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Social Commerce Might Not Be the Marketing Tool It Was Expected to Be

While everyone has been raving about the marketing wonders of social commerce, a recent Ecommerce Quarterly report by Monetate reveals the effects might not be worth the hype.

Only 1.55 percent of all e-commerce traffic was a result of social media and only .71 percent of those visitors actually purchased something. By comparison, email marketing has been fairly effective. Producing quadruple the conversion rate to sales and double the traffic of social media.

The expected success of social commerce was based on the power of word-of-mouth. People tend to trust their friends recommendations and the ease of sharing those opinions on Facebook should have resulted in major revenue for companies. So, why hasn’t it worked?

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Monetate’s report explains: “The challenge for social media — and for its big brother, word of mouth marketing — is that they are inherently additive pieces of the conversion funnel, rather than causative.”

A bigger problem, the report found, is that companies don’t know how to properly use social media. Much like real relationships, customers are more likely to be loyal to a company they can trust and feel like they connect to. Businesses need to socialize with their audience, Mitch Joel, a contributor to the report, said.

For merchants that take the time to build relationships with customers, they can see big results. For example, social referrals from Pinterest typically average sale totals of more than $80. The average sits close to $70 for Facebook and Twitter.

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Source: Venture Beat

Photo Source: Charts, social commerce

DDM Admin

Daily Deal Media covers the growing power of social buying generally called “Daily Deals”. With the explosion of companies like groupon, livingsocial and many others, the way consumers purchase online may have been altered forever. Which companies will emerge as front runners in this space, and who are some of the executives behind them? Which investors stand to gain the most, and which companies have they backed? Daily Deal Media helps you keep up with this fast pace industry, and provides valuable insight, resources, industry reports, forums and more.
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