report on social selling by fung global retail tech mar ... selling executive summary adults spent...

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DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

• Of the world’s 7.4 billion inhabitants, approximately46%areInternetusers,andapproximatelytwo-thirdsofthatgroupareactivesocialmediausers.

• Adultsspentanaverageof109minutesperdayin2015on social media sites such as Facebook, Twitter andInstagram, according to a survey of 50,000 Internetusersaroundtheworld.

• The global e-commerce market is estimated to be $2trillionthisyearandisexpectedtogrow20+%annuallythrough2019.

• In a recent survey, nearly half (45%) of the digitalshoppers polled worldwide said that reading reviews,comments and feedback influenced their buyingdecisions, and 16% of respondents said that theypurchasedproductsdirectlyviaasocialmediachannel.

Social Selling

D E B O R A H W E I N S W I G

M A N A G I N G D I R E C T O R , F U N G G L O B A L R E T A I L & T E C H N O L O G Y d e b o r a h w e i n s w i g @ f u n g 1 9 3 7 . c o m

U S : 6 4 6 . 8 3 9 . 7 0 1 7 H K : 8 5 2 . 6 1 1 9 . 1 7 7 9

C H N : 8 6 . 1 8 6 . 1 4 2 0 . 3 0 1 6

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Social Selling EXECUTIVESUMMARYAdults spent an average of 109minutes per day in 2015 on socialmediasites such as Facebook, Twitter and Instagram, according to aGlobalWebIndex survey of 50,000 Internet users around the world. Thatfigure represents a 9% increase from 100minutes in 2014,whichwas, inturn, up from96minutes in 2013. The same study found thatmore than92%ofadultInternetuserssurveyedhaveatleastonesocialmediaaccountandthat78%areactiveonat leastoneaccount;theaverageuseractivelyparticipatesin3.5socialnetworks.

Givenusers’strongattachmenttotheirsocialmediaaccounts,it islogicalto attempt to connect the channel to the global e-commerce market isestimatedtobe$2trillionthisyearandisexpectedtogrow20+%annuallythrough2019. Ina recent surveybyPwC,nearlyhalf (45%)of thedigitalshoppers polled worldwide said that reading reviews, comments andfeedback influenced their buyingdecisions, and16%of respondents saidthat they purchased products directly via a social media channel, asillustratedinthefigurebelow.

Figure 1.Which of the Following Aspects of SocialMedia Influence Your OnlineShoppingBehavior?

Source:PwC,TotalRetail2016:TheySayTheyWantaRevolution

Eachcountrypossessesauniquesocial-shoppingenvironment.WhileusersinmostcountriesgenerallyrelyonFacebook,Google+andTwitter,sociale-commerce on these platforms is not as well developed as it is on theWeChatWalletandAlipayplatforms inChina.Specifically,USsocialmediacompanieshaveonlyrecentlyaddeda“Buy”buttontotheirplatforms,andtheirplatformsarenotlargelyavailableinChina.Inthisreport,weexploresomeoftheseandotherregionaldifferences insocialnetworksandsocialshopping.

45%

44%

30%

25%

22%

20%

16%

Readingreviews,commentsandfeedback

Receivingpromohonalofferings

Viewingadverhsements

Stayingontopofcurrentfashionandproducttrends

Wrihngreviews,commentsandfeedback

Associahngwithparhcularbrandsandretailers

Purchasingproductsdirectlyviaasocialmediachannel

Theglobale-commercemarketisestimatedtobe$2trillionthisyearandisexpectedtogrow20+%annuallythrough2019.

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GEOGRAPHICALDIFFERENCESOf the world’s 7.4 billion inhabitants, approximately 46% are Internet users,and approximately two-thirds of that group are active social media users.Acrosstheglobe,therearenearly38billionmobileconnections,andmorethanhalf of them consist of active users of mobile social media (source: We AreSocial,Digitalin2016).

