Are people buying more products or services through social media channels?
Will more social networks facilitate the exchange of cash between peers and/or buying/selling goods directly on their platforms?
Do you remember when lots of shops opened up within Facebook but closed down again because they were getting weren’t enough sales? There are still examples of companies doing really well with shops on Facebook but most retailers make the vast majority of their money through their own websites.
In this article, we take a look at the changes that will take place with social networks, in relation to social commerce for the year ahead.
What is Social Commerce?
This is where a commercial transaction occurs as a result of social interaction. For example, someone mentions a book on Facebook and then you click on a link and buy the book.
Here are some examples of how social selling could work:
Social sharing – Someone likes a product or service so decides to share it with their social network. This leads traffic back to the site where further sales occur.
Incentivised social sharing – This is where you get a reward for sharing if someone purchases. You are given a special link to the product or service. When you share this link, it is tracked to see if any of your friends buy using that link. If they do, you get some affiliate commission for the sales!
Reviews – People trust their friends’ recommendations more than any brand recommendations. Encouraging your customers to share reviews of your product or services and making these available online will lead to more sales (assuming they are positive!!). Just take a look at Amazon, eBay and others that generate most of their sales because of reviews.
Sales on social networks – This is an area that is going to grow: sales happening on social networks. You will be on Twitter and see a product or service mentioned and you’ll be able to click on a button to buy it!
Social Commerce Trends for Social Networks
Selling products and services (excluding virtual goods!) directly on platforms such as Facebook and Twitter has had limited success (though there are some social commerce companies providing shops on Facebook).
On Facebook, the main reason for the low sales is that Facebook itself didn’t support sales directly within the Newsfeed. They allowed third-party developers to install shops as apps on a Facebook Page, but no one goes to these apps unless they are directed there. Because you can’t keep on pushing your shop in your Newsfeed, these shops generate limited sales.
I know you probably have an example of a shop making lots of money on Facebook but, for every example, you’ll find 100 other shops not make anything worth talking about.
But the trend going forward is for social networks to start enabling the ability to buy products and services directly within the stream and this is where significant shopping will happen.
Will you ever buy a $500 product directly within the Facebook Newsfeed? Most of us never will. But we will buy impulse purchase for $10, $20 and maybe up to $50 without too much consideration.
Lets take a look at what is likely to happen in 2015 and beyond.
Shopping on Twitter
Twitter is already trialling payment through their platform. They have partnered with Stripe (an Irish start-up valued at US$1.75 billion), which will provide all the back-end payment processing. This means that all accounts set up, transactions, fraud management etc. will be managed by Stripe.
Social networks do not want to store any credit card details. Stripe will do this for Twitter.
Directly within your feed, you will be able to view and buy a product. Here is a mock up of what it will look like:
In the short term, this is likely to be restricted to lower-priced products as there will not be room for providing enough information directly within the feed but, over time, there will be options for expanding on the information provided.
Shopping on Snapchat
Recently, Snapchat made an announcement that it has partnered with Square to deliver a peer-to-peer money transfer system called ‘SquareCash‘. This means that Snapchat users can register their debit card and then transfer money to, and receive it from, their friends on Snapchat.
Snapchat will not charge for this service so how is it going to make money?
Making money for this transaction is not important to them at the moment. They want to get Snapchat users to register their debit card and get used to exchanging money on the platform.
The next stage is to provide the opportunity to buy products through the platform and this is where Snapchat will be able to make a lot of money.
Shopping on Facebook
In a recent article on RazorSocial, we talked about a tool provider called Soldsie, which allowed users to buy products on Facebook by using a hashtag! This is really a short-term solution that will be replaced with the Facebook ‘buy’ button soon.
In July 2014, Facebook shared this screen related to its tests of a ‘buy’ button on Facebook.
In 2015, this will be released. I’m not sure which payment provider Facebook is going to partner with, but I’m sure Stripe are discussing it with them!
Shopping on LinkedIn
LinkedIn has not announced any plans to allow people buy products or services on its platform yet, but it makes perfect sense that this will also happen at some stage. Why can’t you buy an hour of a consultant’s time, buy a white paper or book a trainer for a day on LinkedIn?
This is certainly going to happen but the question is: will it be in 2015 or 2016?!!
Is the following unrealistic?
Shopping on Pinterest
In 2013, Pinterest introduced rich pins where you can provide additional information on a pinned item, which is taken directly from a website. You can also link to the content so that, if an item goes on sale on a store, this price could automatically be updated on your pin.
What is the next stage for rich pins?
Why should Pinterest send you to another site to buy when you might buy the item on Pinterest? Watch out for this happening.
What about Virtual Currencies?
A virtual currency is where you exchange your real cash for virtual money online. There is no printed currency; it is all on the web.
Bitcoin is a growing virtual currency. It’s difficult to get an accurate measurement of the total number of active Bitcoin users but most say it’s between 1 and 1.5 million people.
You exchange your local currency for Bitcoins and then use them in transactions. Stellar is another virtual currency that may challenge Bitcoin.
As virtual currencies grow in popularity, this will be just another payment method that can be used for transacting.
Stellar is backed by Stripe and Stripe is going to grow massively. As Twitter is using Stripe it’s likely that, over time, they will allow their users to transact using Stellars.
The social networks need to make more money for their shareholders and selling products and services will be extremely lucrative for them.
There is no doubt they are moving this direction and it’s going to be exciting to watch it.
What do you think is going to happen in the area of social media commerce? Am I being realistic? Tell me in the comments below!