Monthly Archives: June 2015

The Role That Social Media Plays In Driving Online Retail Sales

Social media driven retail sales and referral traffic are rising at a faster pace than all other digital marketing channels.

The link between social media and retail sales

For millions of retail customers the social media has become an important part of their social lives. They use social media applications such as Facebook, Twitter, YouTube and LinkedIn to generate content by reviewing companies and criticize or recommend products or retailers.

The fast growth in the number of word of mouth content on social media has provided customers with new sources of product information.  This trend is important for online retailers because their customers trust the opinions of peers in the online communities more than retailers advertising their products.

The role of social media in online retail

Cooper Smith in The Business Insider (India) discussed a recent report by BI Intelligence. He notes the following about social media’s role in online retail:

  • Social is driving much bigger increases in retail traffic than any other online channel. Social media increased its share of e-commerce referrals nearly 200% between the first quarters of 2014 and 2015.
  • For retailers to maintain social gains, they will need to pay special attention to mobile device users. Social media users are 35% less likely to share a brand’s or retailer’s social post on a mobile device than they are on desktop computers.
  • Facebook continues to grow its lead as the dominant social commerce platform. Facebook accounts for 50% of total social referrals and 64% of total social revenue. The site’s changing demographics could make older consumers a strong target for retailers leveraging the platform.
  • Pinterest is a major social commerce player despite a relatively small user base. The pinning platform drives 16% of social revenue despite an audience 6.5 times smaller than Twitter. New buy and action buttons on retailer posts should make Pinterest an even stronger referral and revenue engine for brands.
  • Twitter is losing its influence for mass-market merchants, but it could still have a role to play among sporting and events marketers, especially for location-based promotions. Recently, NFL and NBA teams have used Twitter to sell game tickets and merchandise.
  • Instagram doesn’t drive significant sales activity for retailers but high-end companies have been leveraging the platform for branding purposes. New Buy buttons on paid posts, as well as increased targeting capabilities, could make the app a more important direct-response driver.

How should online retailers react to social media?

The social media has empowered the customers of retailers. Many retailers see this empowerment as a threat to their businesses because they lose control and negative online content about their products or brand may hurt their reputation. The traditional marketing approach is not appropriate for retailers trying to communicate with their customers in social media communities.

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