Social Selling - Deborah Weinswig

MARCH 28, 2016

Social Selling

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Of the world’s 7.4 billion inhabitants, approximately 46% are Internet users, and approximately two-thirds of that group are active social media users.

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Adults spent an average of 109 minutes per day in 2015 on social media sites such as Facebook, Twitter and Instagram, according to a survey of 50,000 Internet users around the world.

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The global e-commerce market is estimated to be $2 trillion this year and is expected to grow 20+% annually through 2019.

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In a recent survey, nearly half (45%) of the digital shoppers polled worldwide said that reading reviews, comments and feedback influenced their buying decisions, and 16% of respondents said that they purchased products directly via a social media channel.

D EBO RA H WEI NS WIG M A N A G I N G DI RE C TO R , F U N G G L O B AL R E T A I L & T EC H N OL O G Y d e b or a h w e i n s w i g @ f u n g 1 9 37 . c o m U S : 64 6 . 8 3 9. 7 0 1 7 H K : 85 2 . 61 1 9 . 1 77 9 C H N : 8 6 .1 8 6 . 1 4 2 0. 3 0 1 6 DEBORAH WEINSWIG, MANAGING DIRECTOR, FUNG GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2016 The Fung Group. All rights reserved.

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MARCH 28, 2016

Social Selling EXECUTIVE SUMMARY Adults spent an average of 109 minutes per day in 2015 on social media sites such as Facebook, Twitter and Instagram, according to a GlobalWebIndex survey of 50,000 Internet users around the world. That figure represents a 9% increase from 100 minutes in 2014, which was, in turn, up from 96 minutes in 2013. The same study found that more than 92% of adult Internet users surveyed have at least one social media account and that 78% are active on at least one account; the average user actively participates in 3.5 social networks. The global e-commerce market is estimated to be $2 trillion this year and is expected to grow 20+% annually through 2019.

Given users’ strong attachment to their social media accounts, it is logical to attempt to connect the channel to the global e-commerce market is estimated to be $2 trillion this year and is expected to grow 20+% annually through 2019. In a recent survey by PwC, nearly half (45%) of the digital shoppers polled worldwide said that reading reviews, comments and feedback influenced their buying decisions, and 16% of respondents said that they purchased products directly via a social media channel, as illustrated in the figure below. Figure 1. Which of the Following Aspects of Social Media Influence Your Online Shopping Behavior? 45%

Reading reviews, comments and feedback Receiving promohonal oﬀerings

44% 30%

Viewing adverhsements Staying on top of current fashion and product trends

25% 22%

Wrihng reviews, comments and feedback Associahng with parhcular brands and retailers Purchasing products directly via a social media channel

20% 16%

Source: PwC, Total Retail 2016: They Say They Want a Revolution

Each country possesses a unique social-shopping environment. While users in most countries generally rely on Facebook, Google+ and Twitter, social ecommerce on these platforms is not as well developed as it is on the WeChat Wallet and Alipay platforms in China. Specifically, US social media companies have only recently added a “Buy” button to their platforms, and their platforms are not largely available in China. In this report, we explore some of these and other regional differences in social networks and social shopping. DEBORAH WEINSWIG, MANAGING DIRECTOR, FUNG GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2016 The Fung Group. All rights reserved.

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MARCH 28, 2016

GEOGRAPHICAL DIFFERENCES Of the world’s 7.4 billion inhabitants, approximately 46% are Internet users, and approximately two-thirds of that group are active social media users. Across the globe, there are nearly 38 billion mobile connections, and more than half of them consist of active users of mobile social media (source: We Are Social, Digital in 2016). Figure 2. Overview of Global Internet and Social Media Usage (Mil.)

