Social Commerce Gaining Ground among Online Retailers

Online retailers are increasingly tapping into user-generated content (UGC) as a way of increasing sales and improving customer satisfaction, according to research published today by E-consultancy and Bazaarvoice.

Some of the findings of “Social Commerce Report 2007″:

• More than half of all online sellers (51%) consider UGC as either extremely important or very important to company strategy over the next year.
• Site content improvement is a key area of digital marketing investment for online sellers, with 76% saying it is a high priority.
• Customer ratings and reviews are being used by 28% of online sellers, with more than half (52%) saying that they were considering the use of this feature on their websites.
• The most widely perceived benefit of ratings and reviews among online sellers is an improvement in site conversion rates, viewed as a major benefit by 79% of responding organizations.
• Improved customer retention and loyalty, and better search engine optimization, are also viewed as a major benefit, by 73% and 59% of online sellers, respectively.
• The overwhelming majority of survey respondents (97%) said that they found ratings and reviews either extremely helpful or very helpful “as consumers.”

 

Sam Decker, chief marketing officer at Bazaarvoice, said: “The fact that more than half of retailers believe the customer voice to be integral to their sales and customer service strategies shows that ratings and reviews will have a big part to play in the growth of online retail in the UK. We expect that the reliance on reviews will grow as more retailers adopt this feature.”

The research also found that the environment for online sellers over the last 12 months has been a very positive one, with half of online sellers (50%) saying they expect growth of 20% or more in the next year.

Linus Gregoriadis, E-consultancy’s Head of Research, said: “The research shows that it’s a very healthy environment for e-commerce but increased competition in the marketplace means that companies need to work harder to maintain strong growth.

“Tapping into social commerce can be a great way of gaining a competitive advantage, for example through ratings and reviews. But apart from the early adopters, this is something a large proportion of online retailers are only just starting to think seriously about.”

Gregoriadis said one-third of online sellers are concerned about negative reviews - a major barrier to adoption of ratings and reviews - “but retailers are finding that they can improve conversion rates, drive sales and increase customer satisfaction even if customers aren’t necessarily singing their praises all the time.”

Other key research findings:

• Asked to rank their top priorities for investment, online sellers ranked the following areas as ‘high priority’:
  • Site content improvement/optimization: 76% of online sellers
  • Natural search (SEO): 71%
  • Email marketing: 54%
  • Paid search: 45%
  • Cart/checkout improvements: 39%

• Large proportions of online sellers have increased conversion rates, site traffic and average order values:
  • 56% say their overall conversion rate has gone up in the past year compared with only 9% who say it has gone down.
  • 77% say their level of site traffic has gone up in the past year compared with only 5% who say it has gone down.
  • 42% say their average order value has gone up compared with 6% who say it has gone down.

About the study: The Social Commerce Report 2007 is based on the findings of a survey of more than 800 online marketers, including 360 online sellers, carried out in June and July 2007. The majority of online seller respondents were in the retail, travel, financial services, and publishing sectors. The majority of respondents are based in the UK, although there are also significant numbers of respondents from the United States, the rest of Europe and beyond.