Social commerce sector continues to attract investment from venture capital and tech firms globally

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With the shift in consumer shopping behavior and changing marketing strategies, social channels have emerged as a leading growth driver for retailers globally. Social shopping, while extremely popular in China, the trend is also gaining steady momentum in many other nations around the world. More brands are working with platforms such as TikTok to build new customer relationships and drive incremental revenue through fun and engaging content.

Amid the rapid growth achieved by TikTok in the space, more players in the online commerce space are increasing their investment to launch social shopping features onto their platforms. This coupled with the emergence of innovative startups is driving the competitive landscape of the global social commerce market. The growing market size has also resulted in increased investment from private equity and venture capital firms, and PayNXT360 expects the trend to further continue over the next three to four years.

• In December 2022, Kapu, the Kenya-based social commerce startup, announced that the firm had raised US$8 million in a Seed funding round. The firm is planning to use the capital to scale its business and operations across Kenya, before launching in other regional markets. Like Elenas, Kapu is also planning to increase its seller network, thereby further expanding its reach among the consumers. From the short to medium-term perspective, the firm is also expected to offer support for WhatsApp orders, which will simplify the shopping process for both sellers and buyers.
• In October 2022, Elenas, one of the leading Latin American social commerce startups, also announced that the firm had raised US$20 million in its Series B funding round, bringing the total fund raised to US$28 million, as of October 2022. The firm allows women in the region to sell products from the digital catalog to consumers through social channels. Between Series A and Series B rounds, the firm recorded revenue growth of 5x and is looking to further scale its business by increasing its seller network in Mexico and Colombia.
• In August 2022, LiSA, a German startup in the social commerce space, announced that the firm had raised €2.7 in a funding round, which was led by TechVision Fund. The startup enables online retailers to tap into the potential of social commerce. The headless content management system enables retailers and online platforms to build social commerce experiences for their customers. This in turn drives the customer engagement, conversions, and organic social sharing rates for retailers and online platforms.
• In July 2022, Charles, another German-based startup, announced that the firm had raised €19.5 in a Series A funding round to drive conversational commerce growth in the European region. The investment round was led by Salesforce Ventures, HV Capital, and Accel. The firm enables merchants to provide customers with a conversational commerce experience through messaging apps. Through Charles, retailers can sell their products through chat, while offering their customers a personalized experience.

These innovative startups, along with their multi-million-dollar fundraising rounds are expected to keep supporting the growth of the social commerce industry globally from the short to medium-term perspective. Amid the growing competitive landscape, social media platforms have continued to increase their investment in developing and launching innovative features that can accelerate their growth in the segment.

• In November 2022, YouTube, the social platform owned by Google, announced that the firm will increase its investment in shopping programs in 2023. The investment is part of the firm’s strategy to capture more market share in the social commerce space. The firm also rolled out an affiliate marketing scheme in the United States. Currently, in its beta phase, the widespread rollout is projected in 2023. 
• TikTok, another leading player in the space, announced the launch of in-app shopping capabilities in November 2022, as it seeks to deepen its footprint in the United States market. The firm first launched the Shops feature in the United Kingdom in 2021. The launch in the United States comes at a time when TikTok is looking to make a bigger push into the e-commerce market that is dominated by Amazon. The firm is also planning to open fulfillment centers in the country to accelerate its growth and compete with Amazon.

On the other hand, Amazon also announced that the firm is planning to roll out a TikTok-like shopping experience on its platform in December 2022. The launch of the new feature is aimed at generating more interest from young generation Americans, who are enticed by short-video formats. Initially, the firm is planning to roll out the feature for selected users in the United States, before rolling out the service in the global market.

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