At least, that seems to be the conclusion that Sucharita Mulpuru, a researcher at the Forrester Research firm seem to have arrived at, or at least Social Commerce that is utilizing the Facebook platform. In her report she indicates the reasons - first, only a handful of small retailers are seeing a double-digit percent of their sales coming through their Facebook stores. Second, she found that the number one advantage of Social Networks, namely the ability to target a very precisely defined market, is not being taken advantage of by retailers to the full extent. And the last, Social Networks such as Facebook are plagued by constant unresolved privacy and security issues. This problem affects both the buyers and the sellers. The former do not trust Facebook with their credit card information, while sellers are wary of implementing a payment solution through their store.
But is all this enough to claim that F-Commerce is doomed to fail?
To put it quite simply: No, it is not. Social Commerce is new – companies, as well as customers are still getting used to it. The solutions for Social commerce, such as the facebook store, are not yet perfected, while retailers are still in the process of learning how to use them.
Also, since it is all so new, people around the world are still not thinking about Social Networks such as Facebook or LinkedIN when they are in the mood to do some online shopping.
This is of course, not equally true for all types of products. The sale of digital products, such as eBooks, renting movies and even virtual gifts is already picking up on Facebook. Selling hard goods, such as printed books, electronics and jeans, will have a way to go, but we believe it will get there.
Once Social Commerce takes off, retailers will also become more efficient at utilizing Social Network’s main strength, namely the ability to very precisely target people, whether it is based on the traditional qualifier such as age, region or gender or the more specific qualifiers such as college, major, employer, relationship status or interest.
Between who they are friends with or connected to, where they went to school, what eGroups they belong to, which companies they worked for, what companies, or “pages” they are following and so on, there is a wealth of very valuable information on Facebook and LinkedIN for both B2C and B2B marketers.
As for privacy and security on Social Networks, those are two of the biggest challenges to overcome in order for Social commerce to take off. But as interest in Social Commerce grows, and as direct and indirest sales through social network channels such as facebook stores begin to take off, this challenge will be addressed swiftly and effectively. So, all in all, there are many more reasons to believe that Social Commerce will succeed than that it will not.
Yash Talreja, Vanja Kovacic
There is no denying that Facebook is an excellent promotional and social commerce tool. It is, after all, the most popular social network in the world and the most visited website in many countries. With the introduction of Facebook Deals and the F-Store, they have also made selling through Facebook almost as easy as creating a social network profile. However, Facebook is not the only social commerce tool out there. And a prudent entrepreneur, or business owner should use all of them to maximize the benefits of social commerce.
Other social commerce tools include adding reviews of your products by past customers to your website, encouraging customer discussions, adding social media and other sharing buttons, and so on. These are almost completely free and carry all the benefits of increasing your customer base organically through recommendations. These tools can also save you a lot of money on advertising costs, while raising your profits at the same time.
F-Commerce is also not free. According to some reports, Facebook is charging a minimum of £50,000 (approx. 80,000 USD) from brands for the Facebook Deals tool. And that is quite an investment, especially for a smaller brand or business. So, if you already have a well-established website, it is perhaps better to use Facebook for promotion, while incorporating easier ways to pay, such as mobile checkout, PayPal and so on.
And for those who do their business globally, leveraging the positive benefits of customer reviews just got much easier due to the invention of a new translation software by the British company Reevoo. This new software enables you to automatically translate existing reviews into many different languages. Sony recently piloted this new software across eight of its websites in Europe. They report that it has helped them immensely in overcoming the lack of an established reviews culture in Europe.
Currently F-Commerce seems like the best solution to cover all of your social commerce needs in a single package. However, people are nothing if not fickle. MySpace once held the spot Facebook occupies now and has since fallen quite low. Who’s to say the same won’t happen to Facebook in a year or two? Rather than risk this, it is best to spread your social commerce efforts across a series of social networking sites, namely Twitter, LinkedIn, and others. And do not neglect the new comers, such as, for example, Plurk.com. Who knows, any one of them could be the next Facebook.
Yash Talreja, Vanja Kovacic
Traffic to Facebook stores and pages is now higher than traffic to classic websites across the board. According to the findings of Webtrend’s recently published report “The Effect of Social Networks and the Mobile Web on Website Traffic and the Inevitable Rise of Facebook Commerce,” Facebook stores are already enjoying sales conversion rates equal to those achieved by e-commerce websites. This phenomenon is also not limited just to e-commerce sites, but is also the norm for companies that are not directly selling anything to the vast majority of people who visit their website, such as Procter and Gamble, Boeing and others.
In light of these findings, it has become quite evident that it is, nowadays, much more prudent to create and maintain a Facebook page than a website for many smaller service and product providers, formal or informal special interest groups, non-profit organizations, and so on. In terms of putting yourself, your service, your product or your idea out there for the world to see, there is no faster or more efficient way than by launching a Facebook Page or Store. On Facebook, you are practically guaranteed traffic from the get-go in the form of your own followers, who will also help you spread the word about your new page across their own social web. And launching a Yahoo! or LinkedIn group can also be very effective.
If the findings of the Webtrends report, as well as those from the other reports recently discussed on this blog, are an accurate foretelling of the future then, by the end of 2011, an F-store and mobile checkout capabilities will be a must for anyone selling things online. And for individuals, groups and smaller organizations, a Facebook Page might just be the most important part of their online presence.
So to answer the question: No, the classic website is not yet obsolete, but it is no longer the most important element of the online presence of individuals, groups or companies. In some cases, such as small special interest groups, it is not even essential anymore. However, it is still a good place for offering more information about yourself, your cause, or your business, so it is perhaps not yet time to forsake it completely.
With recent talk that the Amazon Payments division is testing the Near Field Communication (NFC) platform implies that Amazon is looking for ways to expand their mobile commerce capabilities. Given that the projected mobile commerce revenue in the year 2014 is expected to be close to $250 billion, they might as well. For those unfamiliar with it, NFC allows for shortwave communication between devices that can be used to, among other things, make and receive payments with mobile phones, and other handheld devices by allowing these devices to communicate with cash registers.
But why would Amazon need that? All their cash registers are, after all, of the virtual kind. The online retailer will not comment, but one avenue that will open up once they integrate the NFC platform is the ability for customers to compare the prices of items sold in a physical store with those sold on Amazon. For example, if you see an expensive TV in a physical store you will now be able to scan it, check its availability on Amazon, and get it shipped to your home from them, if they offer the better price, as often they do. Or alternatively, if you can’t find the right size, or color in a physical store, you will now be able to scan the item, and then search for it and order it from Amazon. The integration of the NFC platform could also enable customers to order complementary, or related things, such as matching furniture items, accessories, or books from Amazon, while purchasing the actual item from another retailer. For example, buying a camera in a physical store and ordering the how-to manual from Amazon at the same time. Similarly, brave retailers could use this feature to sell Amazon items in their physical store and make a profit on the affiliate commission.
The Birth of In-Store eCommerce
There is some speculation that Amazon is considering venturing into the field of physical retail stores. This does not, however, seem likely in this age of social and mobile commerce, and the rapid dissolution of physical stores in favor of online ones. More than likely, Amazon is working on a new hybrid of eCommerce and mobile commerce, which will give customers even greater freedom in comparing items and prices offered by different retailers in order to get the best deal. It looks a lot more like Amazon is trying to cash in and build on the deals and coupons craze, initiated by Groupon, and continued by Facebook and others.
By allowing customers to do a price comparison on a certