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Why Social Media Buy Buttons Have Failed

Say bye-bye to the buy button 5/11/2016 09:30:00 AM

Our society is increasingly moving toward the kind of push-button living seen on “The Jetsons.” Need a healthy dinner? An outfit for an upcoming wedding? A new sofa? With just a few taps or clicks, those things can be delivered to your door.

While consumers are attracted to instant gratification in some cases, such as hailing a cab, many sectors are still struggling to translate ease into results. One of the most glaring examples of this phenomenon is in e-commerce, where buy buttons have by-and-large failed to gain traction. Buy buttons on social media platforms are rapidly proving ineffective and becoming obsolete. Let’s take a deeper look at why.  

Button Up

Over the past decade, social media has not only transformed the way people connect and communicate with each other, but also the way they make buying decisions. ShareThis conducted a study of 58 million American millennials, which revealed that they are twice as likely to purchase products they post about. Additionally, a poll from Harris Interactive found that nearly seven in 10 millennial social users are at least somewhat influenced to purchase based on friends' posts.

As social media’s influence over purchasing decisions grew, social media and e-commerce platforms alike identified this influence as a huge opportunity. In theory, a buy button could enable networks like Pinterest, Facebook, Instagram and Twitter to monetize their large and engaged user bases, while enabling e-commerce merchants to capitalize on the power of peer influence online.

Over the past 18 months or so, we’ve seen this theory put into practice. Twitter and Facebook tested buy buttons; Pinterest rolled out buyable pins, and Instagram added a “Shop Now” button to ads. However, these efforts have fallen far short of expectations. Twitter’s introduction of a buy button has had a negligible impact on its earnings, and Facebook has been testing buy buttons for over a year, without any demonstrable results. In a survey by the University of Massachusetts Dartmouth, only 35 percent of millennials said they were likely to use a buy button on Facebook, and the numbers were even lower for Twitter. The same pattern holds true for Pinterest and Instagram.

According to data from Custora, social channels accounted for 1.8 percent of overall online sales during the 2015 holiday season, which actually represents a slight decrease from 2014 — before the buy buttons were even launched.

Bye-bye Buy Button

Buy buttons make sense conceptually; the challenge is executing them in a way that makes sense, resonates with consumers, and adds value. There are a number of reasons why they have failed to gain traction.

The first is the question of who is actually taking the payment. Is it the site the user is on or the merchant selling the product on the site the user is on? If someone buys a pair of shoes via a Facebook buy button, does Facebook process the purchase or the shoe retailer? Consumers want to know where their money is going and trust that the transaction will be efficient and secure. Given that many consumers have not actually made a purchase from a platform that is not a retailer, buy buttons involve uncertainties. Consumers are still more comfortable buying directly from a merchant.

Another big issue is inventory. Managing inventory online can be hard enough on a commerce site where the owner controls everything. With buy buttons, there are a lot more moving parts. Social media sites need to ensure that retailers are trustworthy and reliable, and that inventory is up-to-date and available. They also need enough inventory to make the commerce experience compelling. While Pinterest has 60 million buyable pins, that is nothing compared to Amazon’s offerings.

Payment companies, like Stripe and Braintree/PayPal, are hoping that if they can solve the inventory problem, they can win the payment processing market. Stripe’s Relay is targeting complex inventory management, and seems like an attempt to solve the second problem outlined above, but requires Stripe payments. This can be problematic if the seller already has a preferred processor. PayPal's approach seems different in this critical respect because the company claims that you don't need to use Braintree or PayPal to process the transactions if you use PayPal commerce. The question is, what's their motivation/benefit?

Finally, it seems that the companies implementing buy buttons have misunderstood consumer intent. The lackluster performance of buy buttons has emphasized the strong distinction between browsing/shopping and intent to purchase. TIG conducted a study which showed that nearly half of millennials regularly browse for items they don’t plan on buying, and 36 percent say they only buy things that they feel are necessary. Millennials are not impulse shoppers and like to conduct research, which makes them less disposed to impulsively hit a buy button when they see something they like on Instagram or Pinterest. Moreover, they may not be in a shopping frame of mind while perusing on social media, meaning they won’t easily switch between commenting on a friend’s vacation photo and shelling out for a new shirt.

Clearly, it is not enough to slap a buy button into a social media feed and expect consumers to actively begin shopping. Social media giants and retailers alike are still figuring out how to unlock the promise of social commerce, and it doesn’t look like a ubiquitous buy button is going to be successful for anyone any time soon.

Justin Benson is CEO of Spreedly, a Durham, N.C., payment software developer that creates world-class payment infrastructure for merchants, platforms and payment providers.

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