Rethinking the Value of Social Media to Online Shopping

Retailers should beware before positioning their Social Media presence as a “conversation” with customers. Recent research indicates that Social Media’s alleged value to retailers of promoting better relationships, customer service and sales is actually quite difficult to achieve.

While US online retailers have been rushing into establishing their Social Media presence (86% now have a Facebook page), what value are they getting in return? Additionally, how many consumers actually care about that presence?

Social Networks are not popularly used as a resource for shoppers online. According to a recent survey (source: Compete.com), a majority of consumers do not visit retailer pages on Facebook or Twitter. When consumers do follow or ‘friend’ brands or companies, it is to mostly to stay informed of exclusive deals or offers (source: Razorfish).

Let’s discuss some key pieces that must be carefully considered by eRetailers:

Customer expectations: It seems most customers simply want to be better aware of discounts and deals. That means most retailers’ Social Media presence should be nothing more than a glorified RSS feed, much like the Facebook updates of Amazon.com. Clear expectation should be set upfront.

Customer service: Social Media can be used as customer service as few companies have done, but for the majority it is very likely their Facebook/Twitter accounts are administered by one person or a small team. Can they begin handling questions or comments from thousands of followers? Can they properly guide discussion so it is not full of spam and irrelevant conversation? The electronics retailer BestBuy has a huge ‘friend’ base on Facebook, over 1 million, yet the conversation is consistently a series of disappointed customers.

Sales increases: The promise of reaching new customers has not yet been fulfilled. The Dell example of prompting potential purchasers with offers is well known, but if more retailers attempt the same route, can backlash follow? That would be logical considering a greater awareness of online privacy. So far it seems retailers have simply reached their existing customers only.

This research implies that the promise of Social Media for eRetailers should be carefully balanced by logistics and understanding of what customers actually want, otherwise mutual disappointment is sure to follow.

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