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Is social commerce dead in the water?

News, 05 April 2016

NEW YORK: Only 1.5% of all retailer e-commerce transactions come via social media, raising questions as to the value of investment in social commerce.

The figure is based on an analysis of some $100bn in sales among 500m shoppers during the first quarter by Custora, an e-commerce vendor, and represents a slight decline on the 1.8% of sales that social media accounted for over the November-December holiday period.

Not surprisingly, Facebook dominated this area, taking 81% of sales, followed by Pinterest (10.8%), while Instagram, YouTube and Twitter taken together made up 5.2% of the total.

Long-standing techniques such as search, email and affiliate marketing made up the majority of marketing-led retail transactions, accounting for 70%, with display ads, text messages and push notifications taking another 8.5%.

Around one fifth (20%) of sales were impulse and not attributed to any marketing.

"If you're looking on a last-click basis, there's been no movement in terms of social media platforms," according to Claude de Jocas, a lead analyst at digital research firm L2.

"Even the advent of buy buttons has done absolutely nothing to move the needle," she told Ad Week.

Social may appear to be ineffective in these narrow terms, but retailers such as Macy's are looking beyond a simple channel-based approach.

"When we think about social, we can't always measure direct, last-click [sales], so we look at a variety of metrics in addition to ROI," explained Serena Potter, VP/digital strategy.

"As we look at the platforms from a customer-behaviour perspective, we've really been able to drive traffic to our website, to our mobile experience to create a re-marketable audience."

And even on an ROI measure, three quarters of those marketers using social as part of their strategy in a recent 2016 State of Marketing report from Salesforce, said that social media was delivering a "significant" or "some" return on their investment, a huge increase from the 29% achieving an ROI in 2015.

"To be truly effective, social media marketing efforts can't live in a silo," the report noted. "Top teams understand this and use social listening to better understand their audiences and the market."

Data sourced from Ad Week, Salesforce; additional content by Warc staff