Social commerce is a recent concept that is growing in significance. The notion that placing posts and advertisement on sites such as Facebook, Twitter, Instagram and Pinterest will generate lots of ecommerce sales has attracted many businesses toward the process. But it is as important to understand the way that this process works as it is to actually participate in it.
Statistics clearly indicate that but a mere fraction of the online sales generated by retailers actually emanates from a referral form on a social network. This might suggest that the so-called social commerce phenomenon is a bit of a damp squib. But nothing could be further from the truth.
Social commerce goes exponential
In fact, the volume of social commerce is growing rapidly, reaching a triple digit percentage with regard to most social media sites. While ecommerce has been hugely successful, social commerce sales in fact grew at three times the rate of overall ecommerce during the last 12 months.
With this in mind, Business Insider has recently published a report which gives strong indication of how social media is impacting retail sales throughout the purchase process. There are various ways that consumers can purchase through social media, and if businesses wish to truly understand how these work then it is necessary to analyse all of them. Whether it is directly clicking on advertisements in Facebook, or encountering a particularly interesting pin on Pinterest in order to purchase a product at a later date, there are numerous ways for companies to connect with customers on social media nowadays.
Business Insider has assessed the various metrics that underpin social commerce performance at each of the major social media platforms. This is extremely valuable as the publication has gone into great depth on critical commercial information such as conversion rates, average order value, and revenue generated by shares, likes, and tweets. Social media sites are continually discovering and developing new ways to attract commerce, and breaking down how successful each of these individual platforms is in terms of reaching customers can only be a valuable form of information for travel-related businesses.
Social shopping nears $3 billion barrier
The report underlines the fact that social commerce offers huge commercial opportunities. In fact, the top 500 retailers earned $2.69 billion from social shopping in 2013, according to the Internet Retailer’s Social Media 500. This is a vast increase in just a year, as this figure was 60 percent lower in 2012. While ecommerce continues to show healthy growth, its global market place grew by a relatively small 17 percent in 2013, underlining the exponential nature of growth in social commerce.
Social commerce is even more successful with regard to revenue generation when one looks at approaches other than traditional direct referrals. And it seems certain that this growth will accelerate and conversion rates improve in the near future given the new functionality that is now being tested by the social media giants.
As previously reported by the Digital Tourism Think Tank, both Twitter and Facebook are rolling out ‘buy buttons’, which will enable social network audiences to carry out ecommerce purchases simply by clicking on a particular tweet or post from a retailer. This feature has already become popular in Chinese social media, but now the water is being tested for this functionality in the West. Facebook began internally assessing this feature in July of this year, with its major rival Twitter following suit just two months later.
Facebook remains market leader
Although a lot of buzz surrounds Twitter as a social media platform, it has yet to really convert its user base into a commercial success story. Facebook remains the market leader for social commerce referrals and sales. And this can be partially treated to the sheer scale of its audience - with nearly 3/4 of US adult Internet users registered on Facebook - its particular approach to the marketing of social commerce has also paid dividends. After a difficult initial floatation which saw its stock price tumble, Facebook has recovered significantly and has been pretty successful in monetising its content, particularly in the mobile sphere.
The Facebook share of an ecommerce post translates to an average $3.58 in revenue from sales, according to AddShoppers, which outranks the same figure on Twitter by over 400 percent. But other social media sites should not be ignored, with competitors to Facebook gaining on specific metrics such as average order value (AOV). Polyvore scores extremely well here, achieving $66.75 AOV from social referrals, according to Shopify. This compares with $65 for Pinterest and $55 for Facebook. Pinterest is also driving social sharing of retail content, already establishing itself as the market leader in this department.
The picture painted by the Business Insider report is of a future in which social commerce is particularly significant to marketers. While it has yet to truly take off in the West, it is only just around the corner, with both Facebook and Twitter expected to launch services soon. Travel marketers should pay close attention to the development of this commercially important phenomenon.