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Suzy Davidkhanian (00:00):

Ever seen an ad that just fits perfectly? That's Seedtag. Their neuro contextual technology combines AI and neuroscience principles to place brands exactly where they belong. It's privacy first advertising that taps into the user's interests, emotions, and intentions, making every interaction feel natural and relevant. Seedtag, where context becomes intelligence. Hi, everyone. Today is Wednesday, February 11th. Welcome to eMarketers Weekly Retail Show, Reimagining Retail, an eMarketer podcast made possible by Seedtag. This is where we talk about how retail collides with every part of our lives, and I'm your host, Suzy Davidkhanian. On today's episode, we're digging into social commerce, how it became a real retail channel, and why it matters even more as AI and agentic commerce start to shape how people buy. Joining me today are two of our senior analysts. Carina Lamb joining us from the South Coast of England. Hey, Carina.

Carina Lamb (01:05):

Hi, Suzy.

Suzy Davidkhanian (01:06):

Not to be confused with Near London.

Carina Lamb (01:07):

[inaudible 00:01:08].

Suzy Davidkhanian (01:11):

And we also have, for the first time, Minda Smiley joining us from New York City. Hey, Minda.

Minda Smiley (01:16):

Hey, excited to be here.

Suzy Davidkhanian (01:17):

We're so excited to have you. So this week, we're going to talk about social commerce, not as a trend or an experiment, but as a real part of how people are shopping today. What started as discovery and inspiration has now become shoppable, immediate, and increasingly transactional, often in a single sitting. And while social commerce is still a small slice of overall retail, it's become much more important as brands try to figure out how to connect, convert, and build trust in a more mediated buying journey. So with that, I'm going to start with a very easy one. What is the last thing you guys bought through a social platform? Minda, you get to go first.

Minda Smiley (01:59):

I honestly can't even remember. If I had to guess though, probably baby clothes. Yeah.

Suzy Davidkhanian (02:06):

Have you made a purchase? I've clicked on many links, but I haven't actually made a real purchase. And we were even talking about, are you purchasing in the app or are you purchasing through the website?

Minda Smiley (02:18):

Exactly. I feel like there's been many times where I've clicked on ads for toddler and baby clothes, but I couldn't remember if I actually-

Suzy Davidkhanian (02:25):

If you made a purchase.

Minda Smiley (02:26):

... made the purchase there. I don't really shop on social media that much, to be honest.

Carina Lamb (02:29):

I'm the opposite.

Suzy Davidkhanian (02:30):

Carina, tell us more.

Carina Lamb (02:31):

I'm a terrible social shopper. I'm very influenced by my algorithm. And I bought something yesterday, in fact. I'm training for a half-marathon at the moment, and I ended up buying a hydration vest that has a nice little pocket for my phone and some water and snacks. Snacks were the important bit. And it's reflective so I can be seen at night and it's arriving later today, hopefully, so I can tell you how it went.

Suzy Davidkhanian (02:56):

That fast?

Carina Lamb (02:57):

Yeah.

Suzy Davidkhanian (02:58):

Wow.

Carina Lamb (02:58):

But I bought it on a website, so it sent me to the brand website.

Suzy Davidkhanian (03:03):

Yes. But this is the point, right? Social commerce isn't really massive yet, but it's definitely crossed that line into a real retail channel. When did that shift actually happen?

Carina Lamb (03:13):

Yeah, sure. And I mean, I see it from a very UK perspective, which is probably a little bit different from the US. So I think the UK is kind of lagged on social commerce because we never really had native checkout here and it just wasn't a normal thing. So you were kind of sent back to websites and that worked to a point, but I think it was really... The inflection point was the launch of TikTok Shop in 2021. And that kind of finally brought native checkout, integrated logistics and creator led settling into one place. Although I would say it was when TikTok launched Fulfilled by TikTok in 2023 and really took that logistics piece and improved delivery and consistency and things that we saw it really take off and it was double-digit growth in 2024. And I think now we're starting to see some bigger brands get on board, bigger retailers.

Suzy Davidkhanian (04:03):

Onto TikTok Shop?

Carina Lamb (04:04):

Onto TikTok Shop. Yeah. Initially, it was just a lot of SMEs and smaller brands, but I think now we're starting to see bigger brands and retailers start to see the sort of benefit of it as an additional sales channel.

