by Lauren Proctor on November 15, 2011
If it’s true that people spend money where they also spend time, it’s time to get serious about social commerce. Today the Internet boasts 200 million global consumers accounting for $8 trillion dollars in global annual revenue. This represents 21 percent of GDP growth in the world’s largest economies over the past five years, meaning that if the Internet were an economy, it would have a greater weight on GDP than agriculture or utilities.
Consumers have opened their wallets to the worldwide “e-conomy,” but as blogs and social networks account for 23 percent of all time spent online, it’s only natural to expect that the transactional spaces of the Internet will follow the attention of the consumer. This opens up significant opportunities in social commerce, but analysts predict brands have barely begun to scratch the surface.
According to Booz Allen, social shopping will grow 500% over the next four years, accounting for $30 billion of spending by 2015. Brands like Gilt, 7 For All Mankind, and Threadless have already started experimenting with Facebook commerce, producing some early stage results worth paying attention to.
Social commerce company Moontoast reports that brands experience an average of a 68 percent lift in community growth after social commerce is introduced. Bringing the point of sale to Facebook walls and newsfeeds has proven an effective engine for community growth, but according to the company, social networkers are also solid shoppers. According to the brand, 47 percent of active social media users are more likely to be heavy spenders on shoes, clothing and accessories.
What’s more is that consumers are ready to buy those things on Facebook. Moontoast has seen impression-to-order percentages between 3.4 and 9.4 percent, meaning social commerce has a higher conversion rate than the eCommerce average. Whether this is the result of novelty or the rise of an entirely new shopping experience, it’s time to start taking notes on social commerce.
Only Fools Rush In
Despite the temptation to rush at conversion rates exceeding the 2.9 percent eCommerce average, social selling isn’t a perfect match for every brand. Facebook commerce would scream strategic misfit in a community ethos where commercial transactions are outside of the scope of conversation, but for brands like Burberry, Best Buy or Nike, fCommerce is a revenue driver with a true innovation halo.