Social media has already revolutionised the retail industry by fuelling the rise of e-commerce and transforming consumer behaviour, but now it is ready to take one step further. Google, Facebook, Twitter and Pinterest are all set to roll out facilities for users to purchase products directly from their websites in the next 12-18 months.
A recent Citi Retail Services survey found that more than 60% of social media users were open to purchasing products directly through their social channels. This will come as no surprise to the major social networks who have, for many years, flirted with the idea of adding commerce to their ever growing list of services.
Within two years, social media platforms will be the middlemen between customers and retailers. They will be able to take orders, process payments and send details directly to the seller. But how will this affect online retailers and will it spell the end of e-commerce?
Mobile will spearhead the rise of social commerce
Social media is already a fundamental aspect of retail marketing. Many retailers use their social channels to improve customer engagement. For retailers that want to compete in the heavily saturated online market, engaging audiences via social commerce will soon become paramount to their success.
Mobile is set to have the greatest influence on social commerce. Consumers are moving beyond the traditional e-commerce experience and, according to DigitasLBi’s Connected Commerce survey, mobile has become the most popular shopping method.
Mobile commerce already drives more sales than e-commerce. Luxury fashion brand Burberry reported that sales made via mobile search surpassed those made via desktop search in 2015. The trend was largely accredited to Burberry’s efforts to improve user experience for their substantial mobile consumer base.
However, while mobile search is an undoubtedly important channel of customer engagement, today’s consumers spend 85% of time on smartphones in apps such as Facebook and other social platforms. This further emphasizes the importance of retailers developing social commerce strategies.
How should retailers tap into social commerce?
A social commerce strategy will enable retailers to reduce the amount of time they spend gathering customer insight as well as the amount of money spent on product marketing.
The first step to a successful strategy is to identify the networks your customer base engage with. This information can be attained with a simple online survey. The results of the survey can then be merged with sales data to discover which social channels have the potential to be the most profitable.
To tap into social commerce, each platform will have unique technical requirements that the retailer will need to meet. To use Facebook or Pinterest, having OpenGraph markup installed on your website will be essential. Google will require a regularly-updated live product feed, while Twitter has its own tagging system.
Social commerce will be pay-to-play, with platforms adopting a cost-per-click or commission based system. This takes the power away from the retailer and into the hands of the social networking giants. However it’s important to recognize that each network will allocate huge budgets to conversion optimization. Once this has been perfected, retailers using social commerce stand to benefit from these optimized methods of encouraging purchases.
But will people want to shop on social media?
Many analysts still doubt that social commerce will challenge e-commerce and traditional shopping methods. History fails to add any optimism – Facebook’s first venture into commerce failed miserably in 2012 when many major brands closed their “Facebook stores” within months of opening them.
Online media analyst Sucharita Mulpuru believes Pinterest and Instagram will become the most popular social commerce platforms. She does not share the same optimism about Facebook and Twitter, claiming these platforms will rely heavily on impulse purchases as they do not give users the option to explore products in the same way that Pinterest and Instagram do.
However, Mulpuru believes there will be opportunities to sell items with short shelf lives and relatively low friction on Facebook, for instance cinema tickets. She also claims the ability to target posts in Facebook’s News Feed means the introduction of a purchase button could prove more successful than Facebook’s previous ventures into commerce.
The major social channels will need to fine-tune their commerce offerings before presenting a serious challenge to e-commerce, though it will undoubtedly become more ubiquitous with time. Retailers will always need an optimized website that prioritizes user experience and engagement, but the social marketplace presents a feasible alternative to sales driven from organic search engine traffic.