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Social networks face obstacles in road to e-commerce domination

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Social networking companies have made no secret of their desire to convince people to purchase things discovered in ads, photos, and other content shared to their services. But the big social players are finding that more difficult than expected, even with the added sales activity from the holiday shopping season.

Over the last year, Facebook, Twitter, and Pinterest have spent much time developing ways to make shopping easier by eliminating the need to navigate outside the social network with various “buy” buttons. The idea is that if you build purchasing features directly into the social service, people will be more likely to make a transaction than if they were redirected to an online retail site or brand’s website. The problem is that consumers aren’t changing their shopping habits as much as hoped, according to a report from Recode.

The report focuses on the various “buy” buttons that have appeared on these social networks in the last year. It notes that Facebook’s is still seen as a test; that Twitter’s isn’t encountered very often even by its most fanatical users; and that Pinterest’s have led to fewer than 10 purchases a day from a retail partner.

A Facebook spokesperson reiterated the company’s stance — that it’s testing its commerce tools, and that it’s focused on discovering new products as well as allowing people to purchase them with a “buy” button — in an interview. Twitter didn’t respond to a request for comment. Pinterest emailed a prepared response:

Since launching Buyable Pins 6 months ago we are encouraged by the early results for merchants. Although it’s still early days with the program we are hearing from merchants that many of their customers coming through Buyable Pins are new and we are driving higher mobile conversions. We look forward to continuing to deliver value to our partners through the holiday season and a fun, easy shopping experience for our Pinners.

It’s worth noting that criticism of these “buy” buttons doesn’t come amid a holiday shopping slump. Reports indicate that Thanksgiving and Black Friday shopping habits were “perfectly average,” and that an estimated 34 percent of purchases from the last week were made by shoppers on their smartphones.

So it’s not that people are closing their wallets this year, nor that they were too busy eating potentially-worrisome turkey products to use their phones. They’re spending a fair amount and they’re doing so via their smartphones — they just don’t seem to be using social networking companies’ purchasing tools to do so.

This might not be too problematic for Facebook and Twitter. Both companies have introduced features unrelated to commerce — like a not-so-virtual assistant and summaries of breaking news — over the last few months. But Pinterest’s inability to convert digital window shoppers into buyers could be a problem.

Commerce has been Pinterest’s focus for a while. First came the buyable pins; then came a dedicated shopping section in its mobile apps; and then came a new visual search tool designed to allow people to identify products shown in pins. It’s obvious that the company wants people to buy things found on its service.

That makes Recode’s report more damning. A Pinterest spokesperson offered several examples of businesses finding new customers through its service — the same as they do on Facebook and Twitter — but only one of a brand improving sales by a notable margin. And even that was expressed as a percentage of growth instead of an absolute value, which makes it hard to tell how big a bump that really was.

“The effectiveness of buy buttons hans’t been fully realized at this early stage. Mobile users have many options for making purchases and it will take time for this payment route have an impact on overall mobile e-commerce sales,” Gartner analyst Brian Blau told Gigaom. “I think we will see [these companies] make adjustments and continue to configure these purchase points over the coming year to optimize their role in the mobile customer purchase funnel.”

It’s still early in this game. All of these companies have emphasized that their commerce efforts are being tested, and at least for Facebook and Twitter, it’s clear that the companies aren’t focusing all of their efforts on getting people to buy things through their platforms. Those companies will be fine either way.

Pinterest’s success or failure in this regard will be more interesting. The service is often used as a way for people to learn about new products. (Or, as it seems to be used in my house, as a never-ending source of hit-or-miss recipes.) Now it just has to bridge the gap between discovering a product and purchasing it.

3 Responses to “Social networks face obstacles in road to e-commerce domination”

  1. Ankit Prakash

    Appreciate your post, crisp and clear information. App development and game development are one of the fastest growing business verticals, opening new opportunities for growing companies / businesses.

  2. kanetmike

    Its so simply because social networks are not built to be used as E-commerce platforms. Their structure and entire core business value is totally different however user friendly social networks can be. For example, the case of Myspace which was by then the leading social network but when thing got mobile, Myspace’s core business structure couldn’t adopt and Facebook went into the lead. I have reason to believe that the same thing is happen with social networks trying to be e-commerce site something they are not making the networks congested and this is slowly but surely driving users away . This is why new apps like #dovibeapp , Whatsapp that allow you to network on a more person basis are picking up faster.

  3. Eamon.Walsh

    The problem is – social n/w sites are still considered primarily a social profile. To be a business friendly profile, they’d need to somehow convince of better security standards, integration and basically a platform which takes good care of your money. With nearly 24% of enterprise workers blaming cybersecurity for their concerns of IoT adoption, e-commerce certainly has to bridge this gap on social n/w platforms.