For too long, e-commerce has been all about how fast a customer can get in and out of a site to complete a purchase. Immediate gratification has helped turn Amazon into a retail giant. But now, companies are trying a new approach — social commerce.
Social commerce is all about inspiration and product discovery. Sites like Pinterest, Wanelo, OpenSky, and others are more like digital catalogues or virtual malls where shoppers can browse and connect with people interested in the same products and brands. But entrepreneurs and retailers are anxious to transform that interest into sales.
In a new report from BI Intelligence, we analysed the most recent 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 process. To do so they’re building social networks around e-commerce platforms, partnering with brands, or otherwise transforming social commerce’s strengths in Pinterest-style digital window-shopping into a clear value proposition.
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.” It will be about enveloping the shopper in an experience, akin to a digital catalogue or a virtual shopping mall.
- 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. The shopper may not buy the first time, but social commerce will become a valuable link in the chain.
- 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. So far, only Facebook has developed this capability.
- 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. But tracking needs to improve.
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
- Examines Facebook’s mothballing of its physical gifts program and the success of its ad-retargeting platform, FBX
- 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
The report also includes an exclusive collection of eight charts and datasets, and a full-resolution version of our social commerce sales funnel graphic. Subscribers to BI Intelligence also have full access to our ongoing coverage of social commerce, including our May 2013 Social Commerce Report.
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