Instagram, Pinterest, and Snapchat have recently started to offer or test e-commerce and payments opportunities, and online stores need to pay close attention given the potential size of the consumer base.
Having built sustainable businesses over the past five years, these social media apps now need to maintain and monetize their audiences, and each app can deliver a large, attractive base of potential customers to online stores: nearly 78 million people in the U.S. use Instagram; about 48 million people use Pinterest; and between 100 million and 200 million people use Snapchat.
Retailers already rely on all three channels to build brand awareness, support charitable and social causes, and burnish their reputations. These endeavors are critical to building loyalty, particularly among millennials, who comprise 25% of the U.S. population, spend about $600 billion a year, and are heavily invested in social media and online shopping.
In fact, millennials base their shopping decisions primarily on information they find online (and via friends and peers). Only one percent of millennials trust traditional brand advertising; 62% form their loyalties based on their ability to engage with brands via social media, and 46% rely on social media when shopping online. Retailers need to continually reach this group, and Pinterest, Snapchat, and Instagram can help them do just that.
Its unclear how successful each network will be as a sales platform. Pinterest visitors typically use the site to find ideas about recipe, clothes, décor, and more, and the new Buyable Pins will help them satisfy certain needs and/or impulses. The pins are also unobtrusive and offer a clean, clear transaction path right on the site.
Instagrams Shop Now buttons and message links take shoppers to their chosen retailers site, an extra step in the purchase path. However, consumer data provided by Instagrams parent company, Facebook, will help retailers target their audiences very precisely.
Snapchats process seems even more labor-intensive. In a recent test involving shopping portal ShopStyle and e-tailer FarFetch, users were asked to add fashion bloggers to their contact lists, after which they could click links from a bloggers site to ShopStyle, where they could then shop for the FarFetch items that the bloggers were discussing.
These e-commerce initiatives are still nascent, of course, and all three apps are highly motivated to keep improving their own versions. Theyre vying with each other, after all, not only for users but for retailers marketing dollars as well. Online stores also have good reason to explore these sales channels. More than 650,000 e-tailers in the U.S. generated at least $1,000 in sales revenue last year; in such a crowded field, e-commerce outlets have to take advantage of every opportunity to acquire and retain customers.
Snapchat, Instagram, and Pinterest need to increase revenues and audience numbers just to compete with one another. Enhancing their users experiences and their own bottom lines by allowing them to buy products and service while pursuing their personal interests is an obvious next step. The network that offers retailers and users the easiest, least intrusive sales connection will go a long way toward gaining an advantage on its rivals.
Tom Caporaso is CEO of Clarus Commerce.