As a Direct Response Tool, Social Commerce Is Still Lacking - eMarketer
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As a Direct Response Tool, Social Commerce Is Still Lacking

But marketers are still investing in it

December 19, 2016 | Retail & Ecommerce | Social Media

A good number of retailers use social commerce—that is, ecommerce involving social media interactions for researching or buying—in some form. Even though direct sales attributable to social commerce have been lackluster, marketers are banking on future growth, according to a new eMarketer report,“US Social Commerce 2017: Influencing and Driving Sales” (eMarketer PRO customers only).

Commerce Channels Used by Retail Professionals Worldwide, July 2016 (% of respondents)

“Today social commerce is a small chunk of the total, but it’s a very, very rapidly growing chunk, and I have every confidence that it’s going to become an ever-growing part of the total business in the coming years,” said Llibert Argerich, global director of social and content at eBay.

According to a study by Yes Lifecycle Marketing and Retail TouchPoints, close to half of retail executives surveyed worldwide in July 2016 used social commerce or buy buttons—not an insignificant figure, and more than kiosks or catalogs, but nowhere close to stores, mobile methods or ecommerce sites.

US marketing professionals continue to invest in social, but much more for advertising than for commerce. In an August 2016 Hanapin Marketing survey, social advertising was named one of the most important digital marketing tactics by 46% of the agencies and 52% of the brands polled. By comparison, social commerce was named an important tactic by fewer respondents—38% of agencies and 26% of brands—but garnered somewhat better sentiment than did programmatic advertising, a surprising result in a year when programmatic was top of mind for so many marketers.

Increasingly, though, it’s tough to separate the commerce from the advertising when looking at social media marketing. “Across our organic and paid social activities we really see them as a joint effort that supports one another. ... In some ways all our social activity is social commerce,” said Jess Jacobs, director of marketing at online home goods retailer Wayfair.

Retailers’ embrace of social commerce comes despite little evidence that it accounts for much in the way of sales. According to an oft-cited October 2016 stat from Custora, among select ad formats social advertising drove just 1.5% of US ecommerce orders on its platform in 2015. Only display advertising contributed less.

Similarly, social commerce was responsible for only 2% of total revenues according to US retailers with brick-and-mortar stores surveyed by RIS News and Gartner in February 2016. The vast majority of revenues (69%) still came from physical locations.

Share of Revenues Derived from Select Sales Channels According to US Retail Executives, Feb 2016 (% of total)

Studies like the above only looked at sales directly attributable to social commerce. But social commerce has been playing a growing role in influencing ecommerce, and that influence is now more measurable than ever before. For example, Facebook discovered that just 21% of recent purchases in several automotive, electronics and fashion categories by US adults polled in August 2016 were made on the same day that users saw ads.

This November, Instagram began testing a shopping product with accessories brand Kate Spade and eyewear firm Warby Parker, among 18 others. Posts can feature up to five products with prices per image, and users who click will be shown a product page, then taken to the retailer’s site if they want to buy. The idea is to show more information about products earlier in the path to purchase, so shoppers don’t have to leave the app to search.

Get more on this topic with the full eMarketer report, “US Social Commerce 2017: Influencing and Driving Sales.”

eMarketer releases over 200 analyst reports per year, which are only available to eMarketer PRO customers.

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