One of the more controversial ecommerce-related topics is the use of social networks like Facebook and Twitter to increase sales. There is ample evidence to suggest that, in spite of its popularity, social media produces a dismal return on investment. Respondents to a January 2011 Practical eCommerce survey, “Does Social Media Help Your Ecommerce Business?,” revealed that social media accounted for less than five percent of their overall sales.
Social Media Better Utilized as Referral Source
Many practitioners argue that social networks are best utilized as referral sources — versus self-contained shopped carts, where visitors complete transactions without leaving the social platform. Practical eCommerce recently addressed this issue in a webinar titled “The Great Facebook Commerce Debate.”
One presenter — Charles Nicholls, founder and chief strategy officer of SeeWhy, a conversion and abandoned-cart recovery firm — warned ecommerce merchants about relying on Facebook for a material amount of sales, either as a referral source or in a Facebook-enabled shopping cart. In Nicholls’ estimation, social commerce is still too early and not right for most ecommerce merchants.
But as early as February 2009, Practical eCommerce senior contributing editor Armando Roggio discussed benefits to using social media apart from sales in his article titled “Ecommerce Know-How: Social Media as a Marketing Tool.” In the article, Roggio stated that an “integrated social media marketing strategy can help you and your ecommerce site increase brand visibility, improve customer loyalty, and gain important insights about the markets you serve.”
Facebook Positions Itself as Social Commerce Platform
Facebook is apparently positioning itself to be a social commerce-enabled platform. The company recently created a new website, Facebook Studio, that bills itself as “a community for marketers, creatives and fans.” Its purpose is to train digital agencies on how to use the network for marketing. Topics included on the site are “Marketing with Facebook,” “Facebook Pages,” “Facebook Ads,” and “Facebook Places & Deals.”
Perhaps even more telling, Facebook recently instituted HTTPS protocols to provide greater security for its members and, perhaps, to prepare the platform to better manage sales transactions.
Facebook created opportunities for local businesses to offer special deals similar to those offered by location-based social networks such as Foursquare and Gowalla. What’s more, in April the company created its own version of group coupon deals like Groupon and LivingSocial, a product Facebook calls “Deals.”
Investment Capital Pouring In
Another signal is the amount of capital being invested into companies that specialize in social commerce.
- Milyoni, a company that provides a Facebook-enabled shopping cart, has raised $3 million in venture capital, according to the company.
- ShopIgniter, which provides services similar to Milyoni, received $8 million in a second round of funding, the company announced.
- Payvment, a company that also provides a Facebook shopping cart, last year raised $6 million in Series B funding, according to TechCrunch.
Webinar to Address How Best to Use Social Media for Ecommerce
Practical eCommerce is hosting a webinar, “How to Sell to Fans and Followers,” on Tuesday, June 7, at 3 p.m. Eastern U.S. Time to address the topic of social commerce. “How to Sell to Fans and Followers” acknowledges the fact that many, if not most, companies now participate in social media to some degree. The webinar will target those companies that wish to learn how to use social media to increase sales, but do so in a way that doesn’t alienate participants — such as Facebook Fans and Twitter followers — in the social networks.
The June 7 webinar is sponsored by Zmags, a provider of interactive, multi-platform digital publications. Taylor Duffy, senior product marketing manager at Zmags, and I will present the webinar, which covers the following topics:
- Money-Making Opportunities. The opportunity for companies to monetize social relationships;
- Selling Tools. How social media participation has evolved from a marketing tool to a selling tool;
- Social Commerce Options. What options are available to participate in social commerce; and
- Checklist for Success. How to launch your own social commerce campaign — a checklist for success.