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by • 24 March, 2011 • CONSUMER INSIGHT, CRITERION GLOBAL, MEDIA, REAL ESTATE, RETAIL, TRAVEL / HOSPITALITYComments (0)1458

Social Media and E-Commerce: An Elusive Bond

Social media platforms such as Facebook and Twitter strive to drive revenue, with advertising as the primary source of their profits. Oddly, despite their massive reach, with few exceptions, social media platforms have struggled to develop profitable e-commerce tools allow users to shop within these platforms over the course of the past decade and, presumably, boost their own profits by taking a cut of revenue.

In July of 2014, Facebook introduced the “Buy” button. The feature enabled users to purchase specific items shared by advertisers in targeted posts simply by clicking a button. Facebook hoped its “Buy” button would cultivate e-commerce and generate revenue. Twitter, too, tested a “Buy” button and even partnered with Amazon to launch #AmazonCart, a hashtag that allowed users to tweet items directly into their Amazon shopping carts. However both these initiatives haven’t caught on for either platform, despite their significant reach and wide recognition and appeal among brand advertisers and merchandisers. Both Facebook and Twitter are extremely viable advertising platforms, but neither has been able to achieve meaningful success with their e-commerce functions.

The link between social media and e-commerce is logical from a user perspective and more than feasible from a technical standpoint. So why have social media platforms struggled to successfully incorporate shopping features?

Perhaps it starts with user intent. People use Facebook to share photos and have lighthearted conversations with friends. Their use can be characterized as passive, and they are not particularly receptive to unsolicited sales pitches. Further, incorporating payment features on social media requires that users provide credit card numbers and other relevant payment info. Many users feel uneasy about providing their actual names and personal information, let alone their credit card numbers. While Facebook declined to reveal how many of its users have provided their payment credentials, in its annual report released in 2016, it stated that “a relatively small percentage of users have transacted” using its payment systems.

Some social media platforms have successfully implemented e-commerce strategies that have driven profit. WeChat, the dominant social media platform in China, has emerged as an e-commerce giant as well. Of its 800 million users, 300 million use its payment service—WeChat Pay—to transfer money to other users and to make payments online. According to a recent study of WeChat users conducted by Nielsen, positive user experience and tight integration with other elements of the app—including its e-commerce feature—explain the popularity and success of its e-commerce platform. Though WeChat offers many of the same features as Facebook and Twitter, such a messaging service and a news feed, it offers far more utilities than other social media platforms, including e-commerce, digital content, online-to-offline services, and finance.

Though Facebook has failed to become an e-commerce platform, it has established a crucial role in e-commerce by maintaining its status as a preeminent advertising platform. In 2015, Facebook added a “Shop” feature, which businesses can include on their Facebook pages. While this may at first appear to be another attempt to incorporate e-commerce, according Business Insider, that is not the case. Instead, Facebook hopes to more effectively utilize advertisements with the hopes of charging more money for them, focusing particularly on its mobile platform. Businesses that advertise their products on “Shop” have experienced the most success when they have featured new products and collections as opposed to inundating users with entire catalogs. Instead of trying to get users to buy directly from their News Feeds, Facebook encourages its users to click on advertisements that redirect them to businesses’ websites, where users can ultimately browse and shop.

Despite the best efforts of both social media and e-commerce platforms to effectively unite, success has been elusive. Currently, according to a study, social media represents just 1.55% of all e-commerce traffic, and conversion rates are a measly 0.71%. However, as evidenced at least in part by the success of WeChat, effectively utilizing e-commerce features on social media platforms is not a lost cause. Facebook’s user base is very large and loyal, and, while users aren’t actively making many purchases, they discuss brands and recommend products to one another.

While there are plenty of options for a retail business to market their product through social media, finding the right ways to take advantage of this new wave of e-commerce without alienating your consumer base can prove complicated. We at Criterion Global pride ourselves on the work we have done on various e-commerce campaigns for our profitable retail clients.

For more information, call us at +001 646 330 4673, or email hello@criterionglobal.com

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