Americas

Europe

Asia-Pacific

World

Total Population

997

838

4,116

7,395

Active Internet Users

665

616

1,662

3,419

Active Social Media Users

511

393

1,211

2,307

1,072

1,102

3,860

3,790

437

305

1,066

1,968

Facebook Facebook Messenger Instagram Pinterest Twitter

Facebook Facebook Messenger Google+ Twitter WhatsApp

Blackberry Messenger Facebook Line Sina Weibo Qzone Twitter WeChat

Facebook Facebook Messenger QQ Qzone WeChat WhatsApp

Mobile Connections Active Mobile Social Users Selected Top Social Media Platforms

Source: We Are Social, Digital in 2016

The top three social media platforms globally are Facebook, WhatsApp and QQ. Figure 3. Top Active Social Platforms, Worldwide 1,590

Facebook WhatsApp

900

QQ

860

Facebook Messenger

800

Qzone

653

WeChat

650

Tumblr

555

Instagram

400 320

Twimer Skype

300

Baidu Tieba

300

Viber Sina Weibo Line Snapchat YY

249 222 212 200 122

Vkontakte

100

Pinterest

100

Blackberry Messenger

100 100

LinkedIn

Source: We Are Social, Digital in 2016 DEBORAH WEINSWIG, MANAGING DIRECTOR, FUNG GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2016 The Fung Group. All rights reserved.

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MARCH 28, 2016

INTRODUCTION TO SOCIAL SELLING Social media has revolutionized our lives, enabling people across the globe to connect and converse in many ways. People discuss people and things that are important to them on social media and, increasingly, use these platforms to seek out and obtain product information, whereas previously they might have asked friends or colleagues for product information and recommendations. Social media has revolutionized our lives, enabling people across the globe to connect and converse in many ways. People discuss people and things that are important to them on social media and, increasingly, use these platforms to seek out and obtain product information.

amladigital.com

When the topic of social selling is mentioned, most people think of friends recommending certain products or services to their other friends on social media. However, both retailers and brands can operate their own social media platforms and communications, through which they can interact with and influence (and be influenced by) consumers. Retailers, for example, can offer their own pages on social media, share reviews and comments, and provide a platform for purchasing, as shown in the figure below. Both retailers and brands can operate their own social media platforms and communications, through which they can interact with and influence (and be influenced by) consumers.

Figure 4. Retailer Social Media Universe

Source: Epsilon, Digital Shopping Tool Impact Study 2015 DEBORAH WEINSWIG, MANAGING DIRECTOR, FUNG GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2016 The Fung Group. All rights reserved.

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MARCH 28, 2016 The social media universe for brands is very similar to that of retailers, as seen in the figure below, except that many brands also offer coupons and carry on a dialogue with consumers. Figure 5. Brand Social Media Universe

Source: Epsilon, Digital Shopping Tool Impact Study 2015

In the graph below, from a study conducted by Epsilon, we see that social media represents three of the top five digital influences on shopping and that the influence of retailers and brands exceeds that of friends. Social media represents three of the top five digital influences on shopping and that the influence of retailers and brands exceeds that of friends.

Figure 6. How the Digital Tool Influences Your Shopping (% Saying “I try new brands and products”) 29%

Retailer social

28%

Brand social 23%

Printable coupons

23%

Daily deal sites

22%

Friend social Product reviews

21%

Mobile payment

18% 18%

Brand texts Shopping apps

17%

Brand emails

16% 16%

LTC coupons Mobile coupons

15%

Brand websites

15% 14%

Retailer emails QR codes

14%

Search engines

13%

Retailer texts

13%

Price comp sites Retailer websites

13% 11%

Source: Epsilon, Digital Shopping Tool Impact Study 2015 DEBORAH WEINSWIG, MANAGING DIRECTOR, FUNG GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2016 The Fung Group. All rights reserved.

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MARCH 28, 2016 When comparing the behavioral impact of digital tools on the consumer to the utility they offer, we see that social selling from both retailers and brands ranks very high in terms of behavioral impact and ranks above average in terms of utility. Moreover, in its 2015 study, Epsilon found that retailers’ and brands’ digital tools had increased in terms of both impact and utility since the prior survey was conducted in 2013. Figure 7. Digital Tool Impact Matrix

Source: Epsilon, Digital Shopping Tool Impact Study 2015

SOCIAL SELLING—US Of the 323 million inhabitants of the US, approximately 87% are Internet users, and approximately 68% of that group are active social media users. The country features more than 340 million mobile connections, of which nearly half are active users of mobile social media.

Scoop.it

DEBORAH WEINSWIG, MANAGING DIRECTOR, FUNG GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2016 The Fung Group. All rights reserved.

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MARCH 28, 2016 Figure 8. Snapshot of Key Digital Indicators—US Metric

Value (Mil.)

