lilia Souri and AJ Pulvirenti, who co-host the marketing podcast “Gen Z on Gen Z,” TikTok is winning with their generation.

“It’s become one of the biggest because of how advanced the algorithm is, and because even before the creation of the TikTok Shop, we saw the buying behavior on TikTok as a whole,” says 27-year-old Lilia Souri.

“You can buy a product directly on the platform and then keep scrolling through the watch, buy, repeat cycle,” adds her co-host AJ Pulvirenti, 25.

Social shopping is a big market and growing fast. It was worth $570 billion (£446 billion) globally in 2023 and is predicted to be worth more than a trillion dollars by 2028, according to Statista estimates.

While TikTok is one of the big players, its position looks vulnerable. TikTok could be banned in the US unless it is sold by Chinese parent company ByteDance.

So where would that leave social shopping?

If you look at the number of buyers, Facebook still has the largest presence in social shopping, according to Jasmine Enberg, principal social media analyst at E Marketer.

Most of his transactions take place on Facebook Marketplace, “one of the few places where Gen-Z and young people still go on Facebook,” he adds.

But if you’re looking at the percentage of users who actually buy something, then TikTok is ahead, says Ms Enberg.

Data from the US-based e-marketer suggests that 40% of TikTok users in the US will make at least one purchase on the platform this year, ahead of both Facebook and Instagram.

“It’s a very important activity in the app, especially for its users,” says Ms. Enberg.

Not to be outdone, Amazon last year added a Consult-a-Friend feature that lets customers ask friends for advice while browsing its app.

Gen Z podcaster AJ Pulvirenti is skeptical about these new features.

“When a platform is just trying to replicate something from another platform and doesn’t offer much that’s new or interesting, it’s not going to make people want to switch from something they’re used to,” he says.

A recent study by market research company Data.ai suggests that Gen Z spend around two hours a day on TikTok, compared to just under 10 minutes on Amazon.

Perhaps the TikTok experience in Indonesia could provide some useful lessons.

In 2021, it became the first country to pilot the app’s e-commerce service and became one of the biggest markets for TikTok Shop.

But with local trade suffering as a result of the pandemic, the government introduced rules to protect local retailers last October, forcing the TikTok Shop to close.

It was a big blow for 26-year-old entrepreneur Evo Syah.

“It’s hard for me, but what can I do?” he says he remembers the tough decisions he had to make.

“I start a business for a year and then they shut me down,” he says.

But two months after the shutdown, TikTok agreed to invest $1.5 billion in Tokopedia, Indonesia’s largest e-commerce platform, meaning sellers like Evo Syah and millions of others can return to the app.

The 26-year-old said he had “never felt happier”. But not everything is back to normal.

“Before the TikTok store closed, I could get around 20 million rupees (£966) a day. But after it reopened, it’s up to 10 million rupees (£483),” he says.

Mr Syah sells most of his products via live streaming, a sales method which has boomed in popularity in Asia but which Ms Enberg says has not caught on in the UK and US.

“Indonesia is a very different business environment than the US,” he says.

However, in both Indonesia and the US, TikTok Shop is essential for many small and local merchants, he adds.

“A lot of them don’t really have another place that’s as strong as TikTok.”

With a potential US ban in mind, Ms Enberg says it would make waves in the world of social shopping.

“Instagram reels are the most natural thing for many displaced TikTok users. But we’re also likely to see the rise of new applications.”

Gen Z podcast hosts AJ Pulvirenti and Lilia Souri agree: “In a world where maybe TikTok is banned. This behavior will still exist and they will still thrive,” says Lilia.

“In a world where that can happen. I think this next big thing has yet to be created,” adds AJ.