The concept of “social commerce,” or the use of social media or social features to drive sales at online and offline stores, has never quite fulfilled its ambitions.
Customers referred by social networks to e-commerce sites are seeing higher “conversion rates,” meaning that it has become more likely that they will actually buy something, according to recent Monetate data. But simply going after sales doesn’t get at the real value of social networks to retailers.
Social networks are strongest as sources of retail inspiration and product discovery. Social media is where people come across new sellers and products.
In a recent report from BI Intelligence, we analysed the data and spoke to leaders in the social commerce space to understand how their companies are adding value at different stages of the retail and e-commerce “purchase funnel,” the long process that leads to a retail sale. At the bottom of this post, you can see a graphic from BI Intelligence showing what the purchase funnel really looks like.
Some of the latest trends include building social networks around e-commerce platforms, partnering with brands, and otherwise transforming social commerce’s strengths for Pinterest-style digital window-shopping. The report looks at the most important way retailers are leveraging social engagement to drive purchases.
Here’s how social commerce companies are driving sales:
- It’s not about click-to-buy: Social commerce is not simply transactional — it’s not just about offering a click-to-buy link next to an offer on Facebook. Social commerce will never be what some have wanted it to be, an “Amazon killer.”
- What will help social commerce grow as a sales driver? The key is to help connect the funnel end-to-end, or to connect different mediums — say, social media and TV — to help coax a consumer down the funnel.
- There are a few ways to encourage purchases: Retargeted advertising may be one missing link. It enables social commerce to connect the sales funnel from end-to-end by serving ads that remind users of products they have browsed across the Web but have not yet purchased. Facebook has made huge strides with its retargeted efforts.
- Also: Clever merchandising and user interfaces allow for sticky merchant-to-consumer relationships that can help nudge a consumer toward purchase over time.
- Finally, referrals shouldn’t be discounted: Another solution is for social commerce to develop as a sales referral engine, and take a cut of the sales. If social commerce sites have a large enough audience, even a low referral and conversion rate will result in a good revenue stream.
In full, the report:
- Explains how time-sensitive offers on social media can motivate users to snap out of casual browsing or social media-grazing and into a buying mood
- Includes interviews with three social commerce industry leaders
- Discusses why Twitter has a unique opportunity at the bottom of the funnel
- Looks at Pinterest’s prospects as a top-of-funnel platform
- Reveals average order values and order volume for a leading social commerce platform
- Breaks down the share of social media-generated e-commerce sales for each social network
- Looks at the demographics of social commerce consumers
- Compares Twitter, Facebook and more traditional digital methods of retail customer acquisition such as search engines