Figure2.OverviewofGlobalInternetandSocialMediaUsage(Mil.) Americas Europe Asia-Pacific World

TotalPopulation 997 838 4,116 7,395

ActiveInternetUsers 665 616 1,662 3,419

ActiveSocialMediaUsers 511 393 1,211 2,307

MobileConnections 1,072 1,102 3,860 3,790

ActiveMobileSocialUsers 437 305 1,066 1,968

Selected Top Social MediaPlatforms

FacebookFacebookMessenger

InstagramPinterestTwitter


Google+Twitter

WhatsApp

BlackberryMessengerFacebook

LineSinaWeibo

QzoneTwitterWeChat


QQQzone

WeChatWhatsApp

Source:WeAreSocial,Digitalin2016

ThetopthreesocialmediaplatformsgloballyareFacebook,WhatsAppandQQ.

Figure3.TopActiveSocialPlatforms,Worldwide


1,590

900

860

800653

650

555400

320

300

300249

222212200

122

100

100100100

FacebookWhatsApp

QQFacebookMessenger

QzoneWeChatTumblr

InstagramTwimerSkype

BaiduTiebaViber

SinaWeiboLine

SnapchatYY

VkontaktePinterest

BlackberryMessengerLinkedIn

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INTRODUCTIONTOSOCIALSELLINGSocialmediahasrevolutionizedourlives,enablingpeopleacrosstheglobeto connect and converse inmanyways. People discuss people and thingsthat are important to them on social media and, increasingly, use theseplatforms toseekoutandobtainproduct information,whereaspreviouslytheymight have asked friends or colleagues for product information andrecommendations.

Whenthetopicofsocialsellingismentioned,mostpeoplethinkoffriendsrecommendingcertainproductsorservicestotheirother friendsonsocialmedia. However, both retailers and brands can operate their own socialmediaplatformsandcommunications,throughwhichtheycaninteractwithandinfluence(andbeinfluencedby)consumers.Retailers,forexample,canoffer their ownpages on socialmedia, share reviews and comments, andprovideaplatformforpurchasing,asshowninthefigurebelow.

Figure4.RetailerSocialMediaUniverse

Source:Epsilon,DigitalShoppingToolImpactStudy2015

amladigital.com

Socialmediahasrevolutionizedourlives,enablingpeopleacrosstheglobetoconnectandconverseinmanyways.Peoplediscusspeopleandthingsthatareimportanttothemonsocialmediaand,increasingly,usetheseplatformstoseekoutandobtainproductinformation.

Bothretailersandbrandscanoperatetheirownsocialmediaplatformsandcommunications,throughwhichtheycaninteractwithandinfluence(andbeinfluencedby)consumers.

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The socialmediauniverse forbrands is very similar to thatof retailers, asseen in the figurebelow,except thatmanybrandsalsooffercouponsandcarryonadialoguewithconsumers.

Figure5.BrandSocialMediaUniverse


In thegraphbelow, fromastudyconductedbyEpsilon,weseethatsocialmedia represents three of the top five digital influences on shopping andthattheinfluenceofretailersandbrandsexceedsthatoffriends.

Figure 6. How the Digital Tool Influences Your Shopping (% Saying “I try newbrandsandproducts”)


29%

28%

23%

23%

22%

21%

18%

18%

17%

16%

16%

15%

15%

14%

14%

13%

13%

13%

11%

Retailersocial

Brandsocial

Printablecoupons

Dailydealsites

Friendsocial

Productreviews

Mobilepayment

Brandtexts

Shoppingapps

Brandemails

LTCcoupons

Mobilecoupons

Brandwebsites

Retaileremails

QRcodes

Searchengines

Retailertexts

Pricecompsites

Retailerwebsites

Socialmediarepresentsthreeofthetopfivedigitalinfluencesonshoppingandthattheinfluenceofretailersandbrandsexceedsthatoffriends.

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Whencomparingthebehavioralimpactofdigitaltoolsontheconsumertothe utility they offer, we see that social selling from both retailers andbrands ranks very high in terms of behavioral impact and ranks aboveaverage intermsofutility.Moreover, in its2015study,Epsilonfoundthatretailers’ and brands’ digital tools had increased in terms of both impactandutilitysincethepriorsurveywasconductedin2013.

