California Apparel News

Social media has the world’s attention, but many retailers are still unclear on how to use these venues, where hundreds of millions of people go for news, entertainment and friendship.

There is little agreement on whether social media is the next big retail market or simply a great place to market a brand and offer customer service.

The difference in opinion—and experience—regarding social media’s retail potential is shaping up to be a hot topic for e-commerce.

For retailer John Volturo, Facebook is the best place to build a store and give a big boost to the revenue of 
JewelMint, a division of Santa Monica, Calif.–based e-commerce group BeachMint. “Facebook commerce has exceeded our expectations wildly,” said Volturo, BeachMint’s chief marketing officer.

In June 2011, his company introduced social-media commerce to JewelMint to test if it could make “incremental sales” or some extra revenue following a promotion. Initial expectations were low for the online venture, but sales jumped 20 percent above his company’s forecast, and Facebook commerce functions will be rolled out to BeachMint’s other divisions.

However, Forrester Research, an e-commerce market-research firm, came to the opposite conclusion. Forrester analysts would not recommend selling anything on Facebook or Twitter.

“Don’t be swept up by the hype around social,” wrote Forrester analysts in a survey titled “The State of Retail Online 2011.” The analysts had little faith in Facebook’s retail possibilities. “Facebook excels neither at acquiring new, nor retaining existing, customers,” the paper said.

Marketing on steroids

Some of America’s biggest retailers—including Nordstrom, The Gap and JCPenney—quietly shuttered their Facebook stores in recent months. For e-commerce retailer Sara Morgan, everything online has a specific function, and those looking to make sales on social media are looking for business in the wrong place. “It’s like going to a bridge club and expecting a dance,” she said.

Facebook and other social media are important components of building a community for Tailored (www.tailored.co), the San Francisco–area wedding fashion website Morgan founded earlier this year. But the only place to make payments for her company’s services is on Tailored’s e-commerce website, not on its Facebook page or Twitter accounts.

“Selling is not part of the DNA of Facebook,” Morgan said. “You go there to see what your friends are doing. Brands go there to have a genuine relationship with the users. They are going to Facebook to interact. If you’re going there to sell them, you’ll lose them,” she said.

Facebook and other social-media outlets are great places to build support for a product, said Mike George, president and chief executive of QVC, a retailer that specializes in televised home shopping.

Social media has not proven itself to be the right place for QVC to make sales yet, George said. However, it’s been a spectacular vehicle for marketing.

“One of the top ways to get customers is word of mouth, “he said. “On Facebook we take word of mouth and put it on steroids. It’s a powerful driver for us,” he said. In 2011, the company had 250,000 fans, but it quickly increased to more than 700,000 fans this year.

The potential for social-media retailing is untapped, according to a recent survey conducted by technology company RedPrairie, which develops software for retail and supply chain management. The survey found that 38 percent of consumers expect to browse and make purchases on social networks, but only 22 percent of companies deliver these services.

In the survey, RedPrairie found that 
36 percent of companies it surveyed said they were looking for the best venue to make sales in social media or through mobile, but they were held back because there were too many choices in the rapidly growing market for social media.

Discovery channel

Supporters of social-media commerce say naysayers do not understand social-media etiquette and culture.

Social media is still new, and entrepreneur Christian Taylor also believes that it is misunderstood. It’s a great place to do business, he said. More than 1.5 million people shop monthly on his Facebook marketplace, Payvment (www.payvment.com), which is headquartered in Palo Alto, Calif.

“It’s about people discovering products through other people,” Taylor said. In the unique culture of social media, companies cannot simply replicate their e-commerce strategies, such as building a website and expecting shoppers will visit and make purchases. Taylor contends this has been the mistake many retailers made in their first attempts at building shops on social-media sites.

Rather, consumers find businesses through several steps, which start through their personal profiles. Other users visit their profiles, and shoppers receive recommendations about products they might like from other people on the site.

After receiving recommendations and researching brands on Payvment’s mall of stores on Facebook, shoppers visit Payvment and place substantial orders, Taylor said. Companies using Payvment to build retail storefronts include entertainment companies Amoeba Music and Adult Swim. Taylor said apparel is the top-selling category on his Facebook mall, with much of it made by independent designers.

Another social-media benefit for businesses is that companies can harvest crucial information on shoppers’ personal likes and dislikes, said JewelMint’s Volturo. The company’s Facebook store can help it discover that a specific customer prefers necklaces to rings. As a result, the company will not waste time trying to sell rings to that consumer and will highlight necklaces instead.

Another benefit to selling on social media is that the consumers spending time on a brand’s social-media sites are the ones who are the most loyal and engaged and most willing to make a purchase. “They want to know more and more,” Volturo said. “They have an insatiable appetite for the brand.”

Whether commerce finds a firm foundation in social media or not, retailers will have to build a robust presence there, said Casey Chroust, executive vice president at trade group Retail Industry Leaders Association, headquartered in Arlington, Va.

“Today’s multi-channel shopper is here to stay,” he said. “They need to interact with a brand whenever they want, wherever they want and for whatever they want.”