Suzy Davidkhanian (04:16):

Minda, for me, it feels like in the US, it was with livestream shopping, it's like QVC on steroids, right? All of a sudden, all the brands were like, "Wait a second, we can actually sell through social commerce, it's not just a place for people to be entertained and it's not a place for people to communicate." What's your sense around what's actually shifted in the US?

Minda Smiley (04:36):

In terms of social commerce in general or livestreaming?

Suzy Davidkhanian (04:39):

Yeah. How did a social platform end up being such an important touchpoint and maybe all the digitally native brands that needed this direct to consumer access?

Minda Smiley (04:47):

Yeah, I don't think it was one specific thing. I mean, I do think COVID probably played a role. I mean, that's something that we talk about a lot in terms of a lot of digital habits. And I think that probably did play a part in why we did see some growth booms around that time. But I think even before then, 2017, 2018, 2019, TikTok was gaining momentum at that point. People were starting to spend more time on social year over year. I really think it's... Kind of to Carina's point, I think a lot of factors have really led to where we're at now. A lot of it's just social media has become so much more popular. We're spending more time there. Yeah.

Suzy Davidkhanian (05:22):

It's big on its own.

Carina Lamb (05:23):

Yeah. And I do think as well, it's like the friction in that kind of sales point has really reduced. So brands are getting better at handoffs when a link comes in from social to their websites. You're getting payment preferences which are saved and remembered and it's all just getting a bit faster, I think that kind of one click checkout. So it's really seamless experience now whether you're checking out natively or whether you're going to a brand website. And I think that's what really encourages that sale sometimes.

Minda Smiley (05:54):

Yeah. And I do think it's important to note, in our social commerce forecast at least, we do consider native checkout and checking out via a retail... Click to a retailer's platform that's all in our numbers, which I feel like is important because I think even the term social commerce can cause confusion for people, like what exactly does that mean?

Suzy Davidkhanian (06:11):

That's a great point because it's more than just an inspiration piece, even though the sales are lower than other digital channels. But for me, it also felt like there was a time where it was more... It wasn't shoppable yet. It was more like a glossy digital magazine. It was really great for inspiration. It's not necessarily something that you were ever thinking about buying in that moment, but now you're buying it all in one shot. Is that because consumers are more open to it or is that really just TikTok?

Carina Lamb (06:42):

I think it's a bit of both. I mean, you have things like shoppable ads, shoppable videos, and then also creator marketings come on a long way in the way that brands are using creators and the way that creators are then helping sell products on social platforms. So I think it's a combination of that. And then also consumers just becoming a bit more used to it as a sales channel, it's kind of a slow thing to build momentum, but it is now starting to get there.

Suzy Davidkhanian (07:08):

And Carina, you were talking about just before, and I want to dig in a little bit more, this idea that it's a little bit more seamless. We know in retail, like if you do things that have friction, you're less likely to convert. And so it seems like social platforms have figured out a way to sync up inventory, figure out fulfillment, returns, even payment you're saying native or not native. How important do you think all of that work that happened on the backend makes this feel like the moment where it's really going to take off?

Carina Lamb (07:40):

Yeah, I mean, I think that's completely critical. Like you said, without reliable stock visibility, without clear delivery timelines, straightforward returns, people just wouldn't use it. It's just the basics of retail, isn't it? And so like I said, in the UK, I think social commerce became a lot more tangible when TikTok shop introduced options like fulfilled by TikTok because consumers then had that kind of same day fulfillment, next day working delivery. And it's that consistency that then builds trust. And I really think that that's... Like you said, it's the kind of infrastructure behind it now, which is building the trust with consumers. And for them, an experience buying via social is not radically different to an experience buying via more traditionally commerce.

Minda Smiley (08:23):

And I think it's worth noting that the actual ads themselves have gotten savvier, whether it's the format or even with creator marketing. I mean, something we talk a lot about when it comes to influencer marketing is we're seeing this huge boom really of advertisers putting paid media behind their influencer investments to really turn these organic placements, sponsored placements into ads that are showing up on your feed.

Suzy Davidkhanian (08:48):

And I'm throwing in that consumers don't know the difference. They're shopping on Instagram, but they're not paying enough attention to know if it's Ralph Lauren that they're purchasing from or if... Like Ralph Lauren the website or Ralph Lauren through the shop on Instagram. So technically, it's not really called the Instagram shop anymore. And so that even shows us that not only are consumers sort of blended between all the different channels, but Meta is still trying to figure out exactly how to lean into social commerce. So the evolution of how it's going to work is there, whether it's live-streaming or shop in shops or not on TikTok or on Instagram. We even had this whole conversation around, can you actually purchase within Instagram? We know on TikTok you can, but within Instagram. Or on Facebook, we said, "Oh, it's probably more Marketplace." Is that a signal that there's still more to come?

Minda Smiley (09:38):

I think so. I mean, it's interesting. Like yeah, obviously, TikTok shop and TikTok in general has done a really good job of sort of leaning into shopping. It's clearly a big priority for them. They're seeing a lot of momentum. You can see it in the numbers. Instagram has had its challenges, as you said, they haven't really leaned into shopping in the same way, but Instagram also, in other ways, they are seeing success in their own way. The way Instagram works, there's more to offer, I guess you could say, because there's stories, there's the feed, there's reels, there's kind of more going on and maybe that can create both challenges and opportunities. But I think the bigger point I'm trying to make is they both are seeing success in this realm for sure, even though TikTok, I think, has more kind of explicitly leaned into shopping.

Suzy Davidkhanian (10:26):

I also find it interesting that we talk about social commerce and don't mention Pinterest as much, right? And I feel like they're doing so many different things. Their CEO had once said they want to be the digital mall. It doesn't come up a lot in conversations. Do you know why?

Minda Smiley (10:42):

I actually just looked into this as part of our US forecasts at least. And we actually recently increased our figures around Pinterest in terms of social buyers and revenue they're making, social commerce. So they actually are seeing some momentum, but the reality is that they're still really small when you compare them to TikTok, to Instagram, even Facebook. I do think when you look at Pinterest by itself, it actually is seeing some momentum and they're clearly pushing into shopping, but I just think because they're just one of the smaller platforms, they are going to inevitably face some challenges and marketers are also going to maybe bucket them in a more experimental budget, which can have implications for how they're viewed through a shopping lens as well.

Suzy Davidkhanian (11:25):

Carina, what is it like in the UK?

Carina Lamb (11:27):

Yeah, it's the same here really. I mean, I think what is kind of really distinct in the UK is how big TikTok is here now. And I know it's starting to reach that point in the US now that you've got Shop. But for a long time, when we were seeing global consumer surveys, we were seeing that kind of Instagram, Facebook were the top destinations for people in a shopping mindset everywhere in the world except for the UK and TikTok was top in the UK, but it is TikTok, Instagram, Facebook. Pinterest comes pretty low down the list. So I would agree with Minda. I think it's kind of a similar situation here really.

Suzy Davidkhanian (12:02):

It's interesting because they worked so hard on those shoppable pins to make it so efficient and they're doing all kinds of things like shoppable recipes. They're really trying so hard.

Carina Lamb (12:12):

They're trying.

Suzy Davidkhanian (12:13):

Yeah, they're trying so hard to lean into that moment. And I think they're working through.... And maybe this is what you also were sort of alluding to on the Instagram side in terms of creators. They're moving, I think Pinterest too, obviously TikTok, is moving from creators as a marketing angle for brands more to a storefront and thinking about creators really equaling a sales associate in some ways, but in a more human way. Is that going to change how brands think about their own brand voice and how their trust is sort of disseminated to people and even just how to scale?

Carina Lamb (12:46):

Yeah. I mean, I think it kind of fundamentally changes the power dynamic between brands and creators because brands aren't just outsourcing marketing. They're kind of handing over a little bit of that retail experience then. And I think that's quite uncomfortable for a lot of brands that are really used to controlling everything. So they're going to have to shift their mindset a little bit. And to be honest, the bigger the scale, the more you have to hand over control. So it's a kind of scary thing. So I think really we're going to see brands perhaps using fewer creators, but creating deeper longer term relationships. I think that kind of trust is going to be really important there because these creators aren't just influencers anymore. They're part of... They're like a retail partner really now.

Minda Smiley (13:28):

Yeah, for sure. And even within influencer marketing, I'm sure you both know measurement is a huge conversation. Even though we are seeing so much momentum and growth, that is something that I think is a challenge, is figuring out like a lot of marketers are still kind of wondering, "Well, what is the ultimate ROI? How exactly are these creators? What are they actually helping us do?" And so that's kind of a whole different conversation, but I do think brands want them to drive conversions. They want them to ultimately drive sales. And so that's probably why we're seeing this rise of affiliate marketing and whatnot, and really just trying to connect them to the shopping journey a bit more.

Suzy Davidkhanian (14:05):

It's interesting because it does feel a little bit like a slow burn. I mean, we talked about it in terms of what were some of the inflection points up top. But when I was at Macy's, I don't know, I'm going to call it 10 years ago, they tried to pilot this program. So it's that long ago where sales associates and corporate staff were able to build up their own stores and have affiliate tags and would get a very small commission. So really, retailers have been trying to figure out how to lean into these cultural moments. And maybe among all the things we've talked about, TikTok is probably like... I still think about that Dr. Pepper ad. I feel like that really is a testament to how far we've come in terms of leaning in.

Minda Smiley (14:44):

Yeah. And it's crazy. Yeah, it's funny how things come full circle in this industry. Yeah, now there is this rise of employee advocacy programs, essentially turning your employees into creators. And I know some brands are seeing a lot of success there.

Suzy Davidkhanian (14:57):

And one of the things you talk a lot about, Minda, are the AI creators, like creators that are digital, not real human people. Tell us more about that. How is that scaling?

Minda Smiley (15:07):

It's a super interesting area. It's one that I've admittedly been a little bit skeptical of in terms of what kind of traction I think that they're going to have. In a lot of ways, it makes sense. You can maybe have more control over, depending on what the partnership looks like, how it kind of plays out. There's also this idea of big name creators using virtual avatars, licensing their likeness to a brand if they maybe can't commit in real life, so to speak, but they say, "Hey, you can use X, Y, Z using via AI." So I think there are some opportunities there. Again, I remain generally skeptical about to what extent it'll become a big thing and to what extent a lot of brands are even interested, but I've seen some early signs of some traction. I don't know. Carina, what about you? What have you seen?

Carina Lamb (15:53):

Yeah, I mean, it's kind of been similar here. I've seen some surveys saying that brands are quite keen on it and looking at investing more in, not necessarily completely AI generated, but kind of AI assisted creator content. But we do see here that consumers are still pretty skeptical about it. And actually their desire for that kind of content is going down. And I think that's probably down to the fact that there is a lot of AI slop now on social media that's not necessarily ads, but it kind of puts people off AI in general. So I definitely think it's an interesting thing for brands to be thinking about, but I do think they need to be a little bit careful with how they're then taking that to the consumer.

Suzy Davidkhanian (16:33):

I do think we probably need to spend a whole different episode talking about AI created ads and what that looks like. But from an AI virtual influencer, that too is not new. I feel like maybe before COVID, like a couple years before COVID, there was a virtual influencer from Asia who was a really big deal at the time, but she is not coming up on my feed anymore. So maybe she's retired.

Carina Lamb (16:57):

No, and I think it can be quite market specific. I think in the West generally, we're a little bit more skeptical towards that sort of thing, certainly in England and the UK.

Suzy Davidkhanian (17:07):

That's true. So speaking of... Not just that the UK is skeptical, but just in general, let's do a reality check. We are seeing that there's a lot of momentum, but it doesn't obviously work for everything or every category. So how does it fall apart, social commerce? How should brands be thinking about what's working, what's not working, where they can mitigate risk?

Minda Smiley (17:26):

It's funny, like this is just a random thing that happened a few days ago, but it got me thinking... So my husband does not work in marketing or anything at all. He works in a different field. So whenever he makes comments about things related to social, I'm always like, "Ooh, like a little focus group." But he made a comment about how like... He was like, "I saw an ad for a sweater or something on Instagram," and he was like, "But I'm skeptical of buying it." He was like, "I feel like a lot of these brands that you see ads for," he's like, "I've never heard of these brands. I don't know if it's going to be good quality or if I even want to just directly make a purchase for a company I've never really heard of." And I do think that that's a real issue.

(18:00):

And it stands to affect both those brands that maybe just have trust issues, but also bigger brands who they don't maybe want to be affiliated with a channel that some people are sort of like, "Oh, there's all these kind of random small brands and it feels like impulse buying." I mean, even I've run into that too. Like I was saying earlier, there's so many ads for baby and toddler clothes that I get. And a lot of these brands, I'm like, "Do I really want to buy this random onesie from this company I've never heard of?" I do think the trust thing is still an issue to an extent that brands need to work through.

