We are exploring the question Why is text message organically transforming into a text message shopping channel?
In part one of this series, we dove into driving traffic to mobile sites as a way to increase mobile conversions and revenues for online merchants.
We’ve seen how mobile has challenges with inherent design restrictions and maintenance requirements. As an additional challenge, there are increased advertising cost to reach your mobile audience, meaning ROI and Marketing Cost as a Percentage of Revenue are inferior on mobile compared to desktop.
What other options do brands have to drive mobile commerce?
Option # 2 Use Social Media and Other Marketplaces (read: Amazon) as Revenue Channels
Social media has risen in the past 10 years to become a required marketing channel for brands and products. More recently social media platforms are seeking to create a direct sales channel.
Let’s take a look at the Good, the Bad and the Ugly of selling products through Social media channels.
- Instagram Shopping (TL;DR – Basically Advertising with some potential upgrades)
- Product tags make discovery easier, but still requires Users to go to merchant’s website to complete transactions. Good for Product Discovery. (reference)
- It surfaces products in Instagram by making them visible and taggable, however it still requires linking to your mobile website.
- Advertisers have to pay for advertising, so this is basically a newfangled type of advertising. Time will tell if it’s more cost effective, or just more expensive.
- Instagram Checkout (TL;DR – Has Potential, In Beta)
- There will be some beta partners testing the new Checkout inside the Instagram app. (reference)
- This could be a valid direct sales channel for some brands. Only time will tell if the marketing cost as a percentage of revenue comes out competitive.
- Advertisers still have to pay for advertising and a transaction fee inside a competitive marketplace.
- Facebook Store (TL;DR – Never happened)
- Facebook Shop – Ah, good ol Facebook Shop. The phrase failure to launch comes to mind. There’s been a lack of assertiveness and direction from Facebook vis a vis merchandizing products on Facebook, and brands have unanimously abandoned their Facebook Store efforts.
- Searching dozens of the biggest online retailers, I could not find a single one selling via Facebook Store. Too many complications and toll booths.
- You pay a 5% transaction fee. Read: High!
And now the 800 pound gorilla…Amazon.
- Amazon (TL;DR -Expensive)
- Amazon’s mobile Shopping Cart is familiar to almost all online shoppers in the US, and the one click checkout reaches maximum potential for mobile users.
- Depending on Amazon’s keyword search reports for your product category, this can be a quick avenue to boost sales.
- Massive traffic and opportunity comes at a high cost, and even higher level of complexity in a highly competitive environment.
- Referral Fees average 15%-45%
- Fulfillment fees – Varies based on Products
- And advertising cost on Amazon to stay competitive.
The landscape for selling products via social media is either arid and dry or still exploratory. Amazon is a well know channel for selling your products, but comes at a high price. Every brand or product would prefer to have a DTC channel over selling through Amazon.
In part three we are going to explore new innovations that could bridge the mobile gap and create a strong engagement between Brands and their Customers.