Figure7.DigitalToolImpactMatrix


SOCIALSELLING—USOf the 323million inhabitants of the US, approximately 87% are Internetusers,andapproximately68%of thatgroupareactive socialmediausers.The country featuresmore than340millionmobile connections, ofwhichnearlyhalfareactiveusersofmobilesocialmedia.

Scoop.it

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Figure8.SnapshotofKeyDigitalIndicators—US

Metric Value(Mil.)

TotalPopulation 323

ActiveInternetUsers 282

ActiveSocialMediaUsers 192

MobileConnections 342

ActiveMobileSocialUsers 169


The top three social media platforms in the US are Facebook, FacebookMessengerandTwitter.

Figure9.TopActiveSocialPlatforms—US


Social shopping in the US has evolved from a strong base in pure socialnetworking: e-commerce and payment functions have been grafted ontoestablishedsocialmediaplatforms,inmostcasesthroughtheadditionofa“Buy” or “BuyNow” button. Below,we profile selected companies in thesocial-shoppingspace.

eBay is a global leader in e-commerce, via itsMarketplace, StubHub andClassifieds platforms. The company was founded in September 1995 andcompleted its IPO in September 1998. In 2008, eBay began soliciting userfeedback to generate seller ratings. Users could rate sellers on a scale of

41%

17%

15%

15%

12%

11%

26%

11%

9%

7%

Facebook

FacebookMessenger

Twimer

Pinterest

Instagram

Google+

LinkedIn

Snapchat

Skype

Tumblr

SocialNetwork Messenger/ChatApp/VoIP

SocialshoppingintheUShasevolvedfromastrongbaseinpuresocialnetworking:e-commerceandpaymentfunctionshavebeengraftedontoestablishedsocialmediaplatforms,inmostcasesthroughtheadditionofa“Buy”or“BuyNow”button.

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one to five stars; the ratingswere anonymousbut available to all buyers.PowerSellersareeBayvendorswitharatingof4.5orhigheroutof5stars.Inadditiontostars,buyersandsellerscanleaveashorttextreviewofeachother,describingtheirexperience.Buyerscanalsocontactsellersduringthebiddingprocesstoaskquestionsabouttheitemsforsale.

Facebook isa socialmediacompany thatenablesusers toshareopinions,ideas,photosandvideosondesktopsandmobiledevicesvia itsFacebook,Instagram,MessengerandWhatsAppplatforms.FacebookwaslaunchedinFebruary 2004 and completed its IPO in February 2012. Building on itsglobal social media platform, in July 2014, Facebook began adding e-commerce capabilities to its platform via “Buy” buttons and testing thebuttons’ functionality. Facebookalsoenablesusers to submitpayments inordertopurchasevirtualanddigitalgoodsfromdevelopers,aswellasmakecharitydonationsandpurchaseitemswithinsalegroups.

Google+,whichwaslaunchedinJune2011,representsGoogle’sentry intosocial networking. The platform offers interest-based communities, thegroupingofdifferenttypesofrelationshipsintoCircles,multi-personinstantmessaging, a text and video chat platform called Hangouts, as well asevents,locationtagging,andtheabilitytoeditphotosanduploadthemtoalbums. In July 2015, the company launched Purchases on Google, whichenablesconsumerstomakepurchasesfrommobileads;afterclickingona“Buy”buttoninanad,theyaretakentoaproductpurchasepage.

Instagram is a social-networkingplatform thatenables themobile sharingof photos and videos. The servicewas created in October 2010 as a freemobile app, and Facebook acquired it in April 2012 for approximately $1billionincashandstock.TheplatformstartedhostingadvertisinginOctober2013,andinJune2015itbeganofferinge-commerceandbuttonsforotherfunctions,including“ShopNow,”“InstallNow”and“SignUp.”

Pinterest, founded in 2010, is a web andmobile application platform onwhichuserscanupload,save,sortandmanageimages(calledPins)orothercontent in collections called Pin Boards. In June 2015, the companyannounceditwasaddingBuyablePinstoitsplatform;thesearesignifiedbythepresenceofblue“BuyIt”buttonsonthesite’spages.

