How Social Media is Changing Online Shopping for Small Businesses

Back in the 90s, online shopping used to be a side avenue for selling products from brick-and-mortar stores. But a few decades of marketing, social media use and a worldwide pandemic have pushed small business ecommerce to the retail forefront. As more retailers have adopted online stores and startups increasingly prefer an online-only model, people have less incentive to leave the comfort of their couches.

Based on U.S. Census Bureau 2024 data, ecommerce now makes up around $7.2 trillion in sales each year. What’s more, online sales accounted for 16.2 percent of total sales in Q3 2024, rising 7.4 percent from 2023.

The rise in online sales allows businesses to make sales with minimal overhead. But this shift in focus now makes online spaces like social media prime spots for getting customers’ attention. According to a recent Bankrate Social Media Survey, 48 percent of users have made impulse purchases based on something they’ve seen on social media.

Now more than ever, the survival of a small business depends on leveraging digital marketing, ecommerce and social media. Let’s dive into the impact of social media and how to use social media for small business successfully.

The impact of social media on small businesses

Traditionally, small business marketing would involve investing money in formal advertising to take their business to the next level and reach more customers. Instead, now small businesses can prioritize both traditional and social media advertising with targeted campaigns.

According to Statista, social commerce is expected to make up 20 percent of total ecommerce in 2025. Social commerce could bring in an estimated $1.5 billion this year, states a social commerce report by Grand View Research. This form of ecommerce is expected to grow with a compound annual growth rate of 31.6 percent from 2024 to 2030.

Of the platforms, 25 percent of marketers said that YouTube had the highest return on investment, according to the Hubspot 2024 Social Trends Report. Facebook (22 percent), Instagram (21 percent) and Tik Tok (14 percent) were also said to have high ROIs according to social media marketers.

If you’re wondering whether to jump in on social media marketing, now is the time to get in while it’s still gaining ground.

Small businesses focus on digital and social media marketing

Businesses have been spending more on digital marketing in the past year. According to The CMO Survey, businesses spent a total of 11.1 percent of their budgets on digital marketing, up 3 percent from one year ago. Businesses are estimated to continue growing their digital marketing spend to 12.7 percent within the year.

Similarly, businesses spent 12.1 percent of their total budgets on social media and expect to spend 14.2 percent in the next year and 19.1 percent within five years.

Yet despite the importance of marketing, businesses have been decreasing their marketing budgets over the past few years (though still spending more on marketing). In the fall 2024, businesses allotted 10.1 percent of their budgets for marketing, significantly down from 13.8 percent in 2022.

Forty-six percent of company executives are more likely to cut marketing from their budgets when facing slow revenue growth, rather than using marketing to grow. These trends may reflect pressures put on companies by inflation. Still, businesses are spending on digital marketing with no wind of change in sight.

As part of digital marketing efforts, social media platforms have changed the marketing game in a number of ways, including:

• Providing low-cost marketing. Small businesses can market themselves almost for free with time and sweat equity. Those are sacrifices many small business owners are familiar with making to help their businesses succeed.
• Increasing brand awareness. Small businesses can generate marketing buzz about their brand to a broader reach of customers. This way, they can reach more of their audience than they could by drawing customers in through local or traditional advertising.
• Understanding pain points. Social media connects you directly to your customers so that you can listen to their problems and concerns with your products and services. These give you the ability to change products to serve their needs directly as they interact with your business’s account.
• Drive traffic and sales to your business. Your business can use its social media account to advertise new products and services with more success because followers already engage with your brand.

Influence of social media on consumer behavior

Roughly 64 percent of the world’s population keeps social media accounts, according to DataReportal’s latest social media use report. The top social media platforms include Facebook, YouTube, WhatsApp, Instagram and TikTok.

The report also shows that users scroll social platforms an average of two hours and 19 minutes per day, making social media a prime spot for small businesses to reach customers.

According to HubSpot’s 2024 U.S. Consumer Trends Report, Gen Z, Millennials and Gen X prefer to use social media as their number one platform to discover new products. One in 4 social media users have actually bought products from social media in the past three months. Here’s how social media can affect consumer behavior.

Social proof

One of the main reasons consumers use social media is to see what other people think of businesses. From likes and shares to online reviews and influencers, social proof shows consumers whether a product or service is worth their money.

Influencers and online reviews are two of the more popular forms of social proof. A report from Matter shows that 69 percent of people trust recommendations from friends, family or social media influencers above brand marketing. Eighty-one percent either purchased, researched or thought about purchasing the product after these groups posted it online.

BrightlLocal’s local consumer survey shows that local reviews influence 91 percent of people’s perceptions about a business. Thirty-six percent of people surveyed used two sites when researching online reviews, and 25 percent used three sites. Some of the most used social media sites for business reviews are Facebook, Yelp, Instagram and YouTube.

