How Social Media Became a Marketplace
Melanie Chang
Not long ago, opening Instagram meant swiping through pictures of your friends. Today, it could end with buying a new shirt, tipping a creator during a livestream, or purchasing something from someone you’ve never met. Social media started out as a place where people could connect and share ideas. But now, it has evolved far beyond that with features like TikTok Shop, Instagram Shopping, and Facebook Shops, where users never have to leave the application. By introducing in-app purchasing, social media has become a marketplace that has reshaped the global economy.
The revolution of this social commerce actually began with WeChat, a Chinese social app. By allowing third-party businesses to build up inside the platform, users could buy clothes, book flights, and order food all within the app (Rodenbaugh). Following its success, in-app purchasing spread to Western Social Media, where the most prominent of these platforms as we know today—such as TikTok Shop, Pinterest, Instagram, and Facebook—were born. Since then, social media has become a source of not just entertainment, but advertising, shopping, customer service, and entrepreneurship all in one place. New opportunities continue to arise as Gen Z and society become more heavily dependent on these social apps. What do these shifting times mean for the economy, and how does it affect consumer behavior?
The Effect on the Economy
The rise of social media and in-app social commerce changes how money moves, who gets paid, and how products are made. The retail economy has completely shifted from searching for the desired product to discovering something you never knew existed and purchasing it. Traditional retail commerce evolved to include e-commerce, which then evolved to include social commerce. All of a sudden, small brands could now market and sell their goods to consumers worldwide alongside major brands, and the reach that each brand had was now tenfold what it previously was, with advertisements switching to individual creators and the implementation of paid promotions and algorithms ("Fall of Traditional"). In fact, based on a survey of 12,866 US consumers held in August 2022, “Gen Z’ers are the generation most likely to indicate a paid promotion will increase their likelihood of clicking through…” ("From Discovery"). Coincidentally, Gen Z is the generation that relies most heavily on social media.
Additionally, other tactics like contests, giveaways, or influencer marketing have become much more prominent in recent years. These strategies hyper-accelerate consumer spending, creating massive overnight spikes in economic demand. They dramatically increase the velocity of money, shifting how money flows through the modern economy. Especially because algorithms like TikTok pay creators to post, content creation has turned into a major industry.
The Effect on Consumer Behavior
With the elimination of “buying friction”, overspending is incredibly easy in this new era. Stored mobile wallets like Apple Pay or in-app checkout data make checking out a
2-step process that bypasses any hesitation when buying (Lerena). At the same time, there is now a blur between entertainment and commercials. Whereas before, people would skip advertisements because they were annoying, on social platforms, the advertisement is the entertainment. Users will willingly watch 10-minute product reviews, livestream auctions, or funny skits, completely blending media and shopping.
Furthermore, social algorithms personally curate feeds to each individual user based on watch time, comments, likes, location, etc. They present to you the exact products you are most psychologically vulnerable to get ("Why the Psychology"). This increases the likelihood of purchasing at that very moment exponentially, especially when influencers and people you trust are seen with that product. With influencers and social media trends, people are much more prone to impulse buying and exiting the app with an unplanned purchase just because they see their favorite creator with it. This creates a rise of FOMO (Fear Of Missing Out) and the micro-trend epidemic, which social media fosters with regular users posting thousands of videos showcasing a singular product.
Whether it’s a specific water bottle, skincare serum, or clothing item, it creates the illusion of necessity. Because trends can change on a dime, companies have evolved to adapt instantly as well, ready for if a certain video goes viral, or the internet randomly decides to move on to the next aesthetic. FOMO and the desire to fit in cause a cycle of consuming and disposing cheap products rapidly, accumulating clutter and leading to a lot of excess waste. Trends create urgency by touching upon the human drive for participation, and brands that amplify this with limited-edition stock or exclusive access help harness motivations like FOMO (Vishnu M). In this way, social commerce taps into the emotional and psychological aspects of consuming.
Conclusion
All of these consequences on consumer behavior and the economy were in response to the ever-evolving social media. As we move towards an economy that relies more on
social media, we move towards an economy where attention is the currency; the longer a platform can keep users scrolling, the more control they have over where consumer dollars are spent. Whenever an influencer convinces you to buy something, just remember that you’re participating in the fastest-growing marketplace in the world.
Works Cited
"The Fall of Traditional Commerce." Liquid Web, Nexcess, www.liquidweb.com/white-papers/fall-of-traditional-commerce/
"From Discovery to Purchase: Key Digital & Physical Influences on the Customer Journey." Power Reviews by Syndigo, Power Review www.powerreviews.com/key-digital-physical-influences-customer-journey/.
Lerena, Pierre. "How digital trends influence consumer purchasing decisions." LinkedIn, 2 Mar. 2023
www.linkedin.com/pulse/how-digital-trends-influence-consumer-purchasing-decisions-lerena.
M, Vishnu. "How Social Media Influences Consumer Purchasing Decisions." TechWyse, TechWyse Internet Marketing, 26 Feb. 2024, www.techwyse.com/blog/social-media-marketing/how-social-media-influences-consumer-purchasing-decisions
Rodenbaugh, Ryan. "WeChat (Part 1/2): A Not So Brief History." East Meets West, Substack, 19 July 2020, eastmeetswest.substack.com/p/wechat-a-not-so-brief-history. Accessed 11 July 2026.
"Why the Psychology of Impulse is the Secret Weapon in User Acquisition." Appnext, 15 Sept. 2025, blog.appnext.com/user-acquisition-impulse-buys-app-marketing/.
