Whilst 2010 has arguably been the year of marketers asking the question “what is the ROI of Social Media? And, how do we encourage our fans to buy? 2011 could quite possibly be the year of Social Commerce. In its crudest form social commerce could be seen to some as the intersection of social media with ecommerce but I would argue it is more than just an extension of e-commerce “it is the use of social technologies and integrated strategies to redesign and personalise the shopping experience.”
- Highly valuing new information from brands.
- The majority sharing branded content within their network.
- Participants viewing branded social media content as relevant across a wide range of categories.
- Beyond discounts consumers want to engage with brands to help shape products.
Clearly todays social media users both accept and expect brands participating in social network sites and platforms.
The rise of social commerce
A recent survey of 135 top retailers and consumer goods manufacturers by research firm Altimeter Group found 86% of respondents are preparing to launch some sort of social commerce strategy by 2011. Combine this with the fact that over the last year ear, there has been an explosion of stores on Facebook and partnerships with Internet retailers which has prompted Facebook’s Ethan Beard who runs the Web giant’s developer network to also predict that social commerce will hit tipping point over the next 12 months.
“Social commerce will be big and disruptive,” Beard said in an interview with Dow Jones Newswires, referring to the use of social media tools and content (see ‘social tools & tactics’ section below) to make online shopping a more social experience.
see the below 'the future of shopping' video from this years shop.org annual Summit
Redefining the Customer relationship
What does Social commerce really change in terms of the customer relationship and how can we use social to take loyalty to the next level? Traditional CRM was very much based around data and information that brands could collect on their customers, all of which would go into a CRM system that then allowed the company to better target various customers. However we are now in a world of what Pete Blackshaw VP at Nielsen referred to as ‘friction free feedback’ and “the ability for us to provide feedback either good or bad has risen dramatically which leaves a digital trail that goes up exponentially.” It is in this context we need to move from a transactional to emotional interaction with our customers and brands now need to adopt an approach to of active listening and learning, engaging in meaningful dialogue, adapting, and shaping experiences to drive action. But what tools and tactics can we use to help engage, and re-energise the customer shopping experience?
Social Commerce Tools & Tactics
By leveraging some of the following social tools and tactics we can begin the path to product discovery, selection and referral along the consumer path to purchase.
1. Social graphs -Many of the recent examples of social commerce have been made possible by new social media technologies that link social media platforms to ecommerce platforms. Facebook’s open graph allows visitors to login it e-commerce sites with their social networking accounts and communicates directly with their social networks whilst on their sites. In essence portable social graph services allow visitors to bring their friends with them and create direct sales by leveraging the social graph. Not only does this lower the barriers to entry for many sites but it also brings the added benefits of increased traffic and a marked increase in engagement across the site. Linked to this also has been the rise in platform services like Janrain, Gigya, and Shop Igniter that help manage this process for companies.
2.Social Media stores-Alongside the integration of open graph into sites has been the embedding of e-commerce stores directly into social media platforms .Such stores maybe simply storefronts such as Best Buy or, full stores with integrated check in such as 1800-flowers and Delta Airlines ticket counter which both use the Alvenda storefront application . Such has been the growth in this area that Procter & Gamble in the US has also recently announced it was opening up a new Facebook store selling 29 of its top brands as part of what the FMCG giant calls ‘small-scale direct-to-consumer’ initiatives.Indeed selling on Facebook has now also extended to’ network selling’ on where you can sell up your own store with Mark in the US to sell cosmetics to your social network .It can be seen therefore that Facebook has become a compelling place for brands to set up shop. That, along with the cost, is one of the reasons brands are increasingly using Facebook pages rather than microsites as the hubs of their digital marketing campaigns. Coupled with the arrival of stores on the platform has been the recent introduction of Facebook Credits which now allows people to pay for virtual goods such as games and eventually anything.
3. Social plugins -help generate social recommendations which not only realise the referral value of customers and advocates but also are personalising the experience. Logging in through Facebook on your Amazon For example automatically serves up birthdays and gift suggestions for your friends based on their stated profile preferences.
