One of every five beauty purchases online is made via the Amazon marketplace, according to a new report.
Shopping-focused social networks are popping up, luring consumers who like to socialize as they shop and offering a lucrative new sales channel for retailers.
Laura Cabot is like many, if not most, social network users. Whenever she logs onto Facebook, Twitter, Pinterest or just about any other social network, she often finds that she's frittered away far more time than she anticipated.
And that's easy to do. Consider Facebook. You might sign into the social network intending to quickly scan the "Top Stories" section of your news feed. But, given the bombardment of the news feed's diverse content—status updates, photos, videos, ads—shared by family, friends, brands you Like and those who are targeting you with ads, there are countless opportunities for diversions, Cabot says. "It's so easy to get distracted," Cabot says. "One minute you're looking at an interesting product and the next you thing you know you're stalking your ex-boyfriend's pictures."
Established social networks like Facebook, she says, offer such a variety of content that it can be difficult for a brand to garner attention. After all, shoppers aren't on Facebook to shop, says Cabot, who is CEO of bath products manufacturer and retailer Not Soap, Radio. Nor is shopping the reason they're on Pinterest, Twitter, Tumblr, Instagram, Snapchat or just about any other social network that consumers have embraced as the next big thing.
Still, Not Soap, Radio has found that engaging with shoppers on Facebook, Twitter and Pinterest has helped build brand awareness. But to drive additional sales, the retailer and manufacturer last summer began using OpenSky, a social network focused strictly on helping shoppers discover and buy products.
OpenSky, which has more than 600,000 monthly active users, is a different animal than Facebook, Pinterest, Twitter and the like because its sole purpose is to facilitate shopping; the platform lets retailers create an account on the site, post products and sell. OpenSky takes a 20% commission on most transactions. Because shopping is OpenSky's sole purpose, when a consumer is on the site, she's there to browse or buy online, says John Caplan, founder and CEO of the social network's parent company The OpenSky Project Inc. That explains why the conversion rate for consumers who view products on OpenSky is about 10.5%, a rate that's higher than all but 13 retailers in the 2014 Top 500 Guide, according to Internet Retailer's Top500Guide.com.
Since Not Soap, Radio began using OpenSky, the social network has accounted for about 20% of the company's online sales. And because consumers often use shopping-focused social networks as "discovery tools" to find new products, Cabot says that most of those sales stem from consumers that the brand wouldn't have otherwise reached. "It expands our reach and builds brand awareness," she says.
OpenSky is just one of a host of social networks to spring up in recent years that make shopping the centerpiece. Each in its own way seeks to help consumers discover products and retailers to drive sales. Some, like OpenSky, are actually social-tinged marketplaces where shoppers can make purchases. Others like Wanelo operate as affiliates, promoting a retailer's products and taking a commission on sales. Still others, such as Polyvore, make money from advertising. But the common thread is that each seeks to appeal to an audience that more wide-ranging social networks don't explicitly serve—consumers looking to socialize around shopping.
"Social media has taken over everything over the last few years," says Austin Caldwell, marketing director at online-only shoe retailer Heels.com, which is active on shopping-focused social networks Polyvore, Fancy and Wanelo. "Fashion is such a big part of so many people's lives that it only makes sense that there would be spaces devoted to that."
While each of the social networks built around shopping is different, they all borrow elements from mainstream social networks. Wanelo, for example, features a feed with Pinterest-like images collected by a user's friends, and those shared by brands she follows. She can also organize various images around a theme on Pinterest board-like "Collections."
But unlike Pinterest, Wanelo—which is short for "want, need, love"—gives shoppers more shopping-centric tools. For example, a consumer can mouse over an image in her feed to click a Tag button that recommends the product to a friend. She can also click a Save button to add the item to her wish list, or click on the image to go to a product page that features a Buy button that, when clicked, takes her to the retailer's site.
The tools aim to help shoppers simplify and organize their shopping, says Deena Varshavakaya, Wanelo's founder and CEO. "People are constantly bombarded with thousands of stores and thousands of products when they try to search for something online," she says. "Wanelo makes online shopping easier." Rather than having to go to individual stores, they can find everything they want in one place and collect items into a wish list.
The idea of simplifying shopping is good, says Not Soap, Radio's Cabot. But being active on multiple social networks—either mainstream or shopping-focused—can take time.
On OpenSky, for instance, Not Soap, Radio wants to stay in users' feeds by posting updates—which can be topical notes or highlight promotions—as well as post items, which then appear in followers' feeds. Planning those posts and responding to consumers' responses, can take up to an hour of Cabot's day.
A retailer like Heels.com on Polyvore, meanwhile, has an affiliate team member whose job responsibilities include building sets—the term the social network uses for the collections of items shoppers piece together. That employee also manages the retailer's placement of Promoted Products ads, which enable a brand to pay for a premium placement in the category and subcategory levels on the social network's Shop page. (The social network also offers two other ad products, Promoted Collection in Stream, which lets a brand pay to feature products in a user's stream and Promoted Collections in Editor, which lets a brand pay to have their products featured when a consumer is building a set). And on Wanelo, a brand like U.K.-based luxury retailer Farfetch has two employees regularly add products to pique the interest of the social network's users. The employees also post product stories, which are small collections of products that it links together with some copy and a link, which are seen by the brand's followers.