Companies: Prepare To Share $14 Bil In Social Commerce
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 onlineby 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.