Social commerce has moved at a snail’s pace, causing retailers to question if various social media platforms are worth investing in.
Social media still only accounts fo 2.7% of online and mobile traffic to commerce sites, and just 1% of orders, according to the Demandware’s Q2 2016 Shopping Index. However, there are signs that Pinterest could help drive up social commerce as the platform gains momentum.
- User milestone: Pinterest recently passed 150 million monthly active users (MAUs), up 50% year-over-year (YoY). The company first shared its size in September 2015, when it reached 100 million MAUs.
- International expansion: More than half (80 million) of Pinterest’s users are outside of the US, along with 75% of new signups.
- Attracting a broader user base: Although 70% of active US users are women, men now make up 40% of signups, and this user demographic is growing at a 70% annual clip. Diversifying beyond its core demographic of female users will be important in attracting a broader range of advertisers and retailers.
This positions Pinterest to excel as a commerce platform.
Retail partners: There are more than a million businesses on the platform, and it features more than 10 million buyable products, with tens of thousands of advertisers.
- Driving traffic to retail sites: Pinterest represents 17% of social traffic to commerce sites, compared with just 5% for Twitter, according to L2.
- Promoting relevant content: Almost 75% of Pinterest users have bought something they saw on the platform. Although this doesn’t mean the consumer bought the item directly through Pinterest, it shows that the platform is serving up content that could inspire purchases.
If Pinterest captures further user growth and diversifies its customer base, more large retailers could collaborate with the platform. Target, for example, advertises on Pinterest because the site’s users tend to exhibit greater intent to buy than those on other social platforms. If Pinterest can draw in a wider audience and continue inspiring retail purchases, the platform will become more attractive to large retailers that sell products to the general public. This could eventually spur a virtuous cycle in which users engage further with retailers on Pinterest, encouraging more merchants to partner with the platform, which ultimately could generate more users.
BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on social media’s role in online retail. The report analyzes whether social media is driving direct sales with the use of embedded “Buy” buttons on social media posts, or referring traffic to retailers’ websites and apps. It measures the impact social media has on e-commerce by looking at metrics such as conversion rates, average order value, and revenue generated by shares, likes, and tweets. It also outlines the latest commerce efforts by leading social networks.
Here are some of the key points from the report:
- Social is driving much bigger increases in retail traffic than any other online channel. Social media increased its share of e-commerce referrals nearly 200% between the first quarters of 2014 and 2015.
- For retailers to maintain these social gains, they will need to pay special attention to mobile, where social engagement with retail content is still limited. Social media users are 35% less likely to share a brand’s or retailer’s social post on mobile than they are on desktop computers.
- Facebook continues to grow its lead as the dominant social commerce platform. Facebook accounts for 50% of total social referrals and 64% of total social revenue. The site’s changing demographics could make older consumers a strong target for retailers leveraging the platform.
- Pinterest is a major social commerce player despite a relatively small user base. The pinning platform drives 16% of social revenue despite an audience 6.5 times smaller than Twitter. New buy and action buttons on retailer posts should make Pinterest an even stronger referral and revenue engine for brands.
- Twitter is losing its influence for mass-market merchants, but it could still have a role to play among sporting and events marketers, especially for location-based promotions. Recently, NFL and NBA teams have used Twitter to sell game tickets and merchandise.
- Instagram doesn’t drive significant sales activity for retailers but high-end companies have been leveraging the platform for branding purposes. New Buy buttons on paid posts, as well as increased targeting capabilities, could make the app a more important direct-response driver.
In full, the report:
- Sizes social media’s role for retailers compared to other referral sources such as search and email.
- Examines how social media’s transition to mobile is impacting the role of different social platforms.
- Looks at how the different social networks stack up in terms of conversion rates, share of social-generated retail sales, and average order value.
- Highlights up-and-coming social commerce players such as Snapchat and Instagram, and how brands are using them for influencer marketing.
- Outlines the latest major commerce moves by Facebook and Twitter, which could help drive up conversion rates from social.
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