4 Reasons to Invest in Social Commerce

With the holiday shopping season behind us, online retailers are looking towards 2012 and the opportunities for increasing revenue this year.

A key action item on most online retailers’ lists for 2012 is social shopping. In 2011, social networking, led by Facebook, broke the tipping point. With over 800 million users, Facebook is racing towards its 1 billionth user. Beyond its number of users, a second and no less important statistic is the amount of time each user spends on Facebook. Americans spend an average of 6.9 hours per month on social networks, with three minutes out of every four minutes on social networks spent on Facebook (and one minute out of every five minutes spent online on Facebook), according to comScore.

With the growth of Facebook, it’s clear that the social network is now a social platform. One of the activities best suited to this new social platform is commerce. From the results we started seeing in 2011 — which will only grow in 2012 — here are four reasons why your brand should add social commerce in 2012:

1. Strong conversion rates: With Facebook leading the internet in terms of time spent on-site, it’s no surprise that the Facebook storefronts we work with are seeing up to 4 percent conversion rates driven by strong user engagement. Historically, brick-and-mortar retailers said that it’s all about “location, location, location.” Well in 2012, that location includes Facebook.

Facebook isn’t the only social game in town, however. Retailers should be experimenting with all available social commerce solutions in order to maximize conversion rates while offering consumers the best way to shop online. Twitter has proven to be an effective marketing vehicle for many online retailers, and given the importance of Google AdWords to so many online retailers, Google+ is a platform that must be tested. LinkedIn is another social platform which should be mined for marketing opportunities, particularly for B-to-B businesses.

2. Ease of sharing/getting recommendations: In addition to the significant amount of time users spend on Facebook, the inherently social nature of the platform also contributes to the strong performance it delivers. The ability to shop with friends without having to physically be together is a big advantage of social commerce. By “Liking,” “Sharing” and “Commenting,” friends help make shopping easier and more fun. And when another friend happens to be interested in making a similar purchase, a quick review of their Facebook Wall — complete with recommendations from friends — makes that purchase decision easier without having to pick up the phone and solicit advice.

3. Group buying and other social commerce opportunities: A natural extension of the ability to shop with friends remotely is the ability to group buy with friends. Advanced by Groupon, group buying is a great way to gain a discount by providing a retailer with bulk sales. Friends with similar likes and interests are only one click away on Facebook, so it’s easy to complete a group purchase via Facebook. Couponing via Facebook is another effective marketing vehicle to help convert prospects who have expressed an interest in your products through liking, sharing and commenting.

4. Ad targeting: One of the aspects that makes Facebook unique is the ability to show your affinity towards something — e.g., a school, a place, a company, a product, an organization, a cause, etc. Since users frequently go to Facebook to show their affinity for the things they support and believe in, targeting based on that information comes naturally.

By targeting ads on Facebook based on users who are inclined to be interested in your products — e.g., fashion groups for an online clothing retailer or sporting groups for a sporting goods retailer — retailers are more likely to be engaging users who will convert. It’s easy to experiment on Facebook on a limited budget with various targeting options in order to optimize your ad spend and maximize your conversions and performance.

This year promises to be an exciting one for cross-channel retailers, and social commerce figures to be a big reason why.

Ronen Shlomo is the CEO and co-founder of Zibaba, a provider of f-commerce marketing platform solutions. Ronen can be reached at r@zibaba.com.