Hurdles For The Social Media ‘Buy Button’

The Washington Post:

The rush by tech giants and retailers to join the buy-button arms race would suggest that these businesses see money-making potential. And given how much time people spend on social media — an estimated 1 of every 5 minutes spent on a mobile phone in the United States is on Facebook or Instagram, for example — it would be logical to assume that these buy buttons are bringing retailers a blast of online sales.

But this holiday season, social channels accounted for 1.8 percent of overall online sales, according to data from Custora, whose software platform is used by many retailers. That’s just a tiny sliver of purchases, and it’s not even growing: In 2014, Custora found that social media led to 1.9 percent of sales during the same time period.

It is, I would say, very much a chicken and egg issue. Without the proper system underneath -meaning making it as frictionless as possible- the ‘buy button’ is not going to take off. As long as it is or appears to be safer and easier to just go over to Amazon et al and type in the product one just discovered elsewhere, the ‘buy button’ next to the product in the social network doesn’t account to much more than merely more clutter.

The Washington Post:

According to Michael Yamartino, Pinterest’s head of commerce, some of the challenge to adoption right now is a lack of knowledge.

“Awareness is a big part of it. This is a new thing,” Yamartino said. “Most people haven’t bought from a platform that’s not a retailer.”

So, one part of changing this are platforms building up their brands, creating trust. But underlying there is something else, a bigger hurdle: The more companies facing consumers per transaction the harder it is to convince the consumers. Understandably so: How do you know not get ripped off or get bad service etc. if you buy through a social network you usually just use to kill time at a retailer you never have heard off? And even if you trust the social network platform, what about the retailer then?

Imagine this: You go to your local supermarket and you can and have to choose there from which logistics partner the goods you buy have to come from. You don’t only choose among the manufacturer’s brands and the supermarket but also from the logistics companies behind the curtain.

A bit much, isn’t it?

One way to solve this without giving up the immense opportunity of a wider selection can be seen at the Amazon marketplace. User reviews create trust (easily seen in aggregate by visually distinct stars next to every products name and price) and Amazon itself takes over more and more of the fulfillment behind it. The actual seller is more and more in the background.

That is a reasonable approach. But will it work with buy buttons in social feeds? What else might create trust and reduce friction?

There is certainly demand for a solution in the market. Or in different words: There is a growing vacuum to be filled. The usage of social networks is growing and mobile seems to be (not very surprisingly) mostly incompatible with the current online retail model. It is a perfect storm. (Because social feeds fit perfectly with mobile.) The Washington Post:

Right now, stores are seeing a massive “conversion gap” on mobile devices, meaning that there has been a surge in the number of people browsing sites from mobile devices, but only a small share of them are actually making purchases. In studies, shoppers frequently say they don’t buy on their smartphones because it is a hassle to enter payment information and go through a checkout process on the small screen.

But don’t think buy buttons are just a solution to this problem. They could, if successful, create new popular modes of shopping online: From ‘social shopping’ to inspirational browsing; both very much minor ways of online shopping right now.

Lyst (“Lyst offers a personalized fashion marketplace where users can create a customized shopping feed of products.”), which got $60.52 million venture capital in four rounds, is one contender for showing where the future may lie: Lyst has a workable buy button, or universal shopping cart, across online retailers, but only for its own platform.

Maybe it will be more about new mobile middle men like Lyst than a direct integration of online retailers’ offerings into general interest social networks. (Imagine Lyst or a similar service building up enough experience and entrenchment to become a perfect partner for both retailers and social networks on integrating E-commerce. Imagine what kind of role the partnering retailers would keep on in such a constellation. Are they then even still needed?)

Lyst gave insights into its business and strategy at the latest NOAH conference. Here are some slides:

Lyst numbers


The affiliate model was made for the desktop internet and it will probably have to stay there:


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