It is these Personalised recommendations based on similarities in social, purchase and browsing profiles with other customers that are increasing context and relevancy to the shopping experience. Also very popular are Apple’s I-Tunes genius recommendations and personalised fashion recommendations from Stylefeeder. Expect a lot more companies serving up personalised shopping experiences like this as consumer start to realise the benefits of sharing their social and behavioural data.
4. The like button - is the new review has risen to prominence in a matter of months. Since its introduction Facebook has announced 2-million sites have integrated Facebook’s social plugins. As a result sites like IMDB have seen traffic double since in introduced the like feature. According to Facebook research on the value of a liker, the average “liker” has 2.4x the amount of friends than that of a typical Facebook user, they click on 5.3x more links to external sites than the typical Facebook user. So ubiquitous has the use of the like button become that sites like urban outfitters are using the feature to determine products selection for users based of the number of likes which has made it a powerful personal recommendation tool on shopping sites. New shopping search engine the find.com which uses your Facebook open graph data has found that using the like button also leads directly to a higher purchase rate.
5.Social Apps -Offering online apps or widgets that support social interaction and user contributions is another useful tactic as part of the social commerce toolset which when done well can be very powerful.
For example, the Hallmark Social calendar application on Facebook is integrated with your friend’s lists as part of a free calendar and incorporates all the features of social games –points, rankings, virtual goods and rewards– and works in conjunction with tools intended to help people organize and manage their social life. Nike+ is also another well-known social application that allows people to track and share sports performance that is fully integrated into a product and has now been updated into a mobile app integrating GPS acting as your fitness guru, motivator and record keeper. Social apps also have the added benefit of these utilities promoting a sense of fun and an association of trust and credibility in the brand.
6. Forums & Communities -Discussion and Q&A forums involve people offering each other support for example Threadless runs a curated marketplace that brings T-Shirt designers and consumers together on a platform which supports voting, rating and discussions. More structured forums include features such as ‘search FAQ’s like Yahoo Answers & AOL shopping which can both be integrated into e-commerce sites alongside consumer ratings and reviews. Another interesting case study is that of Burberrys ‘Art of the Trench’ site which curated a UGC discussion gallery of customers modelling Burberry trench coats. Between its launch in November 2009 and mid-2010 the site notched up more than 7 million visits and as a result was hugely important to Burberry’s repositioning and resurgence. Retail blogs and communities have an important part to play in the social shopping experience by using community feedback in the design of products and services. Juicy Couture’s for example whose community site Club Couture, use of their social tools such as ‘rate my juicy’ & ‘create a look” has resulted in page views jump up 141%, engagement ( time spent on site) up 150% and a 162% increase in conversion rates.
7. Group buying- allows consumers to use their collective buying power to get a better deal. Local group discount website ‘Jump on it’ based on the US Groupon Model also utilises the power of social media recommendations through its various I love Sydney, Melbourne and Perth Facebook pages to offer its members deals on goods and services. In a relatively short space of time the company built a network of some 450,000 members in Sydney, Brisbane, Adelaide and Perth and uses these pages as the basis to crowd source the type of services they offer on site. Whilst there is considerable competition in the space no other local model can boast such a highly engaged community that provides user contributions to shape the business in such a unique way. Indeed it will surely be just be a matter of time before the major brands jump on board and utilise the service on a national level as was the case When Gap partnered with Groupon to smash all sales records in the US recently.
Taking the notion of group buying to another level is innovative Japanese brand Uniglo.Their ‘lucky counter’ website utilises user contributions in a unique way by incentivising customers to drive down the price of goods by tweeting about them. Not to miss out on the action large corporate e-commerce sites have introduced their own group buying initiatives such as Dell’s Swarm and eBay’s recent ‘group gifting’ service which allows customers the ability to digitally pay for a present with contributions from more than one person.
8.Social shopping portals - The latest wave of Social shopping portals now enable people to shop multiple stores together using a range of the afore mentioned tool & tactics often combined with ratings and reviews , recommendations ,referrals and social bookmarking . A few of the leading sites include Polyvore, Etsy, and Kaboodle. However another social shopping site Modcloth takes the concept a step further by letting the customer ‘be the buyer’ and helping shape the vision of the company and its products. Its sourcing team places interesting items on site which members can then comment and vote on and the Mod stylists on their own and flourishing Facebook page extend this dialogue further by helping you talk through what is in stock and what might look good together. While a lot of these sites are uniquely in the apparel industries the opportunity exists for this type of shopping experience to extend to other industries in the near future.
