Article

Imagining Gen Z Social Commerce

by Ann Bordetsky, Danielle Lay and Hunter Worland

Nothing demonstrates celebrity influence on consumer commerce like the Got Milk? campaigns of the 1990s and 2000s. The original adverts featured some of the decades’ most iconic figures – like Beyonce, Britney Spears, the fictional Austin Powers – with a subtle yet memorable milk mustache.

The campaign’s triumph, from the vantage of a contemporary observer, is not just its commercial success in resuscitating stagnant milk sales, but the ability of célébrité to cast something so mundane as dairy as trendy, humourous, even cool.

Contrast Got Milk? with a culinary phenomenon from just last year. A TikTok user from Florida under the pseudonym of Chef Pii emerged from relative obscurity when she debuted a Pepto-Bismol colored condiment aptly named Pink Sauce. Chef Pii’s creation not only became a cultural event (its hashtag now represents over 500 million views), but a commercial success. Thereafter, she signed deals with Dave’s Gourmet to produce the sauce and Walmart to distribute it across thousands of its stores.

The rise of Pink Sauce would have been unfathomable only a few years ago, let alone the heyday of the Got Milk? campaign. Indeed, it demonstrates a more recent distribution of influence – or, what drives culture, aesthetic, humor, zeitgeist, style, taste, inspo – beyond celebrities and professional influencers to ordinary individuals. Accordingly, when we asked consumers of Gen Z, the generation most reflective of this movement, who has the largest influence on shaping today’s trends, everyday creators ranked first:

Survey results from everyday consumers between ages 18 – 25, where the dispersion of influence is most acute.

Of course, celebrities and professional influencers still matter (look no further than the success of Rihanna’s Fenty Beauty, MrBeast Burger, or Kylie Cosmetics), but there already exists an ecosystem of products to enable their success. Rather we believe the largest opportunity lies in unlocking the influence of the everyday user, specifically: a) connecting their influence to the marketplace and b) constructing social personas. But before exploring those opportunities, let’s further define this new class of influence.

Defining the everyday user

In today’s social media landscape, influencer is more a genus than a species. There are mega-influencers, anti-influencers, affiliate influencers, all-star influencers, micro influencers, nano influencers and so on. Everyday users, empowered by the downstream dispersion of influence, do not denote a new species of influencer below nano (say, pico-influencer?), but a different taxonomy altogether.

Users are distinguished by intention. A user’s primary purpose in posting is not to drive sales, but express themselves – such as, showing off an accomplishment, documenting an important moment in time, joking around, showcasing a new purchase, sharing a life event, celebrating an occasion, soliciting feedback, rallying friends around a cause, or basking in the victory of a sports team. This archetype produces two fundamental and distinctive characteristics that underlie the need for new tools: inconsistent virality and (if you’ll pardon the oxymoron) anti-commercial commercial behavior.

Inconsistent virality

If the celebrities of the Got Milk? campaign are stars, then users are more like Halley’s Comet. Despite the periodic appearance, they spend most of their time in obscurity. For instance, about 15% of Gen Z TikTok publishers in our survey have posted a video that broke 10,000 views. However, less than 8% average more than 10,000 views per video. Similarly, creators that have broken 100,000 views average less than 10,000 across posts. The mechanics of TikTok’s primary feed, the ‘For You page,’ only reinforce this phenomenon; unlike elder social media platforms like Facebook and Instagram, TikTok does not just feed its users content from their followers. Accordingly, a user’s followership does not guarantee a floor nor set a cap on the potential virality of a given post.

Ultimately, this inconsistent virality undermines the predominant influencer marketing model (which now represents a $21.1B market size), as their collective influence is dispersed among singular users. Those individuals independently do not sustain a large enough audience to merit a brand relationship nor can guarantee return on investment on any given post.

Anti-commercial commercial behavior

Unlike celebrities or influencers, users primarily post to express themselves not to drive sales. A user posts a fit check (or, a standard showcase of a user’s outfit, for the uninitiated) to boast a sense of style or showcase a haul from a recent spree, not to increase revenue for a multinational clothing manufacturer. A user covers a popular song on the guitar on an Instagram story to express an artistic passion, not to support a music label’s top line. Compensation might be welcomed, but it’s not the base intention. Influencer and celebrity tools, when applied to the user, have to be understood within the larger range of expressive human emotions that incentivize these posts in the first place – feelings like gratitude, passion, envy, awe, infatuation, pride, excitement, conviction, and so on – rather than profit.

We believe this trend unlocks whole new categories across the Gen Z commerce ecosystem. We’ve highlighted two of the most exciting: connecting influence to the marketplace and social profiling.

Connecting influence to the marketplace

Reconsider the aforementioned fit check, a staple of today’s social media:

These posts, in addition to similar displays for categories like homeware, travel, and food, serve as the units of influence that direct discretionary spend. They influence what clothing brands Zs prefer, where they travel, how they travel, which restaurants and bars they patronize, what items they order at those restaurants and bars, how they decorate their dorms, apartments, and houses, which books they read, and what shows they watch. It’s no wonder the hashtag #Tiktokmademebuyit represents more than 40 billion views. For celebrities and influencers, the translation of that supply to spend is typically fluid. Incentivized by bounties or equity stakes in the business, these figures simply tag, hashtag, or link their affiliates or add the product to a link-in-bio:

Everyday users however have little incentive. In fact, if those tags or links compromise self-expression, users are disincentivized. Unsurprisingly, a majority of Gen Z respondents in our poll do not link relevant brands in posts that feature their products. When we asked them all to explain why not, a nineteen year-old retail associate from Oklahoma City said it best: “I didn’t need to tag a company. I just posted because I felt cute.”

The behavior is understandable, even natural. However, it isolates user influence from the marketplace itself, creating friction for buyers. Viewers – the influenced – absorb the supply of culture, aesthetic, testimonial, taste-making, humor, zeitgeist, style, inspo without tools to convert. No corner of the social ecosystem better demonstrates that friction between influence and conversion than the comment section:

Imagining a winner in connecting influence to the marketplace

Converting the influence of Gen Z users into e-commerce sales, however, is more complex than it appears. Winners in this space will have to understand the impressionistic nature of the Z consumer. Just consider the recent trend on social media in which users compare two things that surprisingly give the same energy, like Colgate toothpaste and the name ‘Michael.’

The best platforms in this space, ironically, should be able to make similar connections for its customers as @jazzyjazzboi did between Michael and Colgate – interpreting the vibe of something and surfacing items to match it. Identifying products in a query image from a given fit check, for instance, is compelling (to some degree, large e-commerce sites like Alibaba, Pinterest, and Amazon can already do this for specific products); connecting the broader, more abstract aesthetic of a fit check with a related range of products beyond just what the user is wearing is a formidable advantage. We imagine winners will leverage both broad product indexing so that the platform can compute similarity across different ecommerce verticals (e.g., clothing and furniture) and user-specific knowledge in order to isolate relevant items (e.g., excluding children’s clothing for an adult, even if it matches the right aesthetic).

Building social personas

In 2006, two Swedish entrepreneurs launched a music streaming platform called Spotify. Its core innovation was competitive pricing and instantaneous, legal streaming. The disruptive value proposition resonated in Sweden and beyond; by 2015, the platform counted 60 million global users, including 15 million paid subscribers.

But today, for its Gen Z customers at least, Spotify is as much a price effective way to instantaneously stream music as it is a social app. Just ask Empress Qiyana.

Users on Spotify, like any social platform, construct a profile – a digital representation of the self through music. Playlists curate a distinctive vibe. Songs double as easily shareable fodder for social media stories. End-of-the-year Wrapped reviews, reminiscent of an Instagram or Snapchat story, reveal guilty pleasures, validate stan-doms, and assign music personality – a sort of Myers Briggs test of artistic taste. From a business perspective, those social profiles are inextricably tied to the marketplace itself. Although its subscription model obfuscates discrete transactions, that social activity ultimately drives customers to consume its core product – licensed music.

E-commerce is still awaiting the same development. And it’s not for lack of appeal, at least among Gen Z. Our survey respondents showed interest in knowing their social community’s trending brands or restaurants or travel spots at nearly the same rate as their top songs or musical artists:

Survey results from everyday consumers between ages 18 – 25, where the dispersion of influence is most acute.


We think unlocking the value behind that interest begins with leveraging user data and consumer behavior patterns that already exist. The constellation of apps in almost any Z smartphone stores a repository of inputs on an individual’s social commerce profile such as notes pages littered with links to e-commerce sites, a list of favorite restaurants or travel spots on Google Maps, an album of TikTok screenshots with outfits, or a wishlist bookmark folder on their browser – playlists of social commerce.

Entrepreneurs can synthesize these isolated information repositories into a coherent persona.

Survey results from everyday consumers between ages 18 – 25, where the dispersion of influence is most acute.

Imagining a winner in building social personas

Regardless of the inputs, the best companies in this category will: preserve, rather than convert, user expressiveness and enable curation.

Preservation

Pitching products is almost never cool (why else would brands pay for ads?); the best profiles will allow users to maintain whatever impresses their peers in the first place – their style, their humor, their acute observations on the surprising similarities between Colgate toothpaste and the name Michael – through the medium of consumer products like clothes, furniture, and food.

