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[14 comments]

Online Shopping Not a Social Affair, Yet

November 28, 2012

It certainly isn't for a lack of effort, but even with the holiday season here, retailers continue to struggle with using social media sites to drive sales. In fact, new 2012 Holiday Benchmark Reports for Black Friday and Cyber Monday from IBM show that retailers have actually taken a step or two backwards in the social commerce arena.

On Black Friday, shoppers referred from various social media sites including Facebook, LinkedIn, Twitter and YouTube generated 0.34 percent of all online sales, a drop of more than 35 percent from the same day last year.

Results were not much better on Cyber Monday where social media site referrals generated 0.41 percent of online sales, down more than 26 percent from 2011.

Meanwhile, Facebook is looking for its Gifts service to help address its sales challenge. The service, which was launched in September, enables Facebook users to buy and send gifts from a variety of merchants to family and friends. The social media service takes a cut of each sale.

New York's Magnolia Bakery, which sells artisan cupcakes, is one of the merchants participating in Facebook Gifts. Sara Gramling, vice president for public relations for the bakery, told The New York Times, "It was a great opportunity to expand our network."

Discussion Questions:

Why do you think the percentage of online sales driven by social media referrals dropped on Black Friday and Cyber Monday? Which social media site do you think has the greatest potential to drive retail sales?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Which social media site do you think has the greatest potential to drive retail sales in the future?

Comments:

Maybe consumers were more driven to find bargains than they were to contemplate sharing on social media. I don't think this study is indicative of anything. Sales were up, social media referrals were down. So what?

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Max Goldberg, President, Max Goldberg & Associates

Black Friday and Cyber Monday are still all about the deals, heavily communicated through three old faithfuls—TV, newspaper circulars and email advertising. There is so much traditional media noise over the Thanksgiving weekend that new media gets drowned out. When shoppers are running from store to store to get to midnight openings to save a few bucks, they aren't Facebooking their friends to see what items they like too.

Alison Chaltas, EVP, GfK

Maybe the bigger question, or another question is, who cares when less than half a percent are generated from this medium (and normally less than 1% are being generated from social media)? I'd look at that data and say social media is a completely ineffective way to generate online sales.

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Dr. Stephen Needel, Managing Partner, Advanced Simulations

This is easy. When it comes to social media, most brands still don't know what they are doing.

A story I wrote with A. T. Kearney illustrates this point. See it here.

You can't grow a media that you don't understand. This requires, if not new marketers, marketers with new attitudes. It also may be the case that the potential to commercially exploit social media really isn't as big as its proponents suggest.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

I am not so sure the relevant take away is the reduction of sales resulting from referrals. Measuring a 0.15% change from a sample across years can be dicey.

The results do show that on Black Friday and Cyber Monday social media is not driving sales, despite brand's efforts to nurture advocates and monetize social media channels. Retailers need to understand if this is true only for Black Friday and Cyber Monday, or if it is true in general (it could be the time sensitivity of Black Friday and Cyber Monday deals reduces the effect of social media). Armed with this understanding they can adjust their social strategies appropriately.

Kurt Seemar, President, Analytic Marketing Innovations

I agree with Ryan. A retailer's goal in life is to sell more stuff. When all you have is a hammer, everything looks like a nail, right? So of course they're trying to make social media into an engagement platform that helps sell more stuff. But what if that's not its best use (as so amply demonstrated)?

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Nikki Baird, Managing Partner, RSR Research

Two reasons: Social media will never live up to the hype that's been so freely tossed around. Consumers will continue to go to social media for one reason: to interact with their friends.

Even more interesting, though, there was tremendous use of far more powerful advertising through traditional media. Retailers did a superb job this year of integrating their offline and online deals to drive traffic. Seems like every Black Friday advertiser included Cyber Monday deals.

At this point, no one should be expecting that social media will ever deliver the power needed to rise any higher than a very minimal level of impact on these sales...with a small number of exceptions.

Doug Garnett, Founder & CEO, Atomic Direct

I continue to be amazed by the fact that retailers approach social media as a selling vehicle first, or at least place at parity with other mature, proven drivers of online/offline sales when they evaluate impact on sales. One other reader said it best about the old hammer-and-nail analogy.

There is still so much undeveloped territory in maximizing the value of social for customer care/service (with a direct and higher gain on the bottom line/ROI) that I wish retailers put more emphasis on integrating social media with their customer care processes as well as leveraging as a vehicle for improving employee empowerment. When it comes to retailers, particularly those with brick-and-mortar operations, providing superior customer service at the POS or other touchpoints continues to be a strong brand differentiator with those consumers that matter, ie., those who prioritize value, quality and service over buzz and the hottest promos.

Dimitris Tsioutsias, VP, Targetbase

One size does not fit all. Social media works well when you know your consumers well, know which social media tools they use, when they use them, how they use them, configure your approach to fit their behavior, and create an approach that interests them. This is easier said than done. With so many offers, deals, promotions, and tools available over the Thanksgiving shopping period, social media had to be even more targeted to work well.

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Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

The declining results are a pointer to the failure of those measuring to refine the reports to include the user migration to smartphones and notebooks. This migration left many of the previous participants technically abandoned due to the poor IT site service for these devices. A look at the drop in upgrades and user registrations for desk and lap top devices at the consumer level is more than a marketing manager needs to investigate this trend further.

Slowing internet speed due to user volume, over taxed and antiquated servers, and poor site enhancements to accommodate these new devices have caused consumers to find quicker and easier means to satisfy gifting needs for the 2012 holiday season. A look at the increase in gift card consumption and brick and mortar traffic is where you might see some hand-held users are going.

Facebook and Twitter have settled into a 2012 chat room(s). YouTube is now a WIKI newsroom. Google is the "go to" for finding information and stuff for sale, but they too have a tendency develop for the desk and laptop user. No matter which one of these or other sites is exploited to benefit sales, all is for naught if the company site is not ready for the amount of traffic and waiting with easy-to-use functional software.

There is some real opportunity for a well funded IT development group here. The biggest opportunity is in an affordable wireless security system that can compete with Blackberry. This would eliminate a lot of the overhead needs IT managers must carry at a very high cost(s).

'gjarnoldjr'

Google will be the dominant player here. This year, they have implemented a new program that lets users pick what they want and then make their wish list public. You can tell your family what to look under and they can buy right from your list. It's like a bridal registry online. This is a great new step in cyber shopping.

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Janet Dorenkott, VP & Co-owner, Relational Solutions, Inc.

Nikki and Ryan (and many others) make good points about the need to look at social media and commerce through a bit of a different lens. Here are some of the things I've been thinking about,

1) Social (including Pinterest although the IBM report did not) is very young and marketers are early in defining best practices. This is especially true when it comes to promoting and selling products. What seems clear is that driving from social streams to eCom isn't very effective, but remember, it's also largely free.

2) Black Friday and Cyber Monday coverage tends to be won by big retailers who primarily sell on price and selection (Walmart, Target, Amazon, etc.). Many brands prefer to hold price and many strive towards premium pricing. These two different models require different marketing tactics at different times. Target, for example, does an amazing job in social that helps drive their ongoing and holiday success. Social is also a great place to nurture relationships with your most valuable customers and create a sense of exclusivity, the antithesis of Black Friday.

3) Black Friday and Cyber Monday are culminations of all the work marketers do during the year. Brand affinity, product discovery, research and consideration have all happened leading up to the holiday season. More and more of this work is being done within social networks or is being driven by our digital social connections. Without empirical evidence, I'd make the case that the growth in eCom this year wouldn't be as high without social driving affinity and discovery.

4) Social streams are more like entertainment than billboards. We parse through news, imagery, video, stories, etc. and we're open to hearing from our chosen brands but only if they respect the context. TV commercials do both the affinity work *and* incorporate direct response tactics. I think social and more specifically product promotion and commerce to social customers will learn a lot from these approaches.

Marko Muellner, VP Marketing, ShopIgniter

Um, because social media sites are for people socializing with other people and no one pays any attention to companies trying to sell 'stuff' while they're socializing with other people? Just guessing.

Better way to put it: Social Media is C to C not B to C. If it was B to C, it'd be called a web site.

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Lee Peterson, EVP Creative Services, WD Partners

Social media can suggest users about available deals proactively. As they store personal details, they will be better positioned to anticipate need. Amazon has made a mark by leveraging web analytics to suggest better offers to visitors.

If social media can scale up demand they can command customized promotional offers from Retailers and Vendors, as enjoyed by financial services providers. They can team up with group buying vendors like LivingSocial and Groupon.

Chandan Agarwala, Manager - Strategy and Research, iGATE Corporation

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