Suzy Davidkhanian (18:34):

And probably around the categories, right? For a child, you want to make sure that it is safe versus [inaudible 00:18:42] versus other categories.

Minda Smiley (18:44):

Yes.

Carina Lamb (18:44):

I don't think social is great at high consideration categories. I think those kind of categories are actually better suited to something like an AI chatbot where you compare specs and things like that. I think social's all about building that kind of desire and that cultural relevance. I think it works really well for categories like beauty. We see really strong in TikTok shop at the moment in the UK, fashion. It's that kind of like, "Oh, I never knew that I wanted that, but I want it now," but not when it's a kind of super high consideration or sensitive purchase.

Suzy Davidkhanian (19:19):

Right. And you can't just focus on this, right? Brands need to focus on all the different touchpoints. And to your point, there is a distinction between AI assisted shopping and social shopping. So if social is much more about discovery and impulse and GenAI type of assistants are much more about, "This is exactly what I want. Help me find the best thing for me," how should brands think about optimizing for both?

Carina Lamb (19:47):

So I think you need to accept that you're designing for two slightly different mindsets. So for AI agents, you want to be really findable and comparable. So that means clean data, clear product specifications, structured attributes similar to SEO, whereas social commerce is much more about, like we said, stories, emotion, aspiration, building that relationship with the consumer and building that social proof. So I think both channels are kind of important. Which one is more important will depend on the category that you're in, but I really think that brands need to be trying to operate across both.

Minda Smiley (20:25):

Yeah. I mean, I think in some ways that they are kind of bleeding together with the rise of social search and social media platforms being used to search in the same way you might search on an AI platform. There are some similarities, but I think generally, I mean, I agree with Carina, there are still some major distinctions. The way you're going to talk to an AI agent is probably different than what you would type in to Instagram. And they're also just like... And social tends to be much more visual. Whereas I feel like with AI agents, it's still primarily text-based for a lot of people. And so yeah, I really think it's just a matter of knowing you have to take two different approaches, even though there is some overlap because we obviously know these AI platforms cite social platforms quite a bit. They're citing YouTube content, they're citing Reddit content, but your marketing strategy doesn't... It should not be the same because of that.

Carina Lamb (21:18):

And from a retailer perspective, I think the one thing that both have in common is that quite a lot of those sales are going to take place off platform. So most sales that begin on an AI platform are going to end up being completed on the brand website. And similarly with social commerce, I mean, I don't think we have a split, but we know that while you can buy through TikTok shop natively, like we said, it's more limited now or not possible, we're not sure on Instagram. So a lot of those purchases are going to happen on your website. So really thinking about that handoff and thinking about reducing the friction at point of conversion when it arrives back on your own site is kind of really important for both channels really.

Suzy Davidkhanian (21:59):

So well said. And the truth is that you were comparing the rise of AI when we were talking about this before of folks getting onto ChatGPT and other platforms with folks joining different social platforms and it's so much faster. So it's something brands can't ignore. You need to be everywhere all the time to meet your consumer where they are.

Carina Lamb (22:20):

Yeah, 100%. I think our forecast for AI platform-driven e-commerce sales show that it's going to be around 1.5% of e-commerce this year, in 2026. 2029, it's going to be about 8.8%, and that's a much bigger leap than we saw social commerce get a much bigger percentage share. I think even in 2029, social commerce is only going to be around the 9% mark. So it's still not a massive lead now despite the fact it's been around for much longer. So for sure, AI is important, but I think that brands need to be thinking across all channels, not just one or the other.

Suzy Davidkhanian (22:57):

Unfortunately, that's all the time we have for today. Thanks so much for joining us, Carina.

Carina Lamb (23:01):

Thanks for having me back, Suzy.

Suzy Davidkhanian (23:02):

And thanks, Minda.

Minda Smiley (23:03):

Yes, thank you. This was fun.

Suzy Davidkhanian (23:05):

And thank you listeners and to our team that edits the podcast, please leave a rating or review and remember to subscribe. I'll see you for more Reimagining Retail next Wednesday. And on Friday, join Marcus for another episode of Behind the Numbers, an eMarketer podcast made possible by Seedtag.