Social commerce has been misunderstood as simply transactional — as a means of getting consumers to click and buy. But the failure of Facebook's Gift Shop proved that this was not going to be social's role in e-commerce. If social commerce is ever going to fulfill its ambitions, it must go after all parts of the consumer purchase funnel.
To that end, Pinterest is creating a model for how social media is really going to drive retail. A recent report from BI Intelligence finds that the new social commerce model will be about inspiration and discovery.
For the report, we analyzed the most recent data on social commerce 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.
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Here's how social commerce companies are really driving sales:
- It's not about click-to-buy: 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 catalog 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.
- Explains how social commerce can play a role throughout each stage of the purchase funnel
- Suggests 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
- Looks at where each of the major social networks fits into the social commerce funnel; each one has a unique role to play
- Examines Facebook's success with its ad-retargeting platform, FBX
- Provides 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 retail customer acquisition on Twitter, Facebook and more traditional digital methods such as search engines
The report also includes an exclusive collection of 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.