Total Population

323


282


192

Mobile Connections

342

Active Mobile Social Users

169


The top three social media platforms in the US are Facebook, Facebook Messenger and Twitter. Social shopping in the US has evolved from a strong base in pure social networking: e-commerce and payment functions have been grafted onto established social media platforms, in most cases through the addition of a “Buy” or “Buy Now” button.

Figure 9. Top Active Social Platforms—US 41%

Facebook Facebook Messenger

26% 17%

Twimer Pinterest

15%

Instagram

15%

Google+

12%

LinkedIn

11%

Snapchat

11%

Skype Tumblr

9% 7% Social Network

Messenger/Chat App/VoIP


Social shopping in the US has evolved from a strong base in pure social networking: e-commerce and payment functions have been grafted onto established social media platforms, in most cases through the addition of a “Buy” or “Buy Now” button. Below, we profile selected companies in the social-shopping space. eBay is a global leader in e-commerce, via its Marketplace, StubHub and Classifieds platforms. The company was founded in September 1995 and completed its IPO in September 1998. In 2008, eBay began soliciting user feedback to generate seller ratings. Users could rate sellers on a scale of DEBORAH WEINSWIG, MANAGING DIRECTOR, FUNG GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2016 The Fung Group. All rights reserved.

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MARCH 28, 2016 one to five stars; the ratings were anonymous but available to all buyers. PowerSellers are eBay vendors with a rating of 4.5 or higher out of 5 stars. In addition to stars, buyers and sellers can leave a short text review of each other, describing their experience. Buyers can also contact sellers during the bidding process to ask questions about the items for sale. Facebook is a social media company that enables users to share opinions, ideas, photos and videos on desktops and mobile devices via its Facebook, Instagram, Messenger and WhatsApp platforms. Facebook was launched in February 2004 and completed its IPO in February 2012. Building on its global social media platform, in July 2014, Facebook began adding ecommerce capabilities to its platform via “Buy” buttons and testing the buttons’ functionality. Facebook also enables users to submit payments in order to purchase virtual and digital goods from developers, as well as make charity donations and purchase items within sale groups. Google+, which was launched in June 2011, represents Google’s entry into social networking. The platform offers interest-based communities, the grouping of different types of relationships into Circles, multi-person instant messaging, a text and video chat platform called Hangouts, as well as events, location tagging, and the ability to edit photos and upload them to albums. In July 2015, the company launched Purchases on Google, which enables consumers to make purchases from mobile ads; after clicking on a “Buy” button in an ad, they are taken to a product purchase page. Instagram is a social-networking platform that enables the mobile sharing of photos and videos. The service was created in October 2010 as a free mobile app, and Facebook acquired it in April 2012 for approximately $1 billion in cash and stock. The platform started hosting advertising in October 2013, and in June 2015 it began offering e-commerce and buttons for other functions, including “Shop Now,” “Install Now” and “Sign Up.” Pinterest, founded in 2010, is a web and mobile application platform on which users can upload, save, sort and manage images (called Pins) or other content in collections called Pin Boards. In June 2015, the company announced it was adding Buyable Pins to its platform; these are signified by the presence of blue “Buy It” buttons on the site’s pages. Polyvore is a social commerce website fueled by members of a community that curate products within a shared product index and use them to create collages called Sets. The site primarily features interior design and fashion offerings. Twitter is a platform for public self-expression and conversation in real time that can be accessed around the world instantly. The content is unfiltered, and users can access it via the Twitter website, the Twitter mobile application and text message. Twitter messages, called tweets, cannot be longer than 140 characters. The company was founded in March 2006 and completed its IPO in November 2013. In late 2014, Twitter began testing a “Buy Now” button, which was officially launched in September 2015. YouTube is a video-sharing website where users can upload, view, rate, share and comment on user-generated and corporate videos, including, increasingly, full-length videos of TV shows and movies. YouTube was founded in February 2005 and acquired by Google in November 2006 for DEBORAH WEINSWIG, MANAGING DIRECTOR, FUNG GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2016 The Fung Group. All rights reserved.

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MARCH 28, 2016 $1.7 billion. The YouTube platform offers “Click-to-Shop” buttons that take visitors to the websites of the brands featured in videos, where viewers can then purchase products.

