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Are social networks primed to be the next omnichannel frontier? Yes, no, maybe

The advent of social networks as e-commerce channels presents challenges for brands and retailers and yes, even for Amazon.

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April 9, 2019 by Judy Mottl — Editor, RetailCustomerExperience.com & DigitalSignageToday.com

With the advent of Instagram's retail shopping channel, Checkout, it's clear the retail customer experience is expanding well beyond in-store, online and the emerging mobile device landscape.

It's taking root within the social media network environment as social media titans are bringing a retail experience to subscribers — potential consumer populations that initially embraced social media as places to share everything from vacation photos to dog portraits to video of the latest grandchild taking that first step.

Now they can increasingly buy with ease — without having to log into a retailer's site when they see a product shared that they're interested in buying.

New channel brings new challenges

Yet, as retail and digital commerce experts note, social media commerce doesn't mean smooth sailing will be automatic –— for consumers or brands hoping to capitalize on the newest omnichannel experience.

As John Bruno, vice president of product management at Elastic Path, sees it, the social media retail landscape will only deliver if brands and retailers are up to fulfilling on the promise. Elastic Path offers API-based e-commerce software solutions.

"So often, e-commerce disruption happens through organizations with the means to disrupt. Social media, and Instagram in particular, have democratized social engagement," Bruno told Retail Customer Experience in an email. "The real challenge will be if major brands with decades old commerce investments can be nimble enough to manage their product catalogs and get the right information out to Instagram so they can capitalize on it as an emerging channel."

As it went with online retail, the focus, Bruno said, will be on delivering that often pursued "seamless" experience.

"Today on Instagram, you can already highlight products and link out to your own commerce experience. Any time you can reduce the friction and steps between the decision to buy and executing on the transaction represents a powerful shift for the consumer. Retailers struggle converting on mobile, but with Instagram owning payments — the mobile friction point — conversion will increase," he said.

Giving shoppers what they want where they want it

As Eli Finkelshteyn, CEO and co-founder of Constructor.io, an on-site search company, noted in an email exchange that Instagram's in-app shopping comes on the heels of Google testing shoppable ads via its image search.

Both advancements, he said, highlight a growing retail trend.

"Companies realize that owning the location and medium where users find the products they want to buy is key to getting those users' dollars," he told Retail Customer Experience.

"Shoppers hate repeatedly entering their account information on retailers, especially on mobile. Currently, when they find something they want on Google or Instagram, they'll go straight to Amazon where most already have an account (and payment information stored) to see if they can find the product there," he said.

This is good for Amazon, he added, but not for Instagram or Google where the product was initially discovered.

"With this new shopping functionality, those same shoppers can buy what they want even more easily, without Amazon ever being involved."

He noted that today more than half of online consumers, whether shopping at a retailer's site or via social channels, start a product search at Amazon and a good majority typically end up at Amazon when it's time to buy.

"Content sites like Instagram already help users find products they may want to purchase are realizing that they can help both themselves and e-commerce companies (not named Amazon) by providing a simple and quick path to purchase," he said, adding "more and more companies are realizing that owning and being incredibly good at search and product discovery is key to capturing e-commerce dollars."

The double-edged sword in play

Social media shopping, however, may well prove to be a double-edge sword for brands and retailers as most social media users don't yet think of Instagram or other social networks as an e-commerce entity, according to Scott Ings, vice president of product at Apptimize, an A/B testing and release management platform.

In fact, the blending of social media and shopping could even cause what Ings describes as "uncomfortableness" given the blurring of the line between "influencers" and paid advertisements.

"This is a really interesting change for Instagram to make because it could have a substantial impact on how users view the product and the brand," he told Retail Customer Experience in an email interview.

"The new feature could be promising as an additional revenue source for Instagram, but there is also the risk of alienating users by causing the brand to be perceived as more commercial than social. This type of uncertainty is why we see top apps consistently running experiments for major features and experience changes. You really can't know which effect is going to be more dominant until you put it out to users and measure what happens," he said.

Yet a big upside, he noted, is that social media networks present a pretty interesting opportunity to try something new and see what works.

For example, said Ings, Hotel Tonight used Apptimize to remove  a registration requirement for its mobile app and saw a 15 percent spike in total hotel bookings.

"This was pretty counter intuitive at the time because just about every app and website made users register so that they could be remarketed to via email. But Hotel Tonight found the benefits of streamlining the buying process more than made up for it," he explained.

Yet removing barriers could be a double-edge sword as well, he said.

"It's possible brands will find that they are losing out on an opportunity to create long-lasting awareness and loyalty with customers. Since customers won't go to the brand's website at all, brands might find that they're paying for a one time customer as opposed to a customer who interacts with their website directly and who might be stickier in the long run and have a higher customer lifetime value."

The bottom line, said Ings, is that retailers and brands must test the different options and have very solid metrics for success to truly understand long-term benefits and trade offs.

About Judy Mottl

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Judy Mottl is editor of Retail Customer Experience and Digital Signage Today. She has decades of experience as a reporter, writer and editor covering technology and business for top media including AOL, InformationWeek, InternetNews and Food Truck Operator.

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