A big part of what we do at SimplicityDX is social commerce research. It's a rapidly evolving area and the results often have the potential to impact strategy decisions. Many of our findings are in the press and here is a round up of the last few months activity, just in case you missed it!
A massive amount of time, effort and money is spent driving traffic to ecommerce sites. Hitting sales targets is based on simple math………
But there’s a problem: Where visitors land — and the experience they have on landing — has a very big impact on what happens next. Today, 25% of traffic lands directly on the product detail page, something that it was never designed for. As a result, traffic bounces off 79% more and converts at only 1.5%, half the rate of every other page. In total, this amounts to 14% of site revenue leaking from your product pages, and $700 billion in lost revenue across the industry. But all is not lost; understanding why consumers are bouncing off leads to some practical solutions that ecommerce teams can implement relatively quickly.
If you believe all the hype surrounding social commerce currently, you might think that social commerce will remove the need for an e-commerce platform completely. The reality though is e-commerce platforms aren't going away.
The state of social commerce
In a February 2021 study of 501 social shoppers by SimplicityDX, 71% of online shoppers prefer to check out on the brand site rather than directly on the social network. By comparison, only 13% prefer to check out on the social network, while 16% have no preference.
This is helpful in understanding how the majority of consumers want to use social media as part of their shopping journey. What the data tells us…………..
Almost half of pure-play ecommerce brands in 2022 are running at a deficit, losing $29 on average for every new customer order. In recent years, customer acquisition costs have increased by as much as 60%, with more brands chasing the same groups of buyers.
Those findings and more come from a recent study by my firm, analyzing ecommerce conversion data from Forrester, National Retail Federation, Shopify, and Kibo, the personalization platform. What follows are observations from that data.
Acquiring new customers is expensive, often wiping out profits entirely from first-time purchases. But three-quarters of conversions come from first-timers.
Forget digital media for your major marketing needs -- for the moment, anyway. Think a little retro -- like marketing material you can hold in your hands and read, without a screen.
Jordan Jewell, former research director at IDC and now analyst in residence for ecommerce platform VTEX, said in a press release: “Some brands now find it cheaper to acquire new customers by delivering personalized paper catalogs to their homes rather than acquire them via digital advertising. This would have been unthinkable just a few years ago, when marketing through digital channels was a bargain.”
What's going on? Ever-higher marketing costs continue to rise.
New Research Shows a 222% Increase in Customer Acquisition Costs Puts Renewed Focus on E-Commerce Profitability and Repeat Sales
“Social checkout looks like a tantalizing way to inject shoppable content into customers’ social feeds. But this is ‘fool’s gold’ because it makes no sense in the current environment to pay to advertise to acquire customers for whom you lose $29 on every sale and then can’t market to”
Brands are more trusted than social media for protecting consumer data.
In a recent survey of shoppers, SimplicityDX found that 53% do not trust social channels to refrain from abusing, sharing or selling their data, while 34% say the same thing about brands.
It’s not good news for either side, and it extends to credit-card data: 47% have no trust in social media to protect their data, and 37% lack faith in brands.
This highlights the need for …..
Linkedin Commentary, Jordan Jewell - Former research director at IDC and now analyst in residence for ecommerce platform VTEX
The most interesting stat in commerce this week: Online brands and retailers LOSE $29 on average for each new customer they bring on; this number (loss) has increased greatly over the past decade.
Charles Nicholls, a friend of mine and ecommerce expert, recently authored an article on PracticalEcommerce where he compared the profitability (or lack thereof) for sales among new customers vs. return customers.
I spoke with Charles about these data points and he highlighted a few areas with “low hanging fruit” where online sellers can make dramatic increases in profitability……
Shoppers increasingly use social media to discover products. But new research shows that shoppers overwhelmingly prefer to check out on a brand site, not on social.
For years consumers have extended their shopping journeys across multiple channels. A Salesforce study in 2019 found that consumers interact with brands across an average of 7.6 touchpoints.
That trend has accelerated. Consumers no longer head directly to the brand site or Google to discover new products.
Shopping has shifted to the edge.