SOCIAL SELLING—ASIA-PACIFIC Asia encompasses a diverse group of countries that are home to more than 4 billion people, more than half of the world’s total population. More than 40% of people in Asia are Internet users, and nearly two-thirds of that group are active social media users. The continent features nearly 4 billion mobile connections, of which more than a quarter are active users of mobile social media. The top social media platforms vary by country in Asia, and include Qzone, Sina Weibo and WeChat in China and Line, Facebook and Twitter in Japan. The KakaoTalk and KakaoStory social-networking platforms are the numberone and number-three platforms in South Korea, but are not reflected in other countries. Meanwhile, Blackberry Messenger is popular in Indonesia. Asia encompasses a diverse group of countries that are home to more than 4 billion people, more than half of the world’s total population. More than 40% of people in Asia are Internet users, and nearly twothirds of that group are active social media users.

Figure 10. Snapshot of Key Digital Indicators—Asia-Pacific (Mil.) Metric

Value

Total Population

4,116


1,662


1,211

Mobile Connections

3,860


1,066


Below, we profile the top social media apps in selected Asian countries that have large populations: China, India, Indonesia and Japan. CHINA China boasts an extremely well-developed infrastructure of socialnetworking and mobile payments companies. Tencent’s WeChat Wallet and Alibaba’s Alipay Wallet are the biggest players in the Chinese mobile payments market, and Alipay currently has the dominant share. Tencent’s initial mobile payment offering, Tenpay, was rebranded as WeChat Wallet in 2014. Its service offerings allow consumers to order taxis, book movie tickets, receive geographically targeted coupons, make payments to other people and make online bill payments. Alipay, operated by Alibaba’s Ant Financial subsidiary, was launched in 2004 as a third-party online payment solution. It enables users to make online payments, such as for purchases on Alibaba’s shopping platforms, and to transfer money. The Alipay Wallet product focuses on mobile payments, and its functions include easy shopping on Alibaba’s e-commerce retail platforms, online bill payment and in-store (i.e., offline) payment via QR code scanning. The top three social media platforms in China are WeChat, Qzone and Sina Weibo.


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MARCH 28, 2016 China boasts an extremely welldeveloped infrastructure of socialnetworking and mobile payments companies. Tencent’s WeChat Wallet and Alibaba’s Alipay Wallet are the biggest players in the Chinese mobile payments market, and Alipay currently has the dominant share.

Figure 11. Top Active Social Platforms—China

WeChat

24%

Qzone

21% 16%

Sina Weibo

14%

Baidu Tieba

12%

Tencent Weibo Renren

6%

Facebook

5%

Kaixin001

5%

Facebook Messenger 51.com




INDIA In India, the top three social media platforms are Facebook, WhatsApp and Facebook Messenger. Figure 12. Top Active Social Platforms—India

In India, the top three social media platforms are Facebook, WhatsApp and Facebook Messenger.

Facebook

13% 12%

WhatsApp Facebook Messenger

11%

Google+

10%

Skype

10%

Twimer

8%

Hike Messenger

8%

LinkedIn

7%

Instagram

7%

WeChat Social Network

6% Messenger/Chat App/VoIP



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MARCH 28, 2016 INDONESIA In Indonesia, the top three social media platforms are BlackBerry Messenger, Facebook and WhatsApp. In Indonesia, the top three social media platforms are BlackBerry Messenger, Facebook and WhatsApp.

Figure 13. Top Active Social Platforms—Indonesia BlackBerry Messenger

19%

Facebook

15% 14%

WhatsApp

13%

Facebook Messenger Google+

12%

Line

12% 11%

Twimer Instagram

10% 8%

WeChat 7%

Pinterest Social Network



JAPAN Japan’s list of leading social media platforms differs markedly from China’s, with the number-one position occupied by Line, an application for instant communication on smartphones, tablets and PCs. Other top social media platforms in Japan include Facebook and Twitter. Japan’s list of leading social media platforms differs markedly from China’s, with the number-one position occupied by Line, an application for instant communication on smartphones, tablets and PCs. Other top social media platforms in Japan include Facebook and Twitter.

Figure 14. Top Active Social Platforms—Japan Line

25% 17%

Facebook Twimer

15% 5%

Mixi Facebook Messenger

3%

Ameblo

3%

Instagram

2%

Google+

2%

Mobage

2%

Gree

1% Social Network


Source: We Are Social, Digital in 2016 DEBORAH WEINSWIG, MANAGING DIRECTOR, FUNG GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2016 The Fung Group. All rights reserved.

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MARCH 28, 2016

SOCIAL SELLING—EUROPE Of Europe’s 838 million inhabitants, approximately 74% are Internet users, and approximately 64% of that group are active social media users. The continent features more than 1 billion mobile connections, of which more than one quarter are active users of mobile social media. Figure 15. Snapshot of Key Digital Indicators—Europe (Mil.)

Of Europe’s 838 million inhabitants, approximately 74% are Internet users, and approximately 64% of that group are active social media users.

Metric

Value

Total Population

838


616


393

Mobile Connections

1,102


305


While the top platforms vary by country in Europe, Facebook, Facebook Messenger, Google+ and WhatsApp are popular in a number of countries. Below, we profile the top social media apps in the four largest countries in Western Europe: France, Germany, Italy and the UK. FRANCE In France, the top three social media platforms are Facebook, Facebook Messenger and Google+. In France, the top three social media platforms are Facebook, Facebook Messenger and Google.

Figure 16. Top Active Social Platforms—France 43%

Facebook 22%

Facebook Messenger Google+

11%

Twimer

11% 9%

Snapchat Skype

8%

WhatsApp

7%

Instagram

7%

LinkedIn Pinterest





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MARCH 28, 2016 GERMANY The top three social media platforms in Germany are WhatsApp, Facebook and Facebook Messenger. The top three social media platforms in Germany are WhatsApp, Facebook and Facebook Messenger.

Figure 17. Top Active Social Platforms—Germany 39%

WhatsApp

38%


20%

Skype

10%

Google+

9%

Instagram

7%

Twimer

7%

Pinterest

7%

Snapchat

4%

LinkedIn

3% Social Network



ITALY The top three social media platforms in Italy are Facebook, WhatsApp and Facebook Messenger. The top three social media platforms in Italy are Facebook, WhatsApp and Facebook Messenger.

Figure 18. Top Active Social Platforms—Italy 33%

Facebook 30%

WhatsApp Facebook Messenger

23%

Google+

14%

Instagram

12%

Twimer

12%

Skype

12% 9%

LinkedIn 6%

Pinterest Viber

6% Social Network




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MARCH 28, 2016 UK The top three social media platforms in the UK are Facebook, Facebook Messenger and WhatsApp. The top three social media platforms in the UK are Facebook, Facebook Messenger and WhatsApp.

Figure 19. Top Active Social Platforms—UK 47%


32%

WhatsApp

24% 20%

Twimer 14%

Instagram Skype

13% 12%

Snapchat Google+

10%

LinkedIn

10%

Pinterest

8% Social Network



THE POWER OF INFLUENCERS Social media influencers wield enormous power in terms of engaging their followers. They can be celebrities or non-celebrities, but the biggest ones have all achieved large followings on social media platforms, and can help brands reach new audiences, raise awareness, influence consideration and help build loyalty to a product. There are social media influencers active in all areas, hobbies and interests, from sports to lifestyle to family values to entertainment. The hypothetical example below demonstrates how an influencer would use multiple social media platforms to promote donuts. Figure 20. Use of Multiple Social Media Platforms to Promote a Category

Source: BBDO Digital Lab DEBORAH WEINSWIG, MANAGING DIRECTOR, FUNG GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2016 The Fung Group. All rights reserved.

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MARCH 28, 2016 The power of influencers to generate page views and consideration is enormous. The table below illustrates several examples of influencers helping companies—including traditional brands such as General Electric and Hewlett-Packard—generate positive results. Figure 21. Influencer Case Studies Brand

Influencer/Followers

Platform

Results

General Electric

Marcus Johns, Jerome Jarre Total of 11.5 million followers Vine

Videos that GE shared on its own account

Hewlett-Packard

@finalcutking 1.8 million followers

Vine

Turned videos into 30-second TV spot

Instagram

6,588 posts

Pinterest

More than 825,000 followers

Twitter

670,000 views and a 4X increase in traffic

@_gabrielflores Nike

122,520 followers

Target

Joy Cho/Oh 13 million followers

Warby Parker

@JayZombie 234,314 followers

Joy!

Source: BBDO Digital Lab

PEER-TO-PEER ONLINE COMMUNITIES

Consumers often turn to advice from peers and reviews when making purchase decisions, and the recent PwC survey found that 45% of respondents said that reviews, comments and feedback influence their shopping behavior.

Consumers often turn to advice from peers and reviews when making purchase decisions, and the recent PwC survey found that 45% of respondents said that reviews, comments and feedback influence their shopping behavior. In response to consumers’ preference for getting information from peers, many retailers have created peer-to-peer online communities based on the concept of social networks. In these communities, consumers can discuss products, offer guidance to purchasers, and follow the guidance of experts or coaches. Companies such as Apple, Bosch, Kraft Foods and Nike have launched online communities, and TokyWoky, a French startup, offers online peer-to-peer communication services to brands and retailers.

“BUY” BUTTONS “Buy” buttons are not new—Amazon patented a version of one way back in 1999—but in recent years, they have proliferated on social media, and most major platforms have tested them in some form. With a few exceptions, though, the technology has not been widely adopted by platforms that were not traditionally used for e-commerce. Consumer adoption has also been slow, although quantitative data on “Buy” button usage is scarce. However, there is a major need to make shopping on mobile devices easier, so as companies continue to test these buttons, and as new entrants disrupt the space, these buttons have the potential to change the face of ecommerce.


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MARCH 28, 2016 Figure 22. History of “Buy” Buttons Date

Event

September 1997

Amazon applies for a patent on a “method and system for placing a purchase order via a communications network.”

September 1999

Amazon’s patent is approved; it includes a method for ordering in a single, “1-Click,” action.

October 1999

Amazon files a lawsuit against Barnes & Noble for using an “Express Lane” feature on its ecommerce platform that allows for single-action purchases. Amazon eventually wins and its patent is upheld.

July 2014

Facebook begins testing a “Buy” button.

July 2014

Twitter begins testing its “Buy Now” button.

June 2015

Pinterest announces the creation of Buyable Pins, saying sellers will soon be able to pay to further promote these Pins.

June 2015

Instagram announces the release of a “Shop Now” button in ads.

July 2015

Google announces the addition of a “Buy” button that will appear in the ad section of mobile searches.

September 2015

Twitter expands the availability of its “Buy Now” button, making it available to any merchant that uses Demandware, Bigcommerce or Shopify.

October 2015

Pinterest announces a major expansion of its Buyable Pins program.

September 2017

Amazon’s patent on 1-Click is set to expire.

Source: US Patent and Trademark Office/company press releases

A “Buy” button is simply a responsive button or clickable link that is embedded into either a web page or social media page in order to enable ecommerce. Clicking the button allows the site or app visitor to directly purchase a product or service without having to go to a separate retailer’s site or payment service. Increasingly, social media platforms are testing such buttons, although different platforms refer to them by different names. For example, Instagram now has a series of call-to-action buttons, labeled “Shop Now,” “Install Now,” “Sign Up” and “Learn More.” On Pinterest, users can click a “Buy It” button on pages that are called Buyable Pins. Regardless of their names, the buttons all serve the same basic purpose—and their effectiveness is still to be seen. A “Buy” button is simply a responsive button or clickable link that is embedded into either a web page or social media page in order to enable e-commerce. Clicking the button allows the site or app visitor to directly purchase a product or service without having to go to a separate retailer’s site or payment service.


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MARCH 28, 2016 A 2014 study by researchers at the University of Massachusetts Dartmouth that focused solely on millennials shed some light on their willingness to use these buttons. The researchers surveyed a diverse group of 405 millennials, ages 14–33, and found that 35% of those surveyed said they are likely to use a “Buy” button on Facebook and 24% are likely to use one on Twitter. Researchers surveyed a diverse group of 405 millennials, ages 14– 33, and found that 35% of those surveyed said they are likely to use a “Buy” button on Facebook and 24% are likely to use one on Twitter.

Figure 23. Likelihood of Millennials to Use “Buy” Buttons on Facebook and Twitter

If Facebook and Twiher had a “buy” buhon, how likely would you be to use it to make a purchase? 46% Facebook Twimer 36% 28%

7% 5% Very Likely

27% 24% 9% 2%

Somewhat Likely

Somewhat Unlikely

Very Unlikely

5%

No Response

Source: University of Massachusetts Dartmouth Survey

There are three main ideas driving “Buy” button adoption: increased use of mobile devices, shopping cart abandonment and the serendipity of shoppers finding additional items they were not originally searching for. Mobile device users tend to prefer apps to websites, as small screens and poorly optimized websites can make it difficult and time consuming to navigate between different apps and websites on a mobile device. This difficulty makes mobile shopping a frustrating experience for some, and presents an opportunity for retailers that incorporate “Buy” buttons into their apps. Leading e-commerce and social-media companies implement these buttons in different ways: • Amazon, a pioneer and leader in e-commerce, introduced its 1-Click ordering method in 1999, but its key patent is due to expire in September 2017. • eBay offers a “Buy It Now” button on many auctions, which enables users to immediately purchase an item (at a predetermined price) rather than having to participate in the standard online auction process. • Facebook is still testing its “Buy” button, which is currently limited to items from a few small and medium-sized US businesses. The button can be found in News Feed ads, and it enables the user to purchase an item without having to leave the Facebook site. • Google has created Purchases on Google, which enables the user to click on a product ad and be taken to a microsite within Google that has the look and feel of the retailer’s site. There, the user can purchase the product featured in the ad or other products from the same company. • Instagram is currently testing “Buy” buttons within ads in Spain. • Pinterest is likely the leader in using these buttons on a social media platform; millions of products are now available via the company’s Buyable Pins functionality. DEBORAH WEINSWIG, MANAGING DIRECTOR, FUNG GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2016 The Fung Group. All rights reserved.

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MARCH 28, 2016 • Shopify is a leading e-commerce platform that enables users to embed “Buy” buttons on their own websites. Shopify users can also use a “Buy Now” button on Twitter. • Twitter’s “Buy Now” button allows users to purchase products with two clicks: the first click is on the button and the second click confirms the purchase. • YouTube allows users to directly purchase from retailer-produced videos and advertisements, as well as place “Buy” buttons in other people’s videos (if those users have opted in). Another challenge that these buttons can help alleviate is shopping cart abandonment. The online retail market was worth approximately $1.6 trillion in 2015, according to eMarketer. However, shoppers filled up their online carts with an estimated $4 trillion worth of goods and services that they later abandoned without purchasing. The graph below, based on a 2012 Worldpay survey of 19,000 consumers, shows that shoppers abandon their online carts for a variety of reasons other than price concerns, including difficulties during the checkout process and concerns about security. Another challenge that these buttons can help alleviate is shopping cart abandonment. The online retail market was worth approximately $1.6 trillion in 2015, according to eMarketer. However, shoppers filled up their online carts with an estimated $4 trillion worth of goods and services that they later abandoned without purchasing.

Figure 24. Reasons for Not Completing Online Purchases

Why do online shoppers leave without paying? Payment declined Price presented in a foreign currency Website hme out Delivery ophons were unsuitable Concerns about payment security Excessive payment security checks Process taking too long Website crashed Website navigahon too complicated Decided against buying Overall price too expensive Found a bemer price elsewhere Just browsing Presented with unexpected costs

0%

10%

20%

30%

40%

50%

60%

Source: Worldpay

For more information on “Buy” buttons, please refer to our Buy Buttons report, published February 16, 2016.


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MARCH 28, 2016

CONCLUSION Social networks are compelling platforms for selling products, given consumers’ strong relationships with them, and the fact that the global ecommerce market is massive (worth an estimated $2 trillion). Although several US-based social media platforms are popular worldwide, consumers’ favorite social platforms vary by country and also by level of integration with electronic payment networks. As the power of online influencers and peer-to-peer communities continues to grow, and as more social networks incorporate “Buy” button technology, social networks’ share of online sales is sure to grow. Deborah Weinswig, CPA Managing Director Fung Global Retail & Technology New York: 917.655.6790 Hong Kong: 852.6119.1779 China: 86.186.1420.3016 [email protected] John Harmon, CFA Senior Analyst

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