Why Brands Can No Longer Ignore Social Commerce

  • Author: Lauren
  • Lauren Fisher,

Social Commerce has hit some setbacks as of late. Billed as the next logical step of e-commerce, the concept hasn't taken off the way that many people have expected. The idea is sound in theory: By seeing what users like, sites could use this data to present goods and services they would be interested in as well as show what their friends like too. Therefore, it aids discovery and increasing the chances of a purchase.

Companies and brands have been keen on the uptake, but while platforms such as Facebook were perfect for this trend to gather pace, consumers weren't as keen on it. Before long, certain brands began shutting down their Facebook services due to a lack or return, which was deemed hasty or a warning sign depending on how you viewed it.

However, that doesn't mean that social commerce is a failure, instead it has resulted in sites realising that you need to do more than just tack on and expect the revenue to begin rolling in. New ways of engaging with users and different payment models are being explored as it enters its latest phase. As consumers are getting accustomed to immediate discovery and the lower prices associated with e-commerce, a new host of startups are appearing, ready to begin round two.

Contents

1) Where is Social Commerce Now?

2) Facebook Commerce

3) Social Commerce Startups

4)Social Commerce Campaigns

5) Opinion & Analysis

6)Infographic Sources

Where is Social Commerce Now?

The two main sites that come up in conversation are Facebook and Pinterest. The former requires its own section to cover properly (which conveniently can be found further down), but excluding Facebook and Pinterest, other sites are slowly beginning to emerge as e-commerce destinations.

Whatever your views are on Pinterset, it has gotten people talking about social commerce again, and soon after its success earlier this year, people began talking about its potential as an e-commerce portal. The reasons for this are pretty obvious: Pinterest is a very visual site, all content on the site consists of links to other websites and its layout and design is geared towards curating items you like and want. Although Pinterest's growth has inevitably evened out over recent months, the site still holds on to a lot of users and the benefits still outweigh other sites.

Twitter and LinkedIn have also attempted e-commerce, but with less success. Despite having the same referral rate as Pinterest, Twitter hasn't found a way to convert links to sales and generate the same amount of revenue, despite having promised it for brand pages as far back as February. LinkedIn focus on professionals and developing connections means that it's more suited towards B2B e-commerce, but no company has found a way to properly utilize this.

The major problem brands have with social commerce is that they treat it like a normal e-commerce site. Simply plant a shopping feature on Facebook or Twitter and the money will roll in. However, while e-commerce is a part of social commerce, it is much more than that. It is about participation and letting the consumer be apart of the purchasing and promotion as the brand itself. Businesses are slowly beginning to realise this and are thinking up of new ways to tap into this field.

Facebook Commerce

Commerce is clearly something that Facebook need to get right. Post-IPO they are struggling to maintain the stronghold they had for brands and advertisers, with their chequered history of commerce resulting in brands being less willing to invest here. Facebook as a platform for commerce all comes down to the solutions they can offer and how embedded they can make their social solutions in the payment process. Despite a lot of experimenting, they haven't quite got this right yet.

Facebook Credits

Its first real foray into social commerce came in the form of Facebook Credits: a virtual currency that started out as optional for developers, but ended up as the mandatory payment option within Facebook games and apps. Facebook stuck to the Apple model of taking a 30% cut from developers, which developers ultimately were forced to accept. Facebook Credits peaked with developments such as being introduced in the ‘real world' via gift vouchers that were sold in Target across 1,750 stores. Although Facebook received revenue from credits of $192 million last quarter, it is not a quick growth area for it and perhaps shows that this is Facebook trying to force the ‘Facebook way' a bit too much, with its own currency proving a step too far for people.

Payment by Mobile

So far, Facebook's best move in social commerce has been the decision to work with mobile carriers to allow people to pay for credits on their mobile phone bill. Facebook rolled this out initially with carriers in the UK and expanded to work with carriers worldwide. This is exactly the kind of thing that Facebook should be doing to shake up social commerce and indeed, online payments overall. Working with the companies that have the infrastructure and reach yet combining it with their own social solution results in a win-win and importantly, a payment system that users actually want and need.

This is also a sign of the ‘new' Facebook, where it is less about keeping a stranglehold and controlling every part of a process and more about opening up and working with others. Given the huge rise of smartphones and mobile commerce, Facebook is doing well to embed themselves in this early on.

Facebook Stores

As well as looking at Facebook's own payment systems, it's worth looking at how brands are using the social platform themselves, as a place to process payments and open a new commerce channel for their consumers. Unfortunately, it suffered from a bit of bad press here when a number of brands denounced Facebook stores and essentially claimed it was a waste of money. Gap, JC Penney and Gamestop all opened, then swiftly closed, stores on Facebook.

Rather than this being down to a lack of customer demand, brands were possibly too premature here. Facebook commerce was seen as a natural win as the eyeballs were clearly on Facebook, but there wasn't a sufficient technical solution to back this up. So what brands were left with was little different than plugging in their existing e-commerce solutions and a putting a Facebook sticker on the window. So, unsurprisingly, the traffic didn't convert.

If brands are to succeed with Facebook commerce, it will require an overhaul of the customer journey and an adequate technical solution from Facebook that people actually want. The early departure of brands from using Facebook stores has given Facebook commerce a bit of a bad reputation, but ultimately has proven that if it is to succeed, Facebook commerce will need to look significantly different than the current e-commerce process. There are a lot of learning still to come, not least in how socialised we actually want the commerce process. Early examples of Facebook commerce such as the Levi's friends' store are nice and sexy, but are they actually what people want?

