Now that it's a possibility, allowing consumers to purchase goods directly through social media seems like a no brainer for retailers. But it doesn't come free of cost.
As a new study from Omniture shows, marketers choose Facebook as their preferred method of interacting with consumers in social media. And new tools are letting merchants sell goods directly through the site. Unfortunately, this method works best for companies that are already popular on the social net. And may not come cheap.
The Omniture survey out this week surveyed 600 marketers to find that 69% were using social media to market their products. Of those, 63% ranked Facebook as the most important site for marketing. Blogs followed with a 40% response, and "other" ranked at 34%. Meanwhile, only 28% considered Twitter to be most important.
About 80% of respondents in the retail sector are using social media channels. And increasingly, marketers are beginning to sell products directly through those sites.
Right now that's mostly happening on MySpace and Facebook. According to The Wall Street Journal, retailers are "adding e-commerce stores to their fan pages, hoping users will scan lists of for-sale items and services—such as floral bouquets, hand-crafted jewelry and spa treatments—and click a button to add them to online shopping carts."
Selling directly to a base of social media fans could become an impressive channel for retailers. However, most of the companies seeing results already have a loyal following in social media. And poorly trafficked social pages can deter sales.
Larry Chiagouris, a marketing professor at Lubin School of Business at Pace University in New York tells the Journal:
"Nobody likes to shop at places where no one else shops."
The community fostered and shared on sites like Facebook can be a boon to marketers. But pushing products through the channel ads an extra wrinkle to the marketing process. If brands are selling products directly through Facebook, what is the benefit to consumers?
It could be a better shopping experience, or — perhaps more likely — socializing the experience and sharing it with friends. That's clearly a great marketing opportunity for brands, giving them the opportunity to spread the word about their products through likes and Facebook's newsfeed. But it could get problematic if they open up the channel and no one uses it.
The Journal cites a few companies that are pushing their Facebook presence by giving away free products to grow the fan base and increase the audience of potential social media purchasers. In addition to those costs, there is the issue of technology.
One application that allows direct shopping, created by CoreCommerce, charges a monthly fee that begins at $24.99 a month. And if direct sales become popular on Facebook, the network is sure to take a cut. Currently, Facebook plans to take a 30% share of certain virtual goods sold on the site.
Considering the razor thin margins that retailers are working with in digital, all of those chunks could start to add up. And other venues may be better for social sharing. Even just different uses of Facebook. Integrating the network's "like" feature into a retail site may accomplish all of the positive sharing that direct sales could do, without having to give over any percentage of revenue.
Getting to customers where they are has its advantages, but it will be awhile before marketers can say whether the benefits of social media sales outweigh the nickle and diming that is sure to come along with it.
Top image: Facebook/Hallmark Bottom image: Omniture