PolyvoreisasocialcommercewebsitefueledbymembersofacommunitythatcurateproductswithinasharedproductindexandusethemtocreatecollagescalledSets.Thesiteprimarily features interiordesignand fashionofferings.

Twitterisaplatformforpublicself-expressionandconversationinrealtimethatcanbeaccessedaroundtheworldinstantly.Thecontentisunfiltered,and users can access it via the Twitter website, the Twitter mobileapplication and textmessage. Twittermessages, called tweets, cannot belongerthan140characters.ThecompanywasfoundedinMarch2006andcompletedits IPOinNovember2013.In late2014,Twitterbegantestinga“BuyNow”button,whichwasofficiallylaunchedinSeptember2015.

YouTube is a video-sharing website where users can upload, view, rate,share and comment on user-generated and corporate videos, including,increasingly, full-length videos of TV shows and movies. YouTube wasfounded in February 2005 and acquired byGoogle inNovember 2006 for

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$1.7billion.TheYouTubeplatformoffers“Click-to-Shop”buttonsthattakevisitorstothewebsitesofthebrandsfeaturedinvideos,whereviewerscanthenpurchaseproducts.

SOCIALSELLING—ASIA-PACIFIC

Asiaencompassesadiversegroupofcountriesthatarehometomorethan4billionpeople,morethanhalfoftheworld’stotalpopulation.Morethan40%ofpeopleinAsiaareInternetusers,andnearlytwo-thirdsofthatgroupareactivesocialmediausers.Thecontinentfeaturesnearly4billionmobileconnections,ofwhichmorethanaquarterareactiveusersofmobilesocialmedia.

ThetopsocialmediaplatformsvarybycountryinAsia,andincludeQzone,SinaWeiboandWeChat inChinaandLine,FacebookandTwitter inJapan.TheKakaoTalkandKakaoStorysocial-networkingplatformsarethenumber-one and number-three platforms in South Korea, but are not reflected inothercountries.Meanwhile,BlackberryMessengerispopularinIndonesia.

Figure10.SnapshotofKeyDigitalIndicators—Asia-Pacific(Mil.)Metric Value

TotalPopulation 4,116

ActiveInternetUsers 1,662

ActiveSocialMediaUsers 1,211

MobileConnections 3,860

ActiveMobileSocialUsers 1,066


Below,weprofilethetopsocialmediaappsinselectedAsiancountriesthathavelargepopulations:China,India,IndonesiaandJapan.

CHINA

China boasts an extremely well-developed infrastructure of social-networkingandmobilepaymentscompanies.Tencent’sWeChatWalletandAlibaba’s Alipay Wallet are the biggest players in the Chinese mobilepaymentsmarket,andAlipaycurrentlyhasthedominantshare.

Tencent’s initial mobile payment offering, Tenpay, was rebranded asWeChatWalletin2014.Itsserviceofferingsallowconsumerstoordertaxis,book movie tickets, receive geographically targeted coupons, makepaymentstootherpeopleandmakeonlinebillpayments.

Alipay,operatedbyAlibaba’sAntFinancialsubsidiary,waslaunchedin2004as a third-party online payment solution. It enables users tomake onlinepayments, such as for purchases on Alibaba’s shopping platforms, and totransfer money. The Alipay Wallet product focuses on mobile payments,and its functions include easy shopping on Alibaba’s e-commerce retailplatforms, online bill payment and in-store (i.e., offline) payment via QRcodescanning.

ThetopthreesocialmediaplatformsinChinaareWeChat,QzoneandSinaWeibo.

Asiaencompassesadiversegroupofcountriesthatarehometomorethan4billionpeople,morethanhalfoftheworld’stotalpopulation.Morethan40%ofpeopleinAsiaareInternetusers,andnearlytwo-thirdsofthatgroupareactivesocialmediausers.

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Figure11.TopActiveSocialPlatforms—China


INDIA

InIndia,thetopthreesocialmediaplatformsareFacebook,WhatsAppandFacebookMessenger.

