Impact of Social Sites on Retail Sales Less than Thought

Monday, July 2nd, 2007 by Greg Howlett

Impact of Social Sites on Retail Sales Less than Thought

A new study from JupiterResearch indicates that social sites do little to influence sales but can help with branding. Specifically, social and community sites influence only about 12% of online shoppers to buy more than planned.

About 53% of online shoppers go directly to a retail website to buy while 3% go to blogs first. That means that if you want to use user generated content to sell your products, you had best find a way to incorporate it directly into your retail site.

There are two things about social sites that make them unattractive to shoppers–inefficiency and lack of fundamental information. Shoppers are simply unwilling to wade through lots of biased and incomplete data on social sites. However, 29% say that they use social sites to reaffirm decisions.

JupiterResearch claims that retailers should use the affiliate model to maximize social site opportunities. That may well be true, but just think of the mess that will cause. I believe that social sites are going to be the new spam, full of useless, biased information that is placed there by clever retailers and their affiliates. It is conceivable that before long, online shoppers will have every reason to mistrust almost everything they read about specific products on social sites.

It is going to be very interesting to see how this shakes out. On the one hand, younger buyers value peer input more than more authoritative sources. On the other hand, peer input is quickly becoming useless because everyone seems to have an agenda. The social sites that are actually going to flourish and profit from product recommendations are going to have to spend a lot of resources on maintaining a high level of credibility.

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11 comments on “Impact of Social Sites on Retail Sales Less than Thought”

Michael Martinez Says:

July 2nd, 2007 at 12:26 pm

Like everything else, social media will go through one or more evolutionary phases as people become immunized to its effects through overuse.

The real value in user-generated content lies in the daily drama of conflict resolution. That is, vendors benefit immensely when potential buyers can see them resolve problems online. When the customer is in conflit with the product or service, the provider needs to show a quick and decisive responsiveness.

Social media sites can help that process along by creating channels for vendors to communicate with their customers and prospects. We’ve seen some attempts in the right direction, but as you say, everyone has an agenda. The concept needs more work, more innovation.
Social Shopping Lacks Impact on Buyers » eCommerce Cache :: Varien eCommerce Blog :: A blog focused on the design, marketing, and implementation of online commerce Says:

July 2nd, 2007 at 1:42 pm

[...] Instead, we thought we’d let you know that JupiterResearch has discovered some interesting statistics regarding social shopping sites and their influence over shoppers. It seems that social shopping does little to influence a potential buyer to make an unplanned purchase, but aids in branding efforts and reaffirming a potential buy for the shopper before checkout. [...]
Mark Barrera Says:

July 2nd, 2007 at 2:46 pm

“About 53% of online shoppers go directly to a retail website to buy while 3% go to blogs first.”

Greg- since I haven’t seen the report, I was just curious what the other 44% of online shopper do?
Greg Howlett Says:

July 2nd, 2007 at 3:14 pm

Mark, they come from a variety of sources–shopping comparison sites, authoritative consumer sites, and various other online publications.
Jason Billingsley Says:

July 2nd, 2007 at 3:26 pm

I like Jupiter and Patti in particular, but I am suspicious about these findings. I’d like to know how the data was collected as any consumer survey would likely be incorrect – it appears it was collected in this manner. Most consumers have no idea they are viewing a blog vs review site vs social shopping site vs retail site. My rule of thumb is always…would my mom know what this is?
Steven Bradley Says:

July 2nd, 2007 at 6:27 pm

Do you know if they asked people who participate in social media site or just people who viewed them. I would think if you’re an active participant in a community you’d be more willing to listen to the recommendation of others in the community.

Also if 29% are reaffirming their decisions that’s significant.

Michael is right that social media is still evolving. I think we’re only going to see more niche social sites with tighter communities and that could lead more people to base buying decisions on the recommendations of the site.
Search Engine Optimization Journal » Why Your Company Blog Is Significant For Attracting Publicity Says:

July 2nd, 2007 at 7:14 pm

[...] The social sites that are actually going to flourish and profit from product recommendations are going to have to spend a lot of resources on maintaining a high level of credibility. [...]
Mobilizer Says:

July 3rd, 2007 at 3:08 am

Web sales may be affected by this ruling, but a consumer usually has numerous options when shopping for products found on-line, and those products are rarely necessities. Therefore, online sales should be a secondary concern.

The concern of greatest interest should involve products with: few available methods to purchase, few manufactures, or in other words, industries that already have the ability to set prices on necessary commodities.

OIL COMPANIES will have the ability to set prices at will. Gasoline prices will raise with out any voice from the market place. Gas companies are already squeezing Americans for every penny. Now they have the tools to do it even better.
links for 2007-07-03 | The Marketing Technology Blog Says:

July 3rd, 2007 at 2:21 pm

[...] Impact of Social Sites on Retail Sales Less than Thought | Marketing Pilgrim A new study from JupiterResearch indicates that social sites do little to influence sales but can help with branding. Specifically, social and community sites influence only about 12% of online shoppers to buy more than planned. (tags: retail socialmedia stats) [...]
Jay Says:

July 3rd, 2007 at 2:29 pm

Why are they focusing on online sales? The #1 category for most of the Social Shopping sites is fashion. Online apparel sales still makes up a very small percentage of total sales for this category. Has Jupiter looked at how blogs, social shopping sites, and even e-commerce sites impact offline purchases? If you can’t follow the clicks, does that mean these sites don’t influence purchasing decisions?
User generated content user growth and the impact on online sales | Gino Cosme Says:

July 17th, 2007 at 7:34 am

[...] A recent U.S. Retail Consumer Survey by JupiterResearch found that social media sites have very little impact on sales but can however help with branding. As Patti Freeman Evans, senior analyst with JupiterResearch, says, “From a branding and advertising perspective, social and community sites are garnering a great deal of online influence, but when researching a product online, shoppers are looking for fundamental information, not entertainment or social interaction.” [...]

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