9.Referral programs- Rewarding customers for referring new customers is also a practice which has transferred to social media .A great example earlier this year was Sky TV’s ‘introduce a friend’ campaign which offered free $50 vouchers and social media campaign to promote the initiative. Deltas Airlines booking system on Facebook also helps their customers earn air miles when booked through their innovative ticket counter booking system on Facebook. Likewise Hallmark has introduced a ‘refer a friend and get 10 Facebook credits’ scheme and again expect these initiatives to become commonplace on social media platforms as brands become more active within social media.
Mobile Social Commerce –Connecting online & offline
With the expanding capabilities of web-enabled smartphones, the growth of shopping applications and highly functional mobile shopping sites, more consumers are relying on their mobile phones for more commerce related activities. One of the main opportunities with mobile is to connect online and offline channels and building engagement beyond the screen. We are already seeing what this looks like with Augmented Reality (AR) apps like Yelp’s Monocle that display geo tagged reviews, deals and sales over street scenes whereas barcode readers like Red laser let the shopper scan and compare product pricing. However it is another service that might well represent the future for location-based marketing is Shopkick that utilises mobile to introduce real-world incentives to recognize and encourage checking-in. Using their mobile consumers can check-in to a store to initially earn “Kickbucks.” In addition, consumers are urged to scan barcodes to increase points and also learn about special deals.
The addition of Facebook places deals feature to the location based services market also now allows users to check in at locations such as bars, coffee shops or malls. Users can claim those deals by simply walking into a merchant and checking in on their phones or other mobile devices, giving marketers the ability to reach consumers and potentially attracting them into a given store. The new service cleverly combines the simplicity of location based service Foursquare, and local group deals service Groupon.Not only are consumers broadcasting their location, but they’re now willingly sharing their purchases as well, indeed, a new i-phone app from American express Social Currency built on the foursquare platform lets users keep a wish list, share photos of purchases, and comment on friend’s activities, syndicating content to Foursquare and Twitter
and along with services like Blippy and Swipey users can now share their transactions like Social badges. It this ability of mobile to transform the offline world with the online social world that is enabling brands and companies the opportunity to integrate the shopping experience like never before .Indeed it is this ease and conveience and the fact that the social shopper “can do everything I want in the palm of my hand” that is driving mobile commerce in the social space .Therefore as mobile transactions continue to increase, delivering a consistent buying experience via mobile devices is no longer a nice-to-have, but a must-have. Remember the mantra “mobile friendly =more sales“.
What doe s the Future of Social commerce look like?
The rise of social commerce report suggested the path forwards has four phases:
1. Let’s Be Social: Programs are launched to drive brand advocacy and increaseVolume/market share.
2. Enlightened Engagement: Companies create interconnections of e-commerce andSocial platforms – both owned and in the wider web – to influence influencers, improveDecision-making, and distil the voice of the customer for the enterprise.
3. Store of the Community: Fans drive assortment, selection, and services through openInnovation networks and social networks.
4. Frictionless Commerce: Companies redesign the shopping experience acrossChannels and categories, to create a truly customer-centric shopping experience.
Whether brands like or not we are rapidly moving towards an era of social commerce where the new social consumer wear products like social badges they are simply asking for a asking for a return on this relationship and those brands that recognise this and adapt and engage with their audience have the best chances of influencing the path to purchase. The opportunities now exist for us to build on the development of social media and monetise the new social consumer through an integrated approach where online, offline and mobile all converge.
At a time where Australian retailers are feeling the pinch to cheaper online stores perhaps now is the time to think about redesigning the customer shopping experience. After all no brand is an island and it is only the companies that strive to improve their customers experience will be the ones that are winning. In the words of the Cluetrain Manifesto mantra No.57 “smart companies will get out of the way and help the inevitable happen sooner.“