• by Jack Loechner , Staff Writer @mp_research, January 15, 2014

Social commerce is becoming mainstream in e-retail, says the recently released Internet Retailer 2014 Social Media 500 report, as large and small retailers moved social media marketing up a notch on their priority lists in 2013. Whether they boosted their ad spend on social networks by 150% like Office Depot, hired their first social media director like Boot Barn, or built out a new photo studio to create eye-catching visuals like ClickToShop, online merchants increasingly view social media as a crucial part of their overall business strategies.

Consumers are spending more of their time on social networks than ever, says the report. Combined with the new social ad formats Facebook and Twitter have introduced, many of which retailers say are very effective, retailers see the results in big growth in traffic and sales that stem from social networks.

Consider these facts gleaned from the study, which ranks online merchants on the percentage of site traffic they receive from social networks, a key indicator of their effectiveness in this channel:

• Monthly referral traffic to e-commerce sites from Facebook, Twitter, Pinterest and YouTube increased 42% in 2013 to 51.5 million monthly unique visitors from 36.3 million
• Social commerce sales retailers revenue derived from those visitors, jumped nearly 63% to $2.69 billion from $1.65 billion
• Spending on social ads by 40 retailers that supplied data increased 400% from 2012 to 2013

For the most part, says the report, it’s the small merchants that operate exclusively online that dominate the top ranks of the Social Media 500. (like shoe maker BucketFeet (No. 1), which attracts 48% of its site traffic from social networks, and military gear e-retailer Ranger Up (No. 2), which gets 39%.) All top 10 merchants in the Social Media 500 brought in less than $150 million in online sales in 2012, and only one, ranked No. 6, operates a physical store.

Many of these e-retailers are relatively new to e-commerce, and don’t have the brand recognition of giant department stores that have been selling to store consumers for decades. Nor can they outspend Amazon.com Inc. on paid search, or offer free two-day shipping without going broke, says the report. The leading online retailer spent on average $3.9 million per month on paid search ads in 2012, according to search marketing firm ROI Revolution Inc..

But small merchants do know how to engage with the customers, says the report. The Top 10 e-retailers in the Social Media 500 have a 30% engagement rate on Facebook, more than 10 times the 2% engagement rate of all merchants ranked in this publication. Of the nearly 5 million Facebook fans of the Top 10 merchants, 30%, or close to 1.5 million consumers, are interacting on Facebook with the those brands weekly, sharing posts with friends, Liking a product, or leaving a comment.

Aaron Strout, managing director of online marketing firm W2O Group, suggests that the leaders in social commerce, realizing that since they can’t outspend their much larger competitors, must have great content, smart choices about where to devote resources, and be nimble.

Even the bigger store-and catalog-based merchants are making a real push to advance their social media strategy. For instance, says the report, Office Depot, the second largest online office supplies retailer in the U.S., increased its focus on social media in a big way this past year, spending 150% more on social media ads in 2013 than it did the year prior. They are experimenting with new strategies like on-site social sharing buttons, Facebook content targeted to segmented audiences, and partnerships with influential social media players who share content on the retailer’s behalf, points out Emery Skolfield, senior director of digital brand and public relations.

Similarly, business-to-business e-commerce giant W.W. Grainger Inc. increased its social traffic 158% last year and its direct social commerce sales 226%, according to Internet Retailer estimates.

For additional information about the Internet Retailer 2014 Social Media 500, please visit here.