Social Commerce for Retailers: Helpful or Hindrance?

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Following Facebook’s lead, Twitter joined the instant gratification bandwagon and announced its own “Buy Now” button.

Social media drives commerce, but brands struggle to tie that connection back to brick-and-mortar stores. Earlier this year, Amazon took a major step toward monetizing it’s social following with #amazoncart. Target and Nordstrom followed suit with Like2Buy, a platform facilitating purchases from Instagram photos. However, both of these solutions, simply link out from social content to a shopping cart on the retailer’s own site.

While innovative, these solutions take a user away from the social experience to complete the sale. In today’s attention-deficient world, time-on-site means almost everything. A Twitter user who leaves to buy something likely won’t come back for a while, checking Pinterest, Instagram, SnapChat and Facebook first. In-network purchases not only provide an additional revenue stream, but more importantly increases the potential loyalty of Twitter’s user-base.

The nature of loyalty will figure prominently in this new commerce model. One hundred and forty characters don’t give a brand much room to sell a product. Even with the subsequent purchase transaction screen, Twitter will rely as much on a user’s brand loyalty to sell an item as on the item’s features.

This model will work well for impulse shoppers, likely providing a spike in the sales of impulsive products like trendy clothing and entertainment opportunities. Twitter as much as admitted this in the initial brands it selected for the Buy Now test. Only one retailer (Home Depot) stands among musicians (Pharrell, Paramore) and charities (DonorsChoose, RED).

Traditional household goods may not play as well in this model. Discounts or special pricing on hand soap or spaghetti sauce likely won’t inspire purchases on Twitter the same way they would on Amazon.com or Walmart.com where people are already shopping for these types of items to fill a grocery basket.

As brands and social platforms partner to better understand a user’s purchasing patterns, we’ll start to see smart offers appear tailored to individual needs. Imagine a woman who bought Revlon makeup last month, but recently started liking and retweeting content from Rimmel London. Revlon could place a tweet in her stream with a specific offer to incentivize a purchase before she tries a competing product.

Twitter will see brands try out this new technology more quickly than retailers. Native buying functionality gives major brands another place to sell their goods while Twitter-with-a-cash-register could easily become just another competitor for retailers facing competition in an already crowded industry.

Retailers will have to determine their place in this brave new world of social commerce. Much as mobile search has begun to displace desktop search, social commerce may eventually eclipse web or app-based commerce. Why should anyone visit a store, or that store’s website, when she can buy a product anywhere, anytime she wants it.

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