Opportunities: Real Currency

Recent developments in Facebook commerce show that Facebook may be abandoning its own payments system overall. In an about-turn, it has recently allowed a game on the platform that allows people to pay in ‘real money' as opposed to Facebook Credits. The game ‘Bing & Slots Frenzy' is pretty much the first of its kind of Facebook. As much as this is an interesting move for Facebook as it shows it getting into social gambling, the decision to abandon their own credits system is telling. Again, it's a sign of the new Facebook, and accepting that it can only control so much. Its solution should come through the platform, with huge opportunities being in the newsfeed where we've seen successes such as Facebook Offers.

The social journey, how people travel in and around Facebook and maintain their connections when outside the site itself is where the magic comes in for Facebook. There's no doubt that the current e-commerce system needs to be shaken up considerably for the opportunities in mobile if nothing else. Facebook could be well positioned to take advantage of this, and certainly it needs to be if it's to retain its relevance and stronghold over the market that it has enjoyed over the past few years.

Social Commerce Startups

There are a number of startups covering e-commerce and while a good number of them incorporate some form of social commerce, (many can be found in our e-commerce guide), here are some more examples of startups focusing on social.

Shopcade

Formatted in the style of Pinterest, Shopcade tries to bridge the gap between commerce and social media by providing a mixture of trending and suggested items for you to look at. The pull is that while you're doing this, there is a reward scheme which lets you earn points for actions like logging in, viewing products and reviewing, thereby placing the focus on gamification and sharing. Having been around for almost a year, the site has almost 260 million products on the site and merchants must become an affiliate partner before their items are added onto the site.

Chirpify

Essentially e-commerce for Twitter, Chirpify is an all-in-one tool that uses PayPal to help users monetise their tweets. Having three different formats for brands, direct payments and fundraising for charitable organisations, the company boasts frictionless one step transactions which take advantage of Twitter's real-time reach. While Twitter e-commerce has been largely ignored, Chirpify's system is handy and would be really useful for charities sending out appeals and asking for retweets.

Joyus

While Joyus focus is primarily on fashion, it takes a different approach by using video to highlight goods. The idea is that most women don't have much free time and would prefer to have content they can consume in short bursts. So every week, you can view a new one-to-three minute video from fashion experts as they goes through their favorite products and items. However, each item is available for a limited time through their sales platform. Considering that customers who view product videos are 85% more likely to buy

than those who don't, it's a section to keep an eye on.

Zappos

While being around since 1999, Amazon owned Zappos.com recently created an app called PinPointing

that combines Pinterest and e-commerce. Simply search for a user and you will be given a list of product suggestions based on their pins and boards. Any items you like can naturally be pinned and if you can look for similar items by visiting the main site. It's nicely designed, but focuses only on fashion so if you're interested in gadgets or furniture, then it mightn't be as useful.

Extole

With the focus on word-of-mouth, Extole is a company which takes consumer recommendations and combines it with social media. As personal recommendations are more valuable, Extole looks for brand advocates at places like Facebook fan pages, and account pages. Those identified as highly engaged customers are contacted and asked to talk about certain products for rewards. As a result, this ends up increasing awareness and improving sales of said product.

Social Commerce Campaigns

While there aren't many campaigns that focus on social commerce, there are some that have stood out and succeeded because they treated the concept as more than just a way to place a shop on Facebook.

One of the best examples out there would be American Express (AmEx) and their partnership with Twitter. Back in March 2012, the credit card company launched a campaign called 'Tweet Your Way To Savings' where members could sync their American Express cards with Twitter and tweet special offer hashtags in exchange for savings in verified stores. The results were amazing. Over 323,344 tweets were posted by 49,308 users, yet the total spend was $12.8 million with $2.8 million in discounts given out, meaning that the campaign was a massive success. However, that doesn't mean it was perfect as Social Commerce Today raises some concerns with the campaign.

Another good campaign comes from Nike Mexico who created a campaign where you bid for goods with miles instead of cash. As Nike+ measures how far you've run, it accumulates how many miles you've completed so to successfully bid in the 15-day auction, you needed to run more miles. So Nike+ got people fitter while offering an awards system that made it worthwhile.

So what can you learn from these campaigns? The first is to give consumers reasons for getting involved. In AmEx's case, it was offering discounts for tweeting while Nike encouraged people to run so they could build up miles and bid for prizes. The second is to make sure the action and reward is linked to the behavior you want, so make sure the action required is easy to accomplish so as many people can participate. The most important thing is that these campaigns turned participants into advertisers. As the AmEx campaign was linked with tweeting brands, it worked perfectly and Nike+ encourages you to link up to your social media accounts to show how many miles you've run.

Opinion & Analysis

- Social Commerce Today is a fantastic resource, featuring case studies and updates in the field.

- A social commerce platform itself, 8th Bridge's blog offers case studies and examples relating to social commerce.

- Business 2 Community advises that you should set up your business for mobile first before you tackle mobile commerce.

- TabJuice created a helpful infographic which looks at the psychology of social commerce.

-  eConsultancy's interview with the co-founder and CEO of Let's Gift It, Ryan O'Donnell, gives a brief idea of how social commerce companies work.

-  Techcrunch looks at social commerce and its links to Pinterest and the future of fashion retail.

- Branding Magazine debunks some myths relating to social commerce, five to be exact.

Infographic Sources

- http://socialcommercetoday.com/social-web-social-commerce-stats-from-econsultancy/

- http://www.tabjuice.com/scommerce-academy/6-hard-to-find-social-commerce-stats/

- http://www.bazaarvoice.com/social-commerce-statistics

- http://www.powerreviews.com/resources/social-commerce-stats

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