With global online retail sales predicted to top US$1.7 trillion1 in 2015, all eyes are on social networks as they become major players in online retail.
Traditionally, online retailers have used social media to funnel consumers to their stores to make a purchase. However, according to the National Online Retailers Association's Paul Greenberg, "customers want to stay and dwell in one domain." In-app purchases are becoming more attractive.
Social media companies like Facebook and Twitter are no longer simply channels of communication between users – they are becoming online marketplaces. Facebook, Twitter, Instagram and Pinterest all have 'buy' buttons. These buttons allow customers to buy products directly from the brand's social page, meaning they never have to leave the social network throughout the entire purchase journey.
Let's look at the main players and how they're changing the nature of retail.
Although not the first network to introduce buy buttons, Facebook's behemoth user base means it holds vast potential for retailers. It has been trialling various call-to-action buy buttons since July 2014, starting with mostly small businesses in the US before gradually expanding worldwide. At present, merchants can promote posts and create ads showcasing products. Customer-wise, users can scroll through a carousel of products and select their preferred size and quantity before entering shipping and payment details to confirm their purchase.
"We're all on Facebook all the time," says Greenberg, "so why wouldn't we move towards shopping? We communicate, we share good and bad news, and shopping is a logical step.
"To make purchasing easier, Facebook recently introduced Canvas which is designed to allow people to browse products from ads within their News Feed more easily. Released on the mobile app first, Canvas allows people choose various colours and sizes – in full-screen mode – before hitting the buy button.With nearly 1.5 billion2 active users, Facebook has the potential to disrupt how eCommerce is done. Businesses may choose to use Facebook as their all-in-one online store, customer relationship manager and advertiser. That's assuming Facebook can successfully challenge established eCommerce companies like eBay, Amazon and Gumtree.
Like its parent company, Facebook, Instagram is getting into eCommerce with sponsored posts and various call-to-action buttons, including a 'Shop Now' option. With a wealth of data on user behaviour and interests, Instagram will also allow merchants to target specific consumers.
An inherently visual medium, businesses are already getting creative with their content and allowing users to interact with brands in new ways. The recent introduction of video ads is another opportunity for engaging content.
A potential weakness within Instagram is that users are primarily there for inspiration rather than browsing products to buy. However, 68% of Instagram users engage with brands regularly, compared with 32% of Facebook users3, and with over 400 million4 active users, Instagram has a lot of potential for retailers.
Introducing 'buyable Pins' in mid-2015, Pinterest's 100 million5 monthly users will be able to search, browse, customise and buy through the platform.
Although claiming to have around 60 million buyable Pins in circulation,6 this figure accounts for less than 1% of the total number of Pins on the platform. While it's mostly larger US retailers using this feature, if successful, Pinterest may spread its buyable Pins worldwide.
With its 'Buy Now' option widely available, users can now purchase and order goods simply by clicking on an activated merchant Tweet.
Previously, users would have to complete their purchase in a separate window or app. But thanks to Stripe, merchants can process payments within apps like Twitter, so the user never has to leave the platform. New Twitter partners Bigcommerce, Demandware and Shopify also allow this function.
Although still in its infancy, social retail holds a lot of potential. While there's a lot more to it than simply changing your brand's settings on Facebook, it's certainly worth exploring.
Merchants who use Shopify were the first to try buy buttons on Facebook, Pinterest and Instagram,7 and with more sites like Google delving further into the retail space, social retail is definitely on the rise.
Finding the right network or networks to focus on will depend on your ability to adequately manage the channel (i.e. responding to customer feedback and providing regular updates). It also depends on what data you want to leverage.
"With the most significant insights, Facebook and Instagram allow retailers to take re-marketing and re-targeting to the next level," Greenberg says.
However, there are still a few hurdles that social media has to overcome. A recent study showed just 5% of consumers trusted Facebook and Pinterest to process payments, compared to 50% for Amazon.8 This wariness highlights how privacy and security remain key concerns for networks to address with their users.
Ultimately, social shopping allows consumers to shop in a familiar and comfortable environment. Compared with browsing on a brand's main website, social network pages offer relatively neutral territory. The challenge for brands is to ensure the experience is authentic, and to ensure the purchase journey is simple."It's all about the easiest path to purchase," Greenberg concludes.
These StarTrack services might also interest you.
Tell us what you’re after and we’ll deliver the best solution.