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The role of social media in e-commerce is growing, but millennials are still not clicking the buy button on these channels.
But they're still utilizing these platforms before they buy.
A new GlobalWebIndex study suggests that millennial shoppers use Facebook, Twitter, and the like to research products before they buy them. According to the study, 40% of global consumers ages 16 to 24 use social media to research products. And 30% of the general population use these platforms for product research before they buy.
The study gives a bit more context to the role of social media in the purchase funnel. Social platforms do not drive many direct orders as a referral channel, as a mere 1% of all e-commerce orders in 2015 occurred from a direct social media referral, according to Custora.
But if younger consumers continue to use social media to discover and research products, then brands and retailers must maintain strong presences on Facebook, Pinterest, Snapchat, and more.
Cooper Smith, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on social media's role in online retail.
The report analyzes whether social media is driving direct sales with the use of embedded "Buy" buttons on social media posts, or referring traffic to retailers' websites and apps. It measures the impact social media has on e-commerce by looking at metrics such as conversion rates, average order value, and revenue generated by shares, likes, and tweets. It also outlines the latest commerce efforts by leading social networks.
Here are some of the key points from the report:
- Social is driving much bigger increases in retail traffic than any other online channel. Social media increased its share of e-commerce referrals nearly 200% between the first quarters of 2014 and 2015.
- For retailers to maintain these social gains, they will need to pay special attention to mobile, where social engagement with retail content is still limited. Social media users are 35% less likely to share a brand's or retailer's social post on mobile than they are on desktop computers.
- Facebook continues to grow its lead as the dominant social commerce platform. Facebook accounts for 50% of total social referrals and 64% of total social revenue. The site's changing demographics could make older consumers a strong target for retailers leveraging the platform.
- Pinterest is a major social commerce player despite a relatively small user base. The pinning platform drives 16% of social revenue despite an audience 6.5 times smaller than Twitter. New buy and action buttons on retailer posts should make Pinterest an even stronger referral and revenue engine for brands.
- Twitter is losing its influence for mass-market merchants, but it could still have a role to play among sporting and events marketers, especially for location-based promotions. Recently, NFL and NBA teams have used Twitter to sell game tickets and merchandise.
- Instagram doesn't drive significant sales activity for retailers but high-end companies have been leveraging the platform for branding purposes. New Buy buttons on paid posts, as well as increased targeting capabilities, could make the app a more important direct-response driver.
In full, the report:
- Sizes social media's role for retailers compared to other referral sources such as search and email.
- Examines how social media's transition to mobile is impacting the role of different social platforms.
- Looks at how the different social networks stack up in terms of conversion rates, share of social-generated retail sales, and average order value.
- Highlights up-and-coming social commerce players such as Snapchat and Instagram, and how brands are using them for influencer marketing.
- Outlines the latest major commerce moves by Facebook and Twitter, which could help drive up conversion rates from social.
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