Here's How Social Commerce Will Transform Virtual Window-Shopping Into A Big Business

Facebook Gift Shop, the social network's experiment in e-commerce, was mothballed at the beginning of August 2013.

Does that mean that social-powered e-commerce will never rise to become a huge Internet business?

Will social commerce consist of nice-to-look-at digital shopping catalogs that don't drive sales? We don't believe so, since scores of entrepreneurs and retailers have succeeded with merchandising on social media and adding social features to e-commerce sites.

One successful strategy is to create time-sensitive offers that motivate users to snap out of casual browsing or social media-grazing and into a buying mood.

In a new report from BI Intelligence, we analyzed the most recent data and spoke to leaders in the social commerce space to understand how their companies are adding value at different stages of the consumer purchase funnel. To do so they're building social networks around e-commerce platforms, partnering with brands, or otherwise transforming social commerce's strengths in Pinterest-style digital window-shopping into a clear value proposition.

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Here are the top social commerce strategies:

• It's not all about click-to-buy: Social commerce is not simply transactional - it's not just about offering a click-to-buy link next to an offer on Facebook. Social commerce will never be what some have wanted it to be, an "Amazon killer."
• What will help social commerce grow as a sales driver? The key is to help connect the funnel end-to-end, or to connect different mediums - say, social media and TV - to help coax a consumer down the funnel, and yes, get them to purchase something.
• There are a few proven ways to encourage purchases: Retargeted advertising may be one missing link. It enables social commerce to connect the sales funnel from end-to-end by serving ads that remind users of products they have browsed across the Web but have not yet purchased. So far, only Facebook has developed this capability.
• Also: Clever merchandising and user interfaces allow for sticky merchant-to-consumer relationships that can help nudge a consumer toward purchase over time.
• Time-bound and compelling offers can be used to snap consumers out of a browsing mindframe and into the buying mood.
• Finally, referrals shouldn't be discounted: Another solution is for social commerce to develop as a sales referral engine, and take a cut of the sales. If social commerce sites have a large enough audience, even a low referral and conversion rate will result in a good revenue stream.

• Looks at all the data regarding social commerce audiences, their demographics
• Includes interviews with three social commerce industry leaders
• Compares the different social media platforms in terms of average order values, conversions, and volume
• Discusses why Twitter has a unique opportunity at the bottom of the funnel
• Looks at Pinterest's prospects as a top-of-funnel platform
• Examines Facebook's mothballing of its physical gifts program and the success of its ad-retargeting platform, FBX
• Reveals average order values and order volume for a leading social commerce platform
• Breaks down the share of social media-generated e-commerce sales for each social network
• Looks at the demographics of social commerce consumers
• Compares Twitter, Facebook and more traditional digital methods of retail customer acquisition such as search engines

The report also includes an exclusive collection of eight charts and datasets, and a full-resolution version of our social commerce sales funnel graphic. Subscribers to BI Intelligence also have full access to our ongoing coverage of social commerce, including our preceding May 2013 Social Commerce Report.

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.