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Posted by Sucharita Mulpuru on July 6, 2015
The hottest topic in eCommerce these days seems to be “buy buttons.” The energy though appears premature. Pinterest announced its buyable pins with a press conference and sentimental Hallmark-like videos though the buyable pins are actually hard to find. Facebook, the king of all social networks, announced a buy button more than a year ago but it’s been relatively mum on the details (and they appear to only have one formal eCommerce partner). Media reports and blog posts of Instagram, Twitter, and Google doing the same seem to further excite merchants and vendors alike - but nothing seems to have launched.
The uninitiated may ask, “What are buy buttons?” They are essentially the ability to complete a transaction on one of these sites. The merchant of record is still usually the seller of the item. This makes all of these players marketplaces. One other salient point, in the cases of Pinterest and Google, is that their buy buttons will only be available on mobile devices upon launch. We’d also be remiss not to mention that the idea of impulse-driven purchases through an app aren’t new: Fancy and others have been trying this for years with questionable success. One executive at a large merchant I recently talked to appropriately summed it up: “This seems like F-Commerce v.2.”
Here’s a run-down of what we know so far and the outlook for each of the players:
- Pinterest. Of all social networks, image-based ones like Pinterest consistently get credit for generating purchase intent. That’s why buyable pins are conceptually a great idea. Unfortunately Pinterest’s current execution is weak. Pinterest is limited to what merchants have in inventory, which means the merchant needs to send real-time data on merchandise availability to Pinterest. That’s onerous in a category like fashion where size and color detail are critical and constantly changing. Furthermore, only a small number of items will be “buyable.” I describe the problem as a Venn diagram: one circle has the things shoppers want and the other circle has what’s available for sale at any moment in time. Given Pinterest’s broad categories and breadth of photography, I expect the overlap will be relatively small. Merchants I’ve talked to say that one of the biggest problems for Pinterest is that old items often get pinned which aren’t available for sale any longer. For Pinterest to get critical mass of "buyability" for a sizable percent of its images (I'd argue that's the bare minimum needed for the company to be a force in commerce), they would likely need to create an image-matching algorithm which would be a new and complicated solution.
Net-net: Pinterest’s buyable pins are a good idea but the current execution is inadequate to nail social shopping, no pun intended. In the long run, the company will likely stick to straight-up advertising and sponsored pins and brands because those are easier and more lucrative to monetize.
- Instagram. To the degree that shopping happened at all through Instagram, there was a hyped “like2buy” solution which got some early buzz among the investment community but was never a sales driver for any merchant in a meaningful, sustainable way. Instagram has said it currently has a very modest test in limited execution now with its own “buy now” functionality. It has the same pros that Pinterest has in that it can generate interest and demand based on lovely imagery. But if Pinterest’s problem is that its pins have too long a lifespan, Instagram has the opposite problem: its image lifespans are too fleeting to have any impact with “buy now” functionality. And unfortunately sponsored images get little engagement. Instagram has one more big problem: its core demographic of young shoppers are the ones with the least money to spend.
Net-net: It’ll be cool to say that you’re testing sales on Instagram, but like shopping at Tesco with your phone at a subway stop in Korea, it won’t actually generate any sales. Agencies may love buzz but what matters to retailers who control the purse strings is sales.
- Twitter. There have been more attempts to sell things on Twitter than we can shake a stick at and nearly all of them have been unremarkable. An exception was Dell which once proved that the one thing Twitter can do is generate interest in a limited quantity flash sale. The problem is that because of the mayfly-like lifespan of a tweet, it’s nearly impossible to scale and makes most sense when inventory quantity is limited. I’m not saying sales won’t happen—I saw a cool Herschel bag myself on Twitter just the other day that I nearly bought. It’s just going to be hard to sell large volumes through Twitter.
Net-net: Tweets are too ephemeral to make a difference to a merchant in sales. Even if there was a buy button on any ad unit, few companies would really get much benefit from such an offering.
- Facebook. The Facebook buy button has been an imminent option for marketers for nearly a year now but with limited uptake, likely because Facebook seems to just be testing it. There are certain categories like tickets or books where newsfeed presence, especially with endorsements by one’s social network, are already very effective. But the likelihood of buy buttons working in other categories remains to be seen because most people don’t buy most things just because their friends did. (The exception is that consumers like to discover new brands and merchants through their friends which is why Facebook ads are pretty effective). In markets like Brazil where there’s a dearth of physical retail, people selling products to their friends on Facebook is already accepted and fairly successful. But slapping a buy button onto miscellaneous product posts that show up in a newsfeed is unlikely to make waves for most merchants in the US.
Net-net: Facebook could be a buy-button-leader because of its scale but it just doesn’t appear to have that much interest in winning at this. With good reason. The value of any buy button is small potatoes in comparison to the company’s red hot ad business right now.
- Google. A few weeks ago, the Wall Street Journal wrote that Google would let shoppers buy certain items directly on Google when a shopper sees these items on a mobile device. For shoppers down the conversion funnel, this is powerful. That’s why companies like Groupon and even Amazon do so well on mobile devices. But Google’s success will depend on its execution—specifically, how much of the product detail page it pulls in and how accurate those details are. Too little detail and the shopper goes to the merchant site anyway. Furthermore, Google, while a superior tech company, has a reputation for atrocious customer service which any merchant that’s customer facing knows is unacceptable to American shoppers.
Net-net: Google’s buy button has the most promise of all the sites listed here but success is relative even if it does get the execution right. Mobile commerce is still tiny and Google's share of it may ultimately be sizable overall but for any given merchant it will be relatively small. The real game-changer will be when Google puts the buy button on the desktop, which is and will be the predominant way to buy digitally in the foreseeable future.
All this said, the one company absent from this discussion but that has perhaps the most disruptive development in the works is Amazon. Between voice-activated buy capabilities (which already exist on its Echo device), the unbundling of that voice-activated tool, and its Prime shipping program, Amazon is in a better position than any of the companies above to win even greater share of impulse and considered purchases - no matter where a shopper may be.
One thing is for certain. In this age of hyperadoption, we’ll have a pretty early read on whether any of these buy buttons are successful for merchants. Given that more and more eCommerce traffic is organic (i.e. shoppers typing a company’s URL directly), I don’t think we’ll see a major shift in how shoppers buy anytime soon, at least not with the executions that have been announced to date. Merchants that are intrigued by these offerings are wise to test and learn but to have low expectations. In fact, I’d argue the biggest opportunity from social networks isn’t sales but the data around what keywords and images are trending. These are crucial demand signals that merchants don’t always get on their own.
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