Nearly every social media site is experimenting with 'buy buttons' today, but consumers' actual buying habits sometimes challenge the expectations of merchants and platform providers.
Twitter and Pinterest, for example, predicted that their sites would be used for low-value impulse purchases, but Pinterest sees consumers saving money to buy designer items. And many Twitter users purchase tickets and other high-value items from musicians and celebrities because they have such a strong connection to those artists on the platform.
Hosted or distributed commerce allows consumers to stay connected to their social feeds when purchasing.
This makes sense, considering that about 60% of Twitter's users utilize the platform to learn about products they plan to buy, the company said.
"So much conversation about what people want to buy happens on Twitter already," said Philippe Dauman Jr., director of commerce at Twitter, at Money2020 in Las Vegas on Oct. 26.
"Today, retailers and brands need to sell where their customers are and that's distributed commerce.”
Twitter began testing its buy button, powered by Stripe, in September 2014. In April, Twitter inked deals with musicians and sports teams to test the button, allowing them to sell tickets exclusively over the social media site.
The rise of buy buttons can be linked in some part to Pinterest, a photo-sharing site that has been lumped into the social media category but functions more as a discovery platform.
For Pinterest, "commerce has always been something our users have wanted from the platform," said Michael Yamartino, head of commerce at Pinterest, during the event. Pinterest introduced Buyable Pins in June this year, allowing consumers to one-click buy items they see on the site. The feature is, again, powered by Stripe, which dominates the social payments space and is also working with Facebook on its own buy button.
Pinterest sees higher conversion rates when people can buy directly on the site, plus merchants reach a wider audience. Between 80% and 90% of merchant purchases on Pinterest are coming from people that have never bought from that merchant before, said Yamartino.
On Facebook, commerce has developed naturally among the platform's users, said Deborah Liu, the social network's vice president of platform. Members of Facebook communities such as parenting groups talk about ways to buy and sell outgrown clothes and toys, and merchants use their Facebook Pages to post deals and discounts to this audience.
"Right now, commerce is happening but there isn't the last mile," Liu said. "As an industry, we need to close that loop … the distance between seeing something and purchasing it."
Especially since, social media is the fastest growing channel for inbound merchant traffic, said Satish Kanwar, director of product at Shopify.
While merchants are starting to sell through social media, the end goal is still to move consumers to the seller's own mobile app to avoid disintermediation, said Kanwar. The implication is that platforms like Pinterest, Twitter and Google come between the buyer and seller, lessening the effect of the merchant brand and, in turn, customer loyalty.
But hosting buy buttons on non-merchant sites is more about convenience than control, said Michael Haswell, director of product partnerships, ads and commerce at Google. He calls the trend "seamless commerce."
TechCrunch editor-at-large Josh Constantine rejected that term. "Calling it seamless commerce is a 'feel good' way to talk about hosted commerce," he said; the term ignores the fact that social platforms and advertisers are controlling the buying experience.
Twitter's Dauman insists that hosted commerce does the opposite, actually growing the customer/merchant relationship. Citing McKinsey research, Dauman said 82% of people that have a positive interaction with a brand on Twitter will go on to recommend that brand. Forcing the user off Twitter would erase some of the goodwill the merchant earned by coming to the platform in the first place.
"You don't want to have a great experience on Twitter and then push people onto an unfamiliar platform for buying," Dauman said.