Return to the Spotify analogy. National celebrities as diverse as Emma Chamberlain or David Portnoy publish public playlists like the former’s “my dad’s kitchen” or the latter’s (hopefully tongue-in-cheek) “Rich Person on Exotic Vacation You Can’t Afford.” Users perceive these playlists as extensions of their authentic persona, rather than strategies to drive record sales for Warner or Universal Music Group. Builders in this space should strive towards the same user perception, employing creative mediums beyond static images or links of the product to maximize user expression and limiting brand interference on user incentives to preserve authenticity.

Curation

Some of the most popular playlists on Spotify among its Z users seemingly have nothing to do with music. Rather they articulate an aura, an energy, a certain vibe. Consider the names of the following top playlists: Feelin’ Myself, BBE, Beast Mode, Spilled Ink, My Life is a Movie, All the Feels, Levitate, *end credits, idk., tear drop, LOCKJAW. More indicative are user-generated playlists that specify a certain pov, like pov: you’re dying on the stair master, pov: you’re clubbing in Spain, pov: you’re warming up in the locker room with the World Cup winning Argentina team.

These aestheticized, expressive playlists – relative to simple music libraries – enable curation. Similarly, any product that constructs social commercial personas will require curatorial layers on top of commercial cataloging where users can self-represent kaleidoscopic identities and interests.

Before you go…

The two most important takeaways of our research are:

  • We believe influence is dispersing beyond celebrities and professional influencers to the everyday user – individuals like you and me

  • NEA is excited to back founders who are building utility for those users; especially in connecting their content to the marketplace and constructing social personas to unlock the next generation of social commerce

If you share our vision, let’s chat. Please reach us at: abordetsky@nea.com, dlay@nea.com, hworland@nea.com

Notes and sources

  1. We partnered with Attest to poll 200 consumers, aged 18 to 25, across the United States. Our survey ran in January 2023. To maximize data quality, Attest aggregates samples from hundreds of panels, communities, and suppliers and participating respondents received various incentives in connection with their participation.

  2. Images from the Got Milk? campaign were created by Goodby Silverstein & Partners for the California Milk Processor Board from 2000, 2006, and 1999 respectively.

  3. Fit Check images sourced from: @lukaszvikas, @giuli_romanelli, @psalmslewis, @winterooni

  4. Viewership statistics reflect NEA search as of February 2023

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About the authors

Ann Bordetsky

Ann is a Partner at NEA, where she focuses on early-stage investing in consumer technology and AI application software and marketplaces. Prior to NEA, Ann was Chief Operating Officer of Rival (acquired by Live Nation) and held business leadership roles at Uber and Twitter during their growth phase. As an operator, she has seen Silicon Valley startups through each phase of the company-building lifecycle, from first launch to IPO. Ann holds an MBA from the Stanford Graduate School of Business and a BS from UC Berkeley.
Ann is a Partner at NEA, where she focuses on early-stage investing in consumer technology and AI application software and marketplaces. Prior to NEA, Ann was Chief Operating Officer of Rival (acquired by Live Nation) and held business leadership roles at Uber and Twitter during their growth phase. As an operator, she has seen Silicon Valley startups through each phase of the company-building lifecycle, from first launch to IPO. Ann holds an MBA from the Stanford Graduate School of Business and a BS from UC Berkeley.

Danielle Lay

Danielle joined NEA in 2017. As a Partner based in New York, she is focused on consumer, social, and commerce infrastructure companies. She is an active investor and/or serves on the board of Burrow, Fizz, Goody, Patreon, and Prime, among other companies. She is also a member of NEA’s Asia investing team. Prior to joining NEA, she was an investment banker at Goldman Sachs covering fintech. She graduated from Northwestern University with a BA in economics, business institutions, and Chinese.
Danielle joined NEA in 2017. As a Partner based in New York, she is focused on consumer, social, and commerce infrastructure companies. She is an active investor and/or serves on the board of Burrow, Fizz, Goody, Patreon, and Prime, among other companies. She is also a member of NEA’s Asia investing team. Prior to joining NEA, she was an investment banker at Goldman Sachs covering fintech. She graduated from Northwestern University with a BA in economics, business institutions, and Chinese.

Hunter Worland

Hunter is focused on consumer and enterprise technology investing—working closely with companies like Kindred, Fabric8Labs, Rocket.Chat, Juvo, Stash, and LXA. Prior to joining NEA in 2021, Hunter was an Associate Consultant at Bain & Company in New York, where he worked with media, financial services, and medical technology clients. Hunter graduated from Harvard University with a degree in history and government, as well as a certificate in Latin American studies and a Hoopes Prize.
Hunter is focused on consumer and enterprise technology investing—working closely with companies like Kindred, Fabric8Labs, Rocket.Chat, Juvo, Stash, and LXA. Prior to joining NEA in 2021, Hunter was an Associate Consultant at Bain & Company in New York, where he worked with media, financial services, and medical technology clients. Hunter graduated from Harvard University with a degree in history and government, as well as a certificate in Latin American studies and a Hoopes Prize.