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News Item

Is Social Commerce the New E-commerce?

Report Explores On- and Off-line Factors Influencing Consumer Online Shopping Behavior in a Down Economy

The future of e-commerce is "social commerce" as online shoppers, particularly younger generations, are heavily influenced by social media and Web 2.0 technologies, according to a new "Future of Commerce" report from Hill & Knowlton.

"Online retailing is being profoundly impacted by the integration of social media into what historically has been a transactional experience," said Joshua Reynolds, worldwide technology practice director, Hill & Knowlton and co-author of the report.

Key factors influencing behavior from the Future of Commerce report include: 

  • Experience counts - 83 percent of respondents said "personal prior experience" has the greatest impact on where they choose to shop online. Trailing behind experience were the following sources: "family member" (48 percent); "friend" (44 percent); and "an online offer or ad from the online store itself" (43 percent).
  • Social media is "Word of Mouth 2.0" for younger generations - Younger generations are predominantly influenced by social media channels: 27 percent of Gen Y are influenced by an "online community or blog" compared to 19 percent of Gen X and only 9 percent of Baby Boomers.
  • Traditional media remains universal driver of influence - Traditional, offline media remains the most effective vehicle for reaching mass audiences: 19 percent of all survey respondents were influenced by an "article in a newspaper or magazine" and 12 percent by "radio or broadcast TV program."
  • The link between thought leadership and corporate valuation - An analysis of more than 300 traditional news articles covering the industry's top e-commerce leaders over a year-long duration indicates strong linkage between companies who talk about the industry - and not just themselves - and increased brand valuation. For example, e-commerce companies that discussed macro environmental topics, such as the evolution of e-commerce, scored highest in "brand presence," perhaps an indicator of the positive impact of establishing a position and maintaining a strong voice in a changing market.

"The most effective way to reach consumers online is with highly-targeted campaigns tailored to engage micro communities that form around common interests," said Julie Mathis, vice president, consumer technology, Hill & Knowlton. "One-size-fits-all marketing is not a viable communications approach in today's PR 2.0 world."

The economy is having a heavy impact on consumer online shopping habits according to the report:

  • Shopping is down - When asked how consumers have changed their everyday item purchases since the economy has receded, 46 percent of consumers said they shop less overall, whether online or offline. The older the consumer, the less likely they are to shop overall.
  • Value is key in a down economy - Fifty percent of respondents said they are shopping online more to look for better bargains. And, Gen X and Y are more likely than Baby Boomers to shop online for better bargains in a down economy.

"Our research indicates that online shopping increases in a downturn, providing a potential offset for offline retailers experiencing revenue losses in the downturn," added Reynolds.

More Stories By Yeshim Deniz

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