The UK's retailers are missing out on a potential 9 billion worth of additional revenue online, according to a whitepaper on the future of social commerce (s-commerce) by social commerce and recommendations firm nToklo.
The whitepaper also noted how user generated content (UGC) is shaping online retail faster than the retailers themselves, and how s-commerce is "not yet equal to the sum of its parts". According to figures from nToklo's work with retailers and brands, the use of UGC and recommendations could account for up to a 27% uptake in sales.
Recently, IMRG reported that the UK's online retail spend for 2011 was 68.2bn and this online spend is expected to grow by a further 13% in 2012. According to nToklo, half of retailers don't yet offer online recommendations to consumers, so it can be estimated that retailers missed out on an estimated 9bn worth of additional revenue online in 2011 alone.
"The increasing interest in social commerce stems from the natural progression of two trends that have seen tremendous growth in recent years: online shopping and social networking", said Anton Gething, co-founder and product director for nToklo. "However, this research shows that social commerce is yet to become the sum of its parts and many businesses are missing out on a potentially significant additional revenue opportunity. In strained times, this additional revenue could provide a much needed lifeline for British retailers."
The research highlighted that 'social' is important to UK retailers, with over 90% of those surveyed having a presence on Facebook and Twitter. However, only 65% of retailers' sites utilise the integration technology these social platforms can offer, such as Facebook Connect. In fact, three quarters (76%) of the retail sites reviewed also did not have their own social community functions onsite, despite many requiring customers to sign-in to the site in order to make a purchase.
Additional findings from the research include:
- 50% of retailers do not provide customers with recommendations through their website;
- 73% of those sites surveyed do not offer consumers the ability to actively discover or share recommendations through social platforms.
"Presenting users with relevant, timely recommendations has been an understood and valuable part of the traditional retail purchase funnel for a number of years, whether in-store or online. However, with the explosion in social engagement, recommendation content is no longer provided by the retail brand alone and increasingly consumers are seeking out more 'social' user reviews and recommendations," concluded Gething. "Therefore, those retailers in a position to offer a cohesive social experience online will be in a position to take advantage of the potential growth in revenue available to them."