Figure12.TopActiveSocialPlatforms—India


21%

16%

14%

12%

6%

5%

5%

3%

24%

4%

WeChat

Qzone

SinaWeibo

BaiduTieba

TencentWeibo

Renren

Facebook

Kaixin001

FacebookMessenger

51.com


13%

10%

10%

8%

7%

7%

12%

11%

8%

6%

Facebook

WhatsApp

FacebookMessenger

Google+

Skype

Twimer

HikeMessenger

LinkedIn

Instagram

WeChat


Chinaboastsanextremelywell-developedinfrastructureofsocial-networkingandmobilepaymentscompanies.Tencent’sWeChatWalletandAlibaba’sAlipayWalletarethebiggestplayersintheChinesemobilepaymentsmarket,andAlipaycurrentlyhasthedominantshare.

InIndia,thetopthreesocialmediaplatformsareFacebook,WhatsAppandFacebookMessenger.

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INDONESIA

In Indonesia, the top three social media platforms are BlackBerryMessenger,FacebookandWhatsApp.

Figure13.TopActiveSocialPlatforms—Indonesia


JAPAN

Japan’slistofleadingsocialmediaplatformsdiffersmarkedlyfromChina’s,with thenumber-onepositionoccupiedby Line, anapplication for instantcommunication on smartphones, tablets and PCs. Other top social mediaplatformsinJapanincludeFacebookandTwitter.

Figure14.TopActiveSocialPlatforms—Japan


15%

12%

12%

10%

7%

19%

14%

13%

11%

8%

BlackBerryMessenger

Facebook

WhatsApp

FacebookMessenger

Google+

Line

Twimer

Instagram

WeChat

Pinterest


17%

15%

5%

3%

2%

2%

2%

1%

25%

3%

Line

Facebook

Twimer

Mixi

FacebookMessenger

Ameblo

Instagram

Google+

Mobage

Gree


InIndonesia,thetopthreesocialmediaplatformsareBlackBerryMessenger,FacebookandWhatsApp.

Japan’slistofleadingsocialmediaplatformsdiffersmarkedlyfromChina’s,withthenumber-onepositionoccupiedbyLine,anapplicationforinstantcommunicationonsmartphones,tabletsandPCs.OthertopsocialmediaplatformsinJapanincludeFacebookandTwitter.

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SOCIALSELLING—EUROPEOfEurope’s838million inhabitants,approximately74%areInternetusers,and approximately 64% of that group are active social media users. Thecontinent featuresmore than1billionmobileconnections,ofwhichmorethanonequarterareactiveusersofmobilesocialmedia.

Figure15.SnapshotofKeyDigitalIndicators—Europe(Mil.)

Metric Value

TotalPopulation 838

ActiveInternetUsers 616

ActiveSocialMediaUsers 393

MobileConnections 1,102

ActiveMobileSocialUsers 305


While the top platforms vary by country in Europe, Facebook, FacebookMessenger,Google+andWhatsApparepopular inanumberof countries.Below,weprofilethetopsocialmediaappsinthefourlargestcountriesinWesternEurope:France,Germany,ItalyandtheUK.

FRANCE

In France, the top three social media platforms are Facebook, FacebookMessengerandGoogle+.

Figure16.TopActiveSocialPlatforms—France


43%

11%

11%

7%

6%

5%

22%

9%

8%

7%

Facebook

FacebookMessenger

Google+

Twimer

Snapchat

Skype

WhatsApp

Instagram

LinkedIn

Pinterest


OfEurope’s838millioninhabitants,approximately74%areInternetusers,andapproximately64%ofthatgroupareactivesocialmediausers.

InFrance,thetopthreesocialmediaplatformsareFacebook,FacebookMessengerandGoogle.

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GERMANY

ThetopthreesocialmediaplatformsinGermanyareWhatsApp,FacebookandFacebookMessenger.

Figure17.TopActiveSocialPlatforms—Germany


ITALY

Thetopthreesocialmediaplatforms in ItalyareFacebook,WhatsAppandFacebookMessenger.

