Global e-retail sales are expected to grow strongly by more than 17% to reach $1.7 trillion this year, as social media companies are increasingly acting as direct sales platforms, which is likely to give an additional boost to online shopping in the long term, a new study from UK market research firm Juniper Research has shown.
The new survey “Mobile & Online Purchases: Cards, Carrier Billing & Third Party Payment Platforms 2015-2020” observed that social media players such as Twitter, Facebook, Pinterest and Instagram had already launched ‘buy’ buttons from their mobile apps. It claimed that such players are also likely to enhance their sales prospects through strategic retailer partnerships.
“We now see the first partnerships between brands and social media platforms, as the former seek to leverage the reach and engagement of the latter, not merely to advertise their product but to act as a direct sales platform,” it said in the whitepaper “Buying into online shopping”, which is part of the wider research.
As part of its move into the retail business, Twitter, for example, bought the US startup CardSpring, a company that helps developers to create apps which will accept credit/debit card payments, in July 2014. Twitter has also partnered with Amazon, allowing consumers to link their accounts. If a link to a product page appears on a user’s Twitter timeline, a reply using the hashtag #AmazonBasket or #AmazonCart adds the item to their Amazon basket.
The latest social networks to launch a ‘buy’ button are Pinterest and Instagram. Pinterest confirmed in early June 2015 that more than two million items would be available for purchase from its app on iOS devices, with retail partners including Macy's, Nordstrom and Neiman Marcus.
In terms of delivery, the research argued that online retailers were increasingly adapting to the growing customer demand for faster delivery by introducing same-day deliveries to reduce time-to-consumer. At the same time, ‘bricks and mortar’ stores now widely offer next-day in-store collection often charging an additional fee for this option.
This trend for faster deliveries is especially boosted by ‘Generation Y’, otherwise known as ‘Millennials’ meaning the consumer generation born in the 15 years prior to the millennium. According to various academic and marketing studies, these consumers have different priorities and behavioural habits to comparable age groups from preceding generations, underpinned by an affinity with digital technologies. Accustomed to interacting at speed, via SMS, social media, instant messaging or e-mail, they want to receive goods and services near instantaneously demonstrating a lack of patience compared with previous generations.
A number of retailers have, in turn, seized a competitive advantage (and revenue uplift) from being able to deliver physical goods to consumers more quickly than their competitors. Amazon, for example, launched the same-day delivery service in ten US cities in 2014, for which it charges a premium of $5.99. In the UK, Amazon has introduced a same-day collection service, where members of Amazon Prime can collect online purchases from one of 500 collection points nationwide at no extra charge (non-members pay £4.99). In both cases, orders must be placed before midday.
The research also urged retailers to deliver consistency of message, branding and shopping experience across all channels by integrating in-store and online experience and adjusting to each individual’s omnichannel shopping habits. A growing trend goes towards a majority of mid-sized and large retailers transitioning to a hybrid approach to maximise their engagement opportunities with consumers, as opposed to pureplay online retailers selling goods exclusively via internet.
According to the research author Dr. Windsor Holden, “the key is to ensure that consumers are allowed to choose their own path to purchase rather than have it effectively mandated by channel limitations.”
Looking ahead, Juniper Research expects smartphones to account for more than 40% of e-retail transactions by 2020. Despite the dramatic increase in purchases via smartphones and tablets, two-thirds of the global e-retail spending still occurred via desktops and laptops so far in 2015. However, the proportion is continuously decreasing as consumers increasingly purchase via mobile devices in many countries.
Juniper Research provides research and analytical services to the global hi-tech communications sector, providing consultancy, analyst reports and industry commentary.