A survey by Power Reviews shows that nearly 61 percent of people always read reviews before purchasing a product. Forty-three percent of consumers believe a business’s products should have more than 100 reviews. It also showed that 64 percent of surveyed participants are more likely to buy a product with over 1,000 reviews compared to just 100. And 54 percent are likely to buy a product with over 10,000 reviews compared to if it only had 1,000.

Outside of reviews, Americans are also using social media for financial advice, according to Bankrate’s Financial Advice Survey. Of all U.S. adults who sought out financial advice in 2023, 30 percent got it from social media.

Customer service

Brands can use social media for business to provide customer service — in fact, consumers expect it. According to the 2025 Sprout Social Index™, 76 percent of consumers say that they will buy from a competitor if brands don’t respond to them on social media. Nearly three-quarters expect brands to respond within 24 hours, making social media an important, and fast, connection point for brands to consumers.

Some brands keep customer service agents solely for the purpose of answering customer questions and feedback on social media. Dedicated social media representatives help customers get questions answered in real time.

E-commerce

Users don’t just scroll social media — they buy from it, too. According to Curalate’s Consumer Survey, 76 percent of social media users bought from a brand’s social media post. Eleven percent bought from the post immediately, 44 percent bought later online and 21 percent bought later from a store.

Social media also inspires people to make impulse purchases. According to Bankrate’s data, these social media impulse buys cost people an average of $754 per year. And 57 percent of social media users who made an impulse purchase in the past year say they regret at least one of those purchases.

As a small business utilizing ecommerce, the main goal is to create and promote products that will truly help your customers at a price that won’t wreck their finances.

“A social commerce strategy is a great way to extend your small business’s reach well beyond your local community. Engaging with influencers and tapping into physical and digital events are some of the ways that small business owners can capitalize upon these trends.“

— Ted Rossman
Bankrate Senior Industry Analyst

Leveraging social media for small business success

A social media marketing strategy will be a constantly evolving process. But if you use it the right way, social media can help your business stay in tune with your customers and deliver sales and products directly to their digital doorsteps.

Ways that you can leverage social media:

• Create posts that serve your customers first. Customers can see through sales tactics and want to know that your business and product puts the customer first. Crafting social media posts that relieve your audience’s pain points and genuinely meet their needs may resonate better — and build a more long-lasting brand — than a continuous stream of sales.
• Stay engaged with your customers. Customers value original content and direct engagement with businesses. So post new, relevant content for your customers, ask for feedback and respond quickly to issues.
• Work with social media influencers. Social media users trust what products are recommended by their favorite influencers. Influencers may recommend products voluntarily or as part of a paid strategy with businesses. Work to ensure that they give an honest review of your products, which will build trust with viewers about your brand.
• Showcase high-quality products. Use social media to present high-quality products and services that your business offers. You want to put your best foot forward to prevent customers from wanting to return items after buying your products from social media.

Challenges and considerations for small businesses using social media

Social media isn’t always a winning strategy for every business, so you’ll want to consider the downsides of investing in social media marketing. Those include:

Social media can be time-consuming

You’ll need to consistently create social media posts and stay engaged with your customers. To do so efficiently, you may want to create a workflow, such as writing content in batches to reduce the time spent on them. If you don’t have the time, you’ll have to hire someone to help manage your social media strategy. So, you’ll want to determine if the opportunity cost of social media is greater than the effort you’ll put in.

You’ll need to gain customer’s trust

Customers won’t revere your small brand the same way they do a household name for a product or store franchise. You can build trust by incorporating business practices like quick responses to comments, product quality control or a customer-first return policy that sow seeds of trust.

You may need a plan for your business if you go viral

You might want to think about what to do if your business suddenly goes viral. This is a common scenario that’s played out, especially for TikTok Shop, where sellers commonly run out of inventory when users discover and share their products. Do you make custom or handmade products or keep limited stock? Going viral could mean an influx of orders that your small business may not be able to handle with its usual resources.

But you might be able to remedy the problem until your sales settle into a new normal. You could look into getting a working capital loan to cover inventory and product costs for the short-term. You could also quickly hire new employees or extend your shipping dates so that customers expect a longer timeline when buying from your business.

Bottom line

The rise in online shopping and social media use can work together to bring awareness to a small business. Social media can help potential customers find a small business and engage with that brand until they’re ready to make a purchase.

Regular engagement and connection to your brand can go a long way in any small business’s social media strategy. To boost your strategy, you could consider using different business loans like a term loan or line of credit to increase capital going toward your social media marketing. Along with utilizing business funding, small businesses should stay aware of customers’ pain points and challenges to bring them products that truly serve their needs.