Retailers are stepping up for a share of social commerce with expertise and best practices from industry leaders and early adopters. Retailers have been given a mandate: ecommerce is a critical channel. Just consider how popular online shopping was during the 2011 holiday season, when retail e-commerce spending reached $37 billion, marking a 15% increase over the previous year and an all-time record, according to ComScore.
For the entire fourth quarter of 2011, retail ecommerce sales increased 14% from the fourth quarter of 2010, representing the fifth straight quarter of double-digit growth. Forrester predicts that 11% of all retail sales will take place online by 2015. Within this fast-growing retail channel is an equally fast-growing subset: social commerce.
Social commerce, according to IDC, is the collection of social networks, blogs, price comparison Web sites and other online social media and technologies that retailers can use to attract and influence customers, study demand patterns, improve brand reputation, provide customer support and ultimately drive sales. Social commerce’s influence is gaining traction.
Booz & Co. estimates that U.S. social commerce sales will reach $14 bil by 2015, up from $1 bil in 2011. As such, more and more retailers need to integrate social media commerce into their social media marketing efforts or risk being left behind. It is critical that retailers understand social commerce’s scope and the challenges they face in leveraging social commerce, and begin implementing tools from experts that help them more effectively execute social commerce strategies.
In a survey conducted in 2011 by Forrester for Shop.org, a division ofthe National Retail Federation focused on digital retail, 72% of retailers planned to spend more on marketing via social networks than in 2010. The findings are part of the Shop.org/Forrester researchsurvey, "The State of Retailing Online 2012.: The Social Commerce Challenges."
There are clear challenges companies must deal with as they maneuver social media. User privacy, an issue Facebook continues to work through, is a right many social media fans are loathe to compromise. But in order for retailers and others to effectively leverage social-media platforms, they need to be able to communicate directly with those social media users.
Social media experts can help maneuver these tricky waters. Another lingering concern is the reliability of online payment systems that can be leveraged within social media. Forrester reports that while Facebook credits have potential, payment systems are complex, and many retailers have yet to even adopt PayPal, which is much more mature.
With these challenges in mind, retailers should consider the many benefits of social commerce that extend beyond selling. As IDC points out, social commerce can be used to build and improve customer relationships, foster brand reputation, and provide customer support.
Specifically, it can be used to facilitate one-to-one online experiences and product recommendations from friends and associated groups. But hard-core selling practices and too much promotional messaging may turn customers away; after all, social media platforms, such as Facebook, have not yet evolved into direct shopping environments.
COMMENTARY: So what exactly is social commerce? In a blog post dated November 2, 2011, marketing expert Heidi Cohen provided a list of nineteen definitions of social commerce. Here's my favorite:
"Social commerce is the marriage between social media and e-commerce, the next evolution of online shopping where consumers fuel the purchasing funnel of your brand."
Click Image To Enlarge
So what is the problem with social commerce?
- Consumers dont trust trust social media yet. 55% of consumers are "uncomfortable" providing their credit information on social networks. In fact, the single biggest complain about social networks is lack of privacy and a suspicion that social networks are using their private information to enhance their marketing. Social media is still maturing and it takes time to build legions of loyal followers and consumer trust.
- Retailers haven't learned how to act like "people." Retailers overwhelmingly act like "stores" instead of building a personality around their brands. Social media requires personaity -- not just special offers -- to create loyal followers and build trust. They need to "humanize" their brands with a spokesperson that consumers can connect to and represent their brands, like Orvillle Ruddenbacher with the popcorn brand of the same name, The Colonel of KFC, the dinky character "Flo" for Progressive Insurance, the Gekko lizard of Gecco Insurance Group and Richard Branson of Virgin America.
- Retailers need strategies for social media. Social media should compliment existing brick-and-mortar stores rather than replacing them. Without a clear goal of how social media enhances existing online retail, retailers are left to post just about anything. Just when retailers thought they had online social networks figured out, mobile devices have become the favorite way for consumers to visit their social network. Many retailers lack mobile social media strategies to deal with these new technologies.
- Retailers fail to take into account the entire Social Commerce Ecosystem. Brands need to understand how to reach and connect with consumers where they socialize online and how consumers socialize where they shop. Social networks are not the only endgame, but just one of many destinations within the social web community.
Click Image To Enlarge
Courtesy of an article dated September 21, 2012 appearing in MediaPost Publications Online Media Daily
Comments