Figure18.TopActiveSocialPlatforms—Italy


38%

9%

7%

7%

7%

3%

39%

20%

10%

4%

WhatsApp

Facebook

FacebookMessenger

Skype

Google+

Instagram

Twimer

Pinterest

Snapchat

LinkedIn


33%

14%

12%

12%

9%

6%

30%

23%

12%

6%

Facebook

WhatsApp

FacebookMessenger

Google+

Instagram

Twimer

Skype

LinkedIn

Pinterest

Viber


ThetopthreesocialmediaplatformsinGermanyareWhatsApp,FacebookandFacebookMessenger.

ThetopthreesocialmediaplatformsinItalyareFacebook,WhatsAppandFacebookMessenger.

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UK

The top three social media platforms in the UK are Facebook, FacebookMessengerandWhatsApp.

Figure19.TopActiveSocialPlatforms—UK


THEPOWEROFINFLUENCERSSocialmedia influencerswieldenormouspower intermsofengagingtheirfollowers. They can be celebrities or non-celebrities, but the biggest oneshaveallachieved large followingsonsocialmediaplatforms,andcanhelpbrandsreachnewaudiences, raiseawareness, influenceconsiderationandhelpbuildloyaltytoaproduct.Therearesocialmediainfluencersactiveinallareas,hobbiesand interests, fromsportsto lifestyleto familyvaluestoentertainment. The hypothetical example below demonstrates how aninfluencerwouldusemultiplesocialmediaplatformstopromotedonuts.

Figure20.UseofMultipleSocialMediaPlatformstoPromoteaCategory

Source:BBDODigitalLab

47%

20%

14%

10%

10%

8%

32%

24%

13%

12%

Facebook

FacebookMessenger

WhatsApp

Twimer

Instagram

Skype

Snapchat

Google+

LinkedIn

Pinterest


ThetopthreesocialmediaplatformsintheUKareFacebook,FacebookMessengerandWhatsApp.

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The power of influencers to generate page views and consideration isenormous. The table below illustrates several examples of influencershelping companies—including traditional brands such as General ElectricandHewlett-Packard—generatepositiveresults.

Figure21.InfluencerCaseStudiesBrand Influencer/Followers Platform Results

GeneralElectricMarcus Johns, Jerome JarreTotalof11.5millionfollowers Vine

VideosthatGEsharedonitsownaccount

[email protected] Vine

Turned videos into30-secondTVspot

Nike

@_gabrielflores

122,520followers Instagram 6,588posts

TargetJoy Cho/Oh Joy!13millionfollowers Pinterest

More than 825,000followers

WarbyParker@JayZombie234,314followers Twitter

670,000 views and a4Xincreaseintraffic

Source:BBDODigitalLab

PEER-TO-PEERONLINECOMMUNITIESConsumers often turn to advice from peers and reviews when makingpurchase decisions, and the recent PwC survey found that 45% ofrespondents said that reviews, comments and feedback influence theirshopping behavior. In response to consumers’ preference for gettinginformation from peers, many retailers have created peer-to-peer onlinecommunities based on the concept of social networks. In thesecommunities, consumers can discuss products, offer guidance topurchasers,andfollowtheguidanceofexpertsorcoaches.CompaniessuchasApple,Bosch,Kraft FoodsandNikehave launchedonline communities,andTokyWoky,aFrenchstartup,offersonlinepeer-to-peercommunicationservicestobrandsandretailers.

“BUY”BUTTONS“Buy”buttonsarenotnew—Amazonpatentedaversionofonewaybackin1999—butinrecentyears,theyhaveproliferatedonsocialmedia,andmostmajor platforms have tested them in some form.With a few exceptions,though, the technology has not been widely adopted by platforms thatwere not traditionally used for e-commerce. Consumer adoption has alsobeen slow, although quantitative data on “Buy” button usage is scarce.However,thereisamajorneedtomakeshoppingonmobiledeviceseasier,soascompaniescontinuetotestthesebuttons,andasnewentrantsdisruptthe space, these buttons have the potential to change the face of e-commerce.

Consumersoftenturntoadvicefrompeersandreviewswhenmakingpurchasedecisions,andtherecentPwCsurveyfoundthat45%ofrespondentssaidthatreviews,commentsandfeedbackinfluencetheirshoppingbehavior.

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Figure22.Historyof“Buy”Buttons

Date Event

September1997 Amazon applies for a patent on a “method and system for placing a purchase order via acommunicationsnetwork.”

