Snapchat Goes All-in on E-commerce with Augmented Reality
Updated: Jul 7
Augmented reality may be taking “try before you buy” to a whole new level. AR allows apps and companies to virtually bring a version of reality onto consumers’ devices — and there’s growing interest within the social media world to start selling products in this new reality. As social media companies have matured and found their user base, they are increasingly turning to e-commerce to grow revenues.
When Snapchat released its iconic lenses almost six years ago, teens watched as they appeared on screen rosy-cheeked and vomiting rainbows, their eyes doubled in size. The interactive lenses changed as they moved their faces.
What was once a means of entertainment for teenagers might now pave the way for Snapchat's place in e-commerce.
Snapchat recently acquired fashion recommendation app Screenshop earlier in April, as reported by The Information, and sizing tech company Fit Analytics in March for an undisclosed amount. The company has slowly been inching into e-commerce over the last few years, but the back-to-back acquisitions might hint at its plans to establish growth and generate more revenue.
"Snapchat has a real opportunity ... to own more of that consumer journey," said Kristen Groh, consumer products industry lead, North America at Publicis Sapient. "They've made a move into advertising, which is a big play. But if you can take that further and actually own more of that journey all the way through to the point of purchase, you become a more valuable destination for your consumers and for your brands."
With e-commerce spending positioned to reach a trillion dollars by 2022, firms that traditionally don't sell products saw the opportunity to play a role in the consumer purchasing journey.
Throughout the pandemic social media platforms like Facebook, Instagram and TikTok have made updates that brought products directly in front of consumers, making the prospect of shopping unavoidable as they scroll.
"Everyone right now is trying to get a little piece of the pie," Groh said. Because of the pandemic, the buying journey — from browsing to purchase — happens predominantly online, causing consumers to miss out on the experiential part of shopping, she said.
Snapchat's place in e-commerce
The missing experiential component is where social platforms swooped in to fill the gap.
Instagram completely redesigned its homepage to accommodate a Shop tab last year, allowing users to explore and buy products directly on the app. Instagram and its parent company Facebook have introduced livestream shopping features to make it easier for brands and influencers to market products during streams. TikTok creators have coined the hashtag "#TikTokMadeMeBuyIt" to illustrate the app's ability to convince consumers to make impulse purchases.
The new developments and updates came fast. But it came at a prime time when consumers, especially Gen Z, spent more hours online to communicate, supplement in-person gatherings or simply to kill time.
Snapchat, on the other hand, had been partnering with brands and other AR tech companies to allow users to virtually try on products.
Last year, Snapchat showed users shoppable AR content for the first time during its try-on campaign with Gucci. The collaboration allowed Snapchat users to test the sneakers with the option to make immediate purchases using a "shop now" button.
American Eagle debuted a jeans guide in Snapchat in February, which lets users look at different bottoms through AR. Snapchat also teamed up with Perfect Corp. last year to bring AR beauty try-on to the app — allowing more than 200 beauty brands to build virtual storefronts on the platform
Planting the flag
But amid the social commerce frenzy, Snapchat was a few steps behind its competitors in keeping younger users' attention through e-commerce, said Hana Ben-Shabat, founder of Gen Z Planet, a research and advisory firm, and author of the upcoming book "Gen Z 360."
There’s a lot at stake to keep younger users engaged. Nationwide, Snapchat reaches 90% of 13 to 24-year-olds and 75% of 13 to 34-year-olds, according to Snapchat Chief Business Officer Jeremi Gorman during a July call with investors.
Piper Sandler also found that Snapchat remains to be teens' favorite social platform late last year. Second place goes to TikTok.
Social media feeds and online advertising is what drives 56% of Gen Z's impulse purchases, a recent report from Gen Z planet indicates. Apps like Instagram, Pinterest and TikTok are places where consumers go to discover new products and potentially inspire purchases.
Despite the notion that Gen Zers have less disposable income, they've grown to become an empowered group of consumers even at a young age, said Ben-Shabat. Because the younger generation grew up with the internet and mobile devices, they are far more independent and have greater influence over their household's spending compared to previous generation at their age, she said.
Unlike their older peers, the younger generation is also more open to adapting new ways to shop, experts say. Which makes Snapchat's integration of shopping and AR appear as if it's defending its "turf," Ben-Shabat said.
The younger generation is "very independent in making those purchasing decisions and that's why they're becoming a very important consumer," Ben-Shabat said. "Building a relationship with these consumers today is really about securing your consumer of the future and securing the future of your brand."