Social commerce is still a nascent market and with that, comes confusion about what it is and even questions of its value for retailers and consumers alike. Off-site social is comprised of Facebook brand pages, Twitter and plugins or platforms that allow people to shop where they socialize. On-site social is made up of plugins or platforms that live within an e-commerce site with the intention of helping people socialize where they shop. On-site social has proven to be much more valuable than off-site social because people have become resistant to shopping where they socialize with their friends online.
According to industry analyst Neha Khera, the social commerce market is expected to grow from about $1 billion to $15 billion by 2015. This is likely due to the rapid proliferation of on-site social commerce. Why is social commerce expected to increase in value at such a rapid pace in the next few years?
Retailers currently face skyrocketing customer acquisition costs through the increasingly competitive usage of online marketing channels such as Google AdWords and Facebook advertising. Retailers who have embraced social commerce have been able to drive sales and conversions while investing a fraction of the money they used to invest in traditional online marketing channels. By embracing social commerce, retailers create a more informative and personalized shopping experience for its visitors. They give themselves the opportunity to include their products and brand into all the conversations that occur on social networks such as Facebook and Twitter. However, the most valuable thing that on-site social commerce can give to online retailers is the opportunity to understand their visitors better than they ever did before through the collection of social data when consumers start engaging on-site social tools when they shop.
For consumers, on-site social commerce also presents a compelling value proposition. Consumers increasingly look to the recommendations and opinions of friends and family when making purchase decisions. Since a large majority of online consumers are on social media (73% of all online shoppers are on Facebook), onsite social features such as refer-a-friend programs, social tagging, and social sharing tools allows them to more easily engage with their social network while shopping. With social commerce, consumers enjoy a more informative and personalized shopping experience. They can access and get the information they need from friends and family in order to make purchase decisions without ever leaving the site they are shopping on. They are also able to shop in a new and interesting ways by participating social loyalty programs. In addition to a better shopping experience, online consumers also enjoy tangible benefits in the form digital coupons.
Although social commerce will continue to grow and evolve, it has become clear that on-site, social commerce is extremely valuable for for both retailers and consumers alike.