September1999 Amazon’spatentisapproved;itincludesamethodfororderinginasingle,“1-Click,”action.

October1999 Amazon filesa lawsuitagainstBarnes&Noble forusingan“ExpressLane” featureon itse-commerceplatform thatallows for single-actionpurchases.Amazoneventuallywinsand itspatentisupheld.

July2014 Facebookbeginstestinga“Buy”button.

July2014 Twitterbeginstestingits“BuyNow”button.

June2015 Pinterest announces the creationofBuyablePins, saying sellerswill soonbeable topay tofurtherpromotethesePins.

June2015 Instagramannouncesthereleaseofa“ShopNow”buttoninads.

July2015 Googleannouncestheadditionofa“Buy”buttonthatwillappearintheadsectionofmobilesearches.

September2015 Twitterexpandstheavailabilityofits“BuyNow”button,makingitavailabletoanymerchantthatusesDemandware,BigcommerceorShopify.

October2015 PinterestannouncesamajorexpansionofitsBuyablePinsprogram.

September2017 Amazon’spatenton1-Clickissettoexpire.

Source:USPatentandTrademarkOffice/companypressreleases

A “Buy” button is simply a responsive button or clickable link that isembeddedintoeitherawebpageorsocialmediapageinordertoenablee-commerce. Clicking the button allows the site or app visitor to directlypurchaseaproductorservicewithouthavingtogotoaseparateretailer’ssite or payment service. Increasingly, social media platforms are testingsuch buttons, although different platforms refer to them by differentnames. Forexample, Instagramnowhasa seriesof call-to-actionbuttons,labeled “Shop Now,” “Install Now,” “Sign Up” and “Learn More.” OnPinterest,userscanclicka“BuyIt”buttononpagesthatarecalledBuyablePins. Regardless of their names, the buttons all serve the same basicpurpose—andtheireffectivenessisstilltobeseen.

A“Buy”buttonissimplyaresponsivebuttonorclickablelinkthatisembeddedintoeitherawebpageorsocialmediapageinordertoenablee-commerce.Clickingthebuttonallowsthesiteorappvisitortodirectlypurchaseaproductorservicewithouthavingtogotoaseparateretailer’ssiteorpaymentservice.

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A2014studybyresearchersattheUniversityofMassachusettsDartmouththatfocusedsolelyonmillennialsshedsomelightontheirwillingnesstousethesebuttons.Theresearcherssurveyedadiversegroupof405millennials,ages14–33,andfoundthat35%ofthosesurveyedsaidtheyarelikelytousea“Buy”buttononFacebookand24%arelikelytouseoneonTwitter.

Figure23.LikelihoodofMillennialstoUse“Buy”ButtonsonFacebookandTwitter

Source:UniversityofMassachusettsDartmouthSurvey

Therearethreemain ideasdriving“Buy”buttonadoption: increaseduseofmobiledevices,shoppingcartabandonmentandtheserendipityofshoppersfindingadditionalitemstheywerenotoriginallysearchingfor.Mobiledeviceuserstendtopreferappstowebsites,assmallscreensandpoorlyoptimizedwebsites can make it difficult and time consuming to navigate betweendifferentappsandwebsitesonamobiledevice.Thisdifficultymakesmobileshoppingafrustratingexperienceforsome,andpresentsanopportunityforretailersthatincorporate“Buy”buttonsintotheirapps.Leadinge-commerceandsocial-mediacompaniesimplementthesebuttonsindifferentways:

• Amazon, a pioneer and leader in e-commerce, introduced its 1-Clickordering method in 1999, but its key patent is due to expire inSeptember2017.

• eBay offers a “Buy It Now” button on many auctions, which enablesuserstoimmediatelypurchaseanitem(atapredeterminedprice)ratherthanhavingtoparticipateinthestandardonlineauctionprocess.

• Facebook is still testing its “Buy” button,which is currently limited toitemsfromafewsmallandmedium-sizedUSbusinesses.ThebuttoncanbefoundinNewsFeedads,anditenablestheusertopurchaseanitemwithouthavingtoleavetheFacebooksite.

