By Jim Lofgren, CEO, Nosto.
Fashion retailers understand that social media plays an important role in driving awareness, traffic and orders. However, given the complex shopping journey of today’s fashion consumer, it’s difficult to clearly identify the relative merits of different social networks – particularly as the networks themselves are continuing to evolve and introduce new features.
Pinterest, for example, added functionality to support online retail in the run up to its recent IPO, while Instagram now lets users make purchases from within the app.
To evaluate the impact of different social sites on fashion ecommerce Nosto recently carried out a global analysis, tracking the source of mobile traffic and orders to large, enterprise online fashion retailers with annual sales of $50m or more. The study is based on 1.19 billion visits to ecommerce sites globally, 24% of which were classified to enterprise fashion sites. All traffic sources were tracked based on the ‘last click’ (where a visitor came from prior to landing onto a retailers’ site from both paid and unpaid traffic sources).
The potential of Pinterest and Instagram
One of the key findings is that while they drive relatively small amounts of traffic, Pinterest and Instagram deliver the highest average order values (AOVs) from mobile devices for fashion retailers - bigger than Facebook. The AOV on Pinterest is $154 (paid), unpaid $68, while on Instagram paid AOV is $103, unpaid is $65. In contrast Facebook AOV is just $69 paid/$58 unpaid.
However, Facebook has the highest conversion rate on social media - 1.24% for unpaid visits and 0.73% paid visits. Given that it is also the biggest driver of social media traffic to fashion retail, Facebook generates more orders overall, but they are smaller on average. Snapchat trails the other social networks in both conversion rate and AOV. This is most likely because it is more of a top of the funnel discovery channel where consumers go for inspiration rather than immediate purchases.
Unpaid vs paid traffic
Comparing paid social sources (such as ads) with unpaid activity also delivers interesting insights. The average order value from unpaid social media activity is lower (on Pinterest for example it is $68 for unpaid and $154 for paid), showing that when consumers click through from paid social media and make a purchase, they tend to buy more. Despite this however unpaid conversion rates remain higher – on Facebook they average 1.24% compared to 0.73% for paid visits - suggesting that consumers from unpaid social are more committed to making purchases and more likely to buy overall.
While the high AOV coming from Pinterest and Instagram do provide a positive indication of their potential power, they still pose some challenges for retailers. For both networks, their low direct traffic and lower conversion rates means there is a risk that they become destinations purely for branding activity. Instagram has managed to drive brand awareness for fashion brands by allowing them to leverage influencers; but can Instagram and Pinterest manage to sustainably drive ecommerce revenue? That’s one of the key questions that fashion retailers (and Pinterest investors) will be keen to get answered.