Social shopping was up 40% over the last year, but young shoppers say they still aren’t convinced

Social shopping was up 40% over the last year, but young shoppers say they still aren’t convinced
Social media spending was up 40% over the last year, but young shoppers say they still aren't convinced. Photo: Getty Images
  • According to PayPal, media spending was up 40% over the last year as businesses moved to meet their customers on their favoured social media platforms.
  • Unsurprisingly, Instagram was the platform of choice for more than 62% of young shoppers, but Facebook wasn’t far behind.
  • Peter Cowan, managing director at PayPal Australia, said his team is of the mind that social commerce is poised to become one of the “biggest trends we’ll see in online shopping” over the next few years.
  • Visit Business Insider Australia’s homepage for more stories.

Young Australians did 40% more of their online shopping within the walled gardens of their favoured social media platforms, but traditional websites are still their preferred checkout method.

According to new data from PayPal, in-app spending on social media platforms has surged over the last two years to an average monthly spend of $35, up 40% on the $25 seen last year, and up 700% on the monthly spend of $5 seen in 2019. 

And businesses have followed in kind. PayPal’s index suggests that while 90% of Australian businesses have some semblance of a social media presence, only 35% of them sell their goods or services via social platforms. 

Those who have made the option available to customers, meanwhile, have seen it account for up to 5% of their net revenue over the last year. 

Peter Cowan, managing director at PayPal Australia, said his team is of the mind that social commerce is poised to become one of the “biggest trends we’ll see in online shopping” over the next few years.

“Social media has become an invaluable channel for businesses to tell their brand story, showcase their latest products and services, and connect in an authentic way with their customers,” Cowan said. 

“With almost half of Australian businesses posting on social media daily, it’s a natural evolution that businesses want to offer social audiences easy and immediate paths to purchase for the products and services they are seeing on their feeds,” he said. 

Instagram, unsurprisingly, is the most popular platform for reaching the cohort who turn to social commerce at the highest rate: Gen Z. Some 62% of Gen Z shoppers said that Instagram was their go-to, in part, because it’s the only of two maturing social marketplaces available to them. 

The platform came in neck and neck with Facebook, which 61% of young Australian shoppers said was their preferred shopping channel, even as swathes of younger users move away from the platform. 

Behind the obvious leaders was Snapchat, which was the preference of 27% of shoppers surveyed, while TikTok came in at 21%, then Twitch at 16%. 

While social commerce saw a tremendous lift through the last two years, young shoppers still prefer to checkout on a traditional website after mood-boarding on a grab-bag of other platforms. 

Of those surveyed by PayPal, 40% overall said that they prefer to complete their purchases on a regular website. The sentiment held true for younger shoppers, too, with as many as 59% of Gen Z shoppers saying that websites will continue to be their preferred checkout option.

Beyond social shopping, paid subscription uptake also saw a marked lift through the pandemic, as Australians turned to newsletters and streaming services. 

More than 28% of Australians signed up for new services through the pandemic, bringing the total number of Australians with active subscriptions to 66%, with an average household spend of $62 a month. 

Paypal’s index also noted that the pandemic punctuated a consumer curiosity for subscription services that cross the streaming rubicon, like toilet paper, mindfulness software and pet supplies, which now account for 5% of all Australian subscriptions.

They’re cancelling almost as quickly as they’re signing up, though. According to PayPal, more than 55% of those surveyed said they’d pulled the plug on a recent subscription. 

The leading reason was cost, which was cited by 23% of Australians who enjoyed 14-day free product trials before cancelling. The approach was even more popular among Gen Z subscribers, of whom 43% said that they subscribe to things only to cancel once their free trials expire. 

Cowan said that while the findings suggest that businesses mightn’t be delivering on the value promises they’re making to customers, subscription models have proven fruitful for businesses forced to pivot through the pandemic. 

“Businesses were looking to adapt during the pandemic and while subscription services aren’t going to work for every business model, they can be an effective repeat revenue generator,” Cowan said. 

“Consumers, especially younger consumers, are now very open to subscriptions across a broad range of categories and they can be a great way for businesses to retain customers, ensure a recurring revenue stream, and provide a convenient and personalised service to customers.”