SMBs know a thing or two about social commerce

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SMBs know a thing or two about social commerce
SMBs know a thing or two about social commerce

A Forrester Research study released in late September showed that less than one percent of online purchases could be traced back to social networks like Facebook or Pinterest. Despite attracting one billion users and thousands of brands and retailers, Facebook did not appear to be the online shopping hub some had anticipated. Rather, Forrester concluded, retailers and other online sellers seeking higher sales conversions would be better off concentrating on the vehicles that had long performed well for them, like search and email marketing.

Let's not be so quick to assume Facebook is overrated for e-commerce. Forrester itself pointed out that its study did not consider data from small and mid-sized online retailers (SMBs), but included only large sellers with tens of millions of dollars in transactions and the marketing heft that could skew their results.

As the maker of a Facebook shopping cart application, we at Ecwid have seen a steady, quarter-to-quarter rise in f-commerce revenues among our customer base, which consists mostly of small and mid-sized retailers. In the third quarter of 2012, for example, total sales from all Ecwid-powered Facebook stores grew 36% from the previous quarter, while the cumulative number of individual Facebook store orders rose by 39%.

Ecwid data from the last two years also found that merchants that maintain both a traditional web store and a Facebook storefront generate between 9 and 22% of their overall online revenue from Facebook. Clearly, while some big name sellers haven't yet fully leveraged the f-commerce opportunity, we see a markedly different story for small businesses.

One would assume that larger retailers and sellers would experience more success with f-commerce, given their extensive marketing dollars. So, why the disconnect? First, large sellers often sell through many more channels—consider, for example, an international luxury clothing line that sells through many retailers, versus a small boutique—and may have more marketing vehicles at their disposal (like email lists) which could skew the results. Another point to consider is that small retailers and sellers are simply better at engaging customers directly via a platform like Facebook. These personal engagements could be leading to a higher sales conversion rate and represent a more significant percentage of their total online revenue.

Like in the earliest days of blogging, it is the SMBs that seem to be leading the f-commerce charge. We recently compiled the attributes of our most successful Facebook storefronts and found the following:

  • Social conversations from small companies tend to strike the proper tone, a far more personal tone than that of big companies. You wouldn't walk into your local mom-and-pop store and expect the proprietor to engage you in marketing speak. The same applies to Facebook. If you're not ready to communicate with your customers like friends, you may not be ready for f-commerce.
  • SMBs more effectively integrate products into the flow of the conversation.  Dropping a product sale offer into a social news stream has to be done carefully. The primary purpose of social networks is to connect people, so an ill-timed sales pitch can be a turnoff. If you're going to make the leap to social commerce—actually conducting a product transaction—remember not to disrupt conversations. Make the process as seamless as possible, and tactfully integrate your store and sales message into the conversation.
  • Small companies are more flexible in adopting the latest store-building technologies, many of which are geared to social. Merchants can now easily create f-commerce storefronts in minutes and make their offerings highly targeted. This helps make store offers friendlier and social customers are more open to them. One example: We've found that providing the option of liking or tweeting a purchase in real-time is something consumers will do if it's presented properly.
  • The most successful stores focus first on community building. This back-to-basics approach bears repeating. Transforming your Facebook page into a list of product links will alienate customers. Instead, organizations should focus on building a community around their business, engaging customers, and encouraging fan-to-fan communication and product discussions. Then simply offer a convenient way to buy. Some businesses have been successful in using incentive programs like “fan of the week” which get fans more actively involved in their social commerce page.

According to Shop.org's recent eHoliday survey, more than half (57.5%) of retailers interviewed said they planned to increase their use of Facebook over last year—the biggest change cited in terms of marketing or retail tactics for this holiday season. While larger retailers with deep marketing pockets consider options like Facebook Offers and Facebook Gifts, they should also keep an eye on their smaller industry counterparts for some valuable lessons.





Jim O'Hara is president of e-commerce solution provider Ecwid.

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