Practical Ecommerce

Does Social Media Impact Ecommerce Sales?

Black Friday online sales hit a record of $1.2 billion, according to published reports. But only a very small percentage of those sales could be attributed to social media, says an IBM report.

In analyzing traffic and sales from nearly 800 retailers, IBM found that only 1 percent of visits to ecommerce sites came from social networks. (To be clear, IBM’s measurements consisted of sales that could be directly attributed to traffic from social media — a “last click” from the social site to an ecommerce site.)

These findings are commensurate with a 2011 survey conducted by Practical Ecommerce, which revealed that 77 percent of responding merchants saw less than 5 percent of sales coming from social media.

Social Media’s Role in Customer Purchase Journey

If social media has little bearing on direct sales, then what purpose does it serve in the overall ecommerce sales continuum?

An article from Google Think Insights points out that social media does, indeed, play a role, albeit a supplementary one.

The article outlines four different segments where marketing channels fit along the customer path to purchase: Awareness, Consideration, Intent, and Decision.

Google divides the customer purchase path into four segments.

Google divides the customer purchase path into four segments.

It refers to the first three as “Assisting” channels, which “build awareness, consideration, and intent earlier in the customer journey.” In each of the industries considered, including retail, social media functioned as a means to influence purchases rather than be directly responsible for them.

Social media assists in the purchase process.

Social media assists in the purchase process.

5 Benefits Gleaned From Social Media

Despite not being a direct sales channel, social media can support ecommerce in the following ways.

  • Promote brand awareness. One of the chief benefits social media provides is its ability to help retailers build brand awareness. A survey conducted by online marketing tools vendor Wishpond found that 89 percent of respondents said social media marketing generated more business exposure.

Due to its viral nature and ability to quickly and easily spread a message, brands that commit to regular posting of relevant content on social sites grow their base of fans and followers, and have ongoing interaction with them should, over time, expect to see an uptick in awareness.

  • Help overcome customer reluctance to purchase. While customers still express some degree of confidence in advertising messages, that pales in comparison to their reliance on word of mouth, especially when it comes from trusted sources such as family and friends.

According the most recent Nielsen Trust in Advertising report, 84 percent of those surveyed said word of mouth was the most influential factor when deciding on a purchase. Consumer opinions posted online ranked third at 68 percent.

If “trust” is a potent factor in convincing consumers to purchase a product, through its focus on building relationships and fostering interaction, social media can serve as a channel to help consumers overcome their reluctance.

  • Improve customer loyalty. In a day when customers are one click away from doing business elsewhere, the importance of increasing customer loyalty and lifetime value cannot be overstated.

By building relationships with new customers and strengthening relationships with existing ones via social networks, it stands to reason both will increase.

  • Provide marketing insights. Even retailers who choose not to pro-actively participate in social media can benefit by listening to the groundswell of opinion expressed by consumers on such sites.

If it’s true that people trust recommendations and advice from other people online, then it behooves merchants to make a practice of hearing what these folks have to say about their brand, products and services.

  • Support search engine optimization. In her Practical Ecommerce article, “SEO: 5 Reasons Not to Ignore Google+,” search marketing expert Jill Kocher cited a report from search marketing tools vendor Moz, which stated there is a correlation between higher search rankings and Google +1s.

“Though Google denies that +1s are an algorithmic factor in search rankings, some speculate that sharing content on Google+ has a causal relationship with higher Google rankings. As Google’s social network becomes more mainstream, we can expect its social signals to be incorporated into Google’s search algorithms,” said Kocher.

If that is the case, or soon will be, then social media participation merits consideration for SEO purposes alone.

Recommendations for Merchants

  • Think Social, Not Shopping. Facebook and other social networks are “social” environments where people gather to share updates about their lives and interact with friends, not as a place to shop.

Merchants can still utilize the channel, but have to think differently about their approach. The experience needs to remain social, interactive and contextual. They should balance promotional posts with those that educate, inform and entertain, and put the needs and interests of customers above their own.

  • Start with a Strategy. Merchants need to first determine the reason they want to participate in social media and what they expect the outcomes to be. Unfortunately, strategy is often usurped by tactics, leaving such outcomes uncertain.
  • Establish Measurable Objectives. Even with a strategy in place, unless there are hard numbers associated with it in the form of measurable objectives, merchants may not be aware of social media’s impact on their business.

Objectives can fall under several categories including:

  • Traffic from social media to their ecommerce site;
  • Ratio of traffic from social networks to conversions;
  • Number of fans and followers that represent their target market;
  • Ratio of social media audience growth to overall sales;
  • Ratio of social network engagement (comments, likes, shares) to sales;
  • Number of repeat sales from customers connected to their brand via social media;
  • Percentage of customer service inquires handled through social media as opposed to a traditional channels.

These represent but a few of the ways to tie social media to sales. For more insight, read the Practical Ecommerce article, “How to Measure Social Media Marketing; 3 Steps.”

Conclusion

Even though social media has not proven to be an direct sales panacea, the ability to build brand awareness, overcome reluctance, increase customer loyalty, provide marketing insights, and improve SEO makes it a worthwhile channel that merchants can use to influence purchase behavior over the long term.

Paul Chaney
Paul Chaney
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Comments ( 5 )

  1. gaurav December 5, 2013 Reply

    hi there,
    I think social media definately had a great impact on ecommerce as our society becomes more ingrained in the social media culture, consumers are starting to rely more and more on going to their friends for their online shopping advice. Using tools such as Google +1, and Facebook “likes” they are able to see products that their friends have previously purchases, and immediately find out whether or not that product was well received by them.

    • Paul Chaney December 5, 2013 Reply

      The shift toward social discovery is a significant trend that has impact on purchase decisions. Occasionally, we learn about new products that appeal to us from friends in our social graph (and it’s nice to experience such serendipity).

      Better still, however, is connecting with people who share our same interests via niche social networks (Polyvore, Kaboodle are two good examples).

      I think it comes down to a matter of intent. Networks built around the social graph (Facebook, Twitter) stand a lesser chance of influencing purchase behavior due to the fact that we’re there to socialize, not shop.

      On the other hand, niche networks, especially those focused on social commerce, include shopping as more of a core focus.

      In either case, social media can benefit merchants to a greater or lesser degree and, therefore, deserves consideration as a way to influence purchase behavior.

  2. sivaldo December 7, 2013 Reply

    hi……………
    nice article. i think social media now best ads place for ecommerce. when we go for social network we see closely. ads also important

  3. Sherika December 11, 2013 Reply

    My business is in a very small niche so we need all the help we can get to build brand awareness and get to reach our target audience. For me, I have realized that the visits that we get from social media are usually longer than all the other channels and the customers usually visit a lot more pages. The bounce rate from social media is 0%! Social media brings us the least number of visitors but when they do come they already know what to expect and they come with the intention of either buying or getting to know our store more (hopefully with the intention of purchasing in the future). These results are promising for us because as we need whatever help we can as it is not easy selling Jamaican grocery products online – http://saturdaymarkejamaica.com

  4. Johnpauull June 16, 2014 Reply

    Yes social media has greater impact on sales. It convert customers from sharing to purchasing. Moreover facebook drives 26% of referral traffic to business from Mashable.

    http://www.sitepronews.com/2014/06/10/social-commerce/

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