Will Social Media Shopping Be The Next Big Thing?

by Jetlore

Historically, social media has never been a major player for online retailers with an average conversion rate far below the rest of the marketing channels. Social, by and large, has been a means to gain brand awareness and to manage a company’s online reputation rather than the means of converting online shoppers. In an effort to enhance the value of social media, both Twitter and Facebook are rolling out upgrades that would allow purchases directly on their respective platforms. Both Twitter and Facebook are promoting this as a means to vastly reduce the time and steps necessary to go from consumer interest to purchase. So what does this mean for online retailers and what are the consequences for more traditional marketing channels like email campaigns?

How will social shopping work?

As we see in the video, the overall process is extremely simple. In the case of Twitter, you simply add your shopping info (credit card, address, etc) to your profile. On the other end, participating retailer (currently including Home Depot and Burberry as part of their testing phase) will promote items, discounts and some exclusives on their Twitter feed. Then according to Twitter, “After tapping the “Buy” button, you will get additional product details and be prompted to enter your shipping and payment information. Once that’s entered and confirmed, your order information is sent to the merchant for delivery.”

In theory, rollout of social shopping experience like Twitter’s should be good news for online retailers. Shopping cart abandonment would be virtually non-existent as there is technically no cart to abandon. Effectively, Twitter’s goal is to come as close to a 1-click purchase as possible.

Where social shopping can fail

While the idea of social shopping may sound great, there are clearly challenges that social media would have to surmount in order to be a viable eCommerce channel, especially when compared to other channels like email.

1) Product research: One of the greatest advantages of shopping online is the ability to research and compare products. Whether through online reviews, comparison shopping, or, standard recommendations (e.g., customers who bought this product also bought these other products), modern eCommerce experience provides many options to research and compare products before consumers make a decision to purchase something.

While social shopping creates an opportunity to capitalize on impulse purchases, savvier shoppers will still want to research products and deals before they commit to buy them. Unless it’s a retargeting ad for one of the products consumers have browsed and researched before, it would be foolish to expect many consumers to buy a product on a whim after discovering it in their timeline.

2) Lack of personalization: One of the main reasons why email has the highest conversion rate and the highest ROI is its one-on-one nature and ability to personalize email based on the user behavior and purchase history. By using a number of data points, algorithmic merchandising enables retailers to target consumers with relevant set of products personalized to their online behavior and optimized in real-time based on live inventory performance. As mentioned earlier and looking a bit far ahead, the best personalization opportunity for social shopping down the road would be retargeting, i.e. displaying a product users have previously browsed (assuming the tracking technology gets enabled for the “buy” button on social media). As enticing as it sounds, it is still far less sophisticated and flexible than what algorithmic merchandising can currently achieve in email.

3) Visibility: A marketing campaign is only effective if it can be seen by the target audience. Email campaigns work in part because an email inbox is asynchronous (email can be received at a different time from when it is sent) and is relatively slow moving, when compared to a Facebook or Twitter timeline. More importantly, email has a high degree of deliverability and visibility to the end consumer: consumers are likely to at least see the subject line and old email can be easily searched and archived. Unlike email, social media is rapidly moving with no guarantees about the visibility of your messages and practically non-existent search/archiving mechanism. A social shopping campaign would require far more impressions in order to be visible and effective to the audience: many potential consumers may miss your campaign completely, while others may see it multiple times. Meanwhile, as we have learned from email marketing, high frequency is often negatively correlated with campaign’s engagement metrics.

What does it all mean?

By combining retargeted product ads with streamlined checkout process, “buy” button on social media seems like a great enhancement to the current social media ad experience, highly dominated by retargeting ads. However, we don’t see social media “buy” button becoming a viable means to shop online. Established channels like email marketing and search will continue to dominate the marketing world of online commerce as they provide more flexibility to the retailers and higher degree of personalization and convenience to the end users.

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