Social media not a good sales channel…yet: study

January 28, 2013  |  Chris Powell  |  Comments

Despite their ubiquity, social media channels like Facebook and Twitter will remain a “backwater” sales tool for the foreseeable future according to a new global study from PwC.

The Multi-Channel Retail Survey found that while 42% of Canadians use social media channels at least once a day (and an additional 17% use them once a week), only 7% currently use them to shop. That compares with 8.5% in the U.S. and 12% globally.

The findings are based on an extensive online survey of more than 11,000 people in 11 countries (including 1,333 Canadians) conducted in July and August.

“Eventually… [social media] may become a sales channel, but right now people are using it for information and to share things with friends,” said David Elsner, manager, retail consulting services at PwC in Toronto. “They’re not using it as a shopping channel.”

Elsner said part of the reason social media lags as a shopping channel is that online shopping as a whole is still an emerging field in Canada. A quarter of Canadians surveyed by PwC said they rarely if ever shop online, trailing only Russia (32%). “It’s a channel that hasn’t been maxed out yet,” he said. “It’s not in its infancy, but it certainly hasn’t completely matured.”

At the same time, he said, companies have not yet figured out the “secret sauce” for creating social media storefronts. While some U.S.-based companies such as Delta Airlines and Ticketmaster have had some success in this regard, design limitations have prevented highly trafficked sites like Facebook from becoming more popular as shopping channels.

The study found that Canadians are actively engaged with companies on social media, with 44% of respondents saying that they use tools like Twitter and Facebook to follow their favourite brands. This could be particularly important for indigenous companies to build customer loyalty as more U.S. retailers such as Target and J. Crew enter the Canadian market, said the PwC study.

Currently, only three Canadian brands (Chapters Indigo, Canadian Tire and The Bay) rank among the top 10 favourite multi-channel retailers for consumers. Elsner said that all three are “compelling” choices in their respective retail category.

Social media has become an important part of retailers’ customer engagement “tool kit” said PwC, with half of respondents indicating that they visit brands’ social media channels to seek out attractive deals or sales, and 32% indicating that they are looking for new product offerings.

“A lot of Canadians are using social media very regularly, so even though they may not be using it as a purchase avenue now, most likely they will be,” said Elsner. “It’s something [retailers] can’t ignore.

“If [social media] is even a small part of the purchase journey, but it’s that one thing that gets you one step closer to the customer actually making that transaction, it is very important. As a retailer, you want to offer different groups of customers whatever route is best for them.”

The complete report can be found here.

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