Facebook, Instagram, Twitter, and Pinterest have all unveiled one of their latest innovations, “buy” buttons. But with the introduction of buy buttons, social networks are starting to look a little more like marketplaces than anything else.
So what does this all mean for ecommerce?
These companies aren’t the first to try and combine social networks and marketplaces into a new business model, companies such as Houzz and AngiesList aim to do exactly that. And they have been quite successful considering they’re valued at $2.3 billion and $800 million respectively.
Social media platforms have tried to introduce commerce to their users before with fairly little success, so why will this time be different?
A greater emphasis on customer experience.
Have a look at the flow from buying on Facebook and Twitter. The user taps the product they are interested in, taps again for the product page, enters their details (which may already be saved), and then confirms the purchase. Overall an easy and seamless process.
But what about retailers that want a customized yet consistent experience across all channels, even social media? Unfortunately, the buy buttons provide retailers with little control over the customer experience. Some retailers will be hesitant to accept this feature as they strive for a consistent look, flow, feel, and branding across all channels. Similarly, retailers will not have control over the payment methods offered. This will be especially surprising for returning customers that are used to your existing payment options, but also for new customers that prefer the convenience of multiple payment methods.
Another advantage of social media buy buttons is their improvement on the traditional mobile purchasing experience. A great way to improve a mobile user’s experience is by reducing the number of steps they have to take and the amount they have to type. With buy buttons, you can do exactly that. Hubspot tested the impact of mobile optimized pages and found that decreasing the number of pages and using mobile friendly forms increased the conversion rate by 27%.
As mobile commerce becomes an increasingly important channel for purchasing, an improved mobile experience may become social buy buttons’ greatest asset. Social media itself is also an important tool for product research and brand discovery. A 2014 survey of US millennials aged 21-32 found that 52% use social media to obtain information on “new products or brands that interest you” – which was actually higher than paid advertising (41%).
Reduced Website Traffic
Because customers buy directly on the social platform, they won’t have to visit the retailer’s website at any point. And this decrease in traffic can have a number of different impacts.
A fairly significant portion of ecommerce revenue comes from upselling and cross selling, and from multi-item orders. For this reason, ecommerce retailers have put considerable effort into creating websites that motivate shoppers to make larger purchases by offering pop-up promotions and minimum purchase discounts. Because social media buy buttons are for a single item, and do not require visiting the retailer’s website, there is little opportunity to encourage customers to make a larger purchase.
Reduced website traffic will also result in fewer newsletter signups, blog comments and shares, and membership sign ups. Newsletters and blogs are excellent ways to engage with customers, send them tips, and build rapport. This engagement is invaluable for developing new products, understanding how your value proposition resonates with customers, and ultimately helping to drive sales. Additionally, fewer member sign ups mean retailers will have less customer data to work with. This reduction in data means retailers will have less opportunities to build customer loyalty, fewer member referrals, and a harder time at market segmentation.
Summing up Social Marketplaces
Social media is one of the most important channels for customer engagement. But it may soon become an equally valuable channel for ecommerce.
Might we even see social-only stores? You could already build a following, segment customers, and create advertisements on social media. Now customers can make purchases.
Although there are a number of different factors to consider, if social media is highly relevant to your customer base then allowing customers to shop directly on these social networks will be especially beneficial. That is, if your customers already spend most of their time on social media, then why not meet them there?