• GooglehascreatedPurchasesonGoogle,whichenablestheusertoclickonaproductadandbetakentoamicrositewithinGooglethathasthelook and feel of the retailer’s site. There, the user can purchase theproductfeaturedintheadorotherproductsfromthesamecompany.

• Instagramiscurrentlytesting“Buy”buttonswithinadsinSpain.

• Pinterest is likely the leader in using these buttons on a social mediaplatform; millions of products are now available via the company’sBuyablePinsfunctionality.

7%

28% 27%

36%

2%5%

9%

24%

46%

5%

VeryLikely SomewhatLikely

SomewhatUnlikely

VeryUnlikely NoResponse

IfFacebookandTwiherhada“buy”buhon,howlikelywouldyoubetouseittomakeapurchase?

Facebook Twimer

Researcherssurveyedadiversegroupof405millennials,ages14–33,andfoundthat35%ofthosesurveyedsaidtheyarelikelytousea“Buy”buttononFacebookand24%arelikelytouseoneonTwitter.

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• Shopify isa leadinge-commerceplatformthatenablesuserstoembed“Buy”buttonsontheirownwebsites.Shopifyuserscanalsousea“BuyNow”buttononTwitter.

• Twitter’s“BuyNow”buttonallowsuserstopurchaseproductswithtwoclicks: the first click ison thebuttonand thesecondclickconfirms thepurchase.

• YouTubeallowsuserstodirectlypurchasefromretailer-producedvideosand advertisements, as well as place “Buy” buttons in other people’svideos(ifthoseusershaveoptedin).

Another challenge that these buttons can help alleviate is shopping cartabandonment.Theonlineretailmarketwasworthapproximately$1.6trillionin 2015, according to eMarketer. However, shoppers filled up their onlinecartswithanestimated$4trillionworthofgoodsandservicesthattheylaterabandonedwithoutpurchasing.Thegraphbelow,basedona2012Worldpaysurveyof19,000consumers,showsthatshoppersabandontheironlinecartsfor a variety of reasons other than price concerns, including difficultiesduringthecheckoutprocessandconcernsaboutsecurity.

Figure24.ReasonsforNotCompletingOnlinePurchases

Source:Worldpay

For more information on “Buy” buttons, please refer to our Buy Buttonsreport,publishedFebruary16,2016.

0% 10% 20% 30% 40% 50% 60%

Presentedwithunexpectedcosts

Justbrowsing

Foundabemerpriceelsewhere

Overallpricetooexpensive

Decidedagainstbuying

Websitenavigahontoocomplicated

Websitecrashed

Processtakingtoolong

Excessivepaymentsecuritychecks

Concernsaboutpaymentsecurity

Deliveryophonswereunsuitable

Websitehmeout

Pricepresentedinaforeigncurrency

Paymentdeclined

Whydoonlineshoppersleavewithoutpaying?

Anotherchallengethatthesebuttonscanhelpalleviateisshoppingcartabandonment.Theonlineretailmarketwasworthapproximately$1.6trillionin2015,accordingtoeMarketer.However,shoppersfilleduptheironlinecartswithanestimated$4trillionworthofgoodsandservicesthattheylaterabandonedwithoutpurchasing.

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MARCH28,2016


CONCLUSIONSocial networks are compelling platforms for selling products, givenconsumers’ strong relationshipswith them,and the fact that theglobale-commerce market is massive (worth an estimated $2 trillion). AlthoughseveralUS-basedsocialmediaplatformsarepopularworldwide,consumers’favorite social platforms vary by country and also by level of integrationwithelectronicpaymentnetworks.As thepowerofonline influencersandpeer-to-peercommunitiescontinuestogrow,andasmoresocialnetworksincorporate“Buy”buttontechnology,socialnetworks’shareofonlinesalesissuretogrow.

DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:[email protected],CFASeniorAnalystHONGKONG:10thFloor,LiFungTower888CheungShaWanRoad,KowloonHongKongTel:85223002470LONDON:242-246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988NEWYORK:1359Broadway,9thFloorNewYork,NY10018Tel:6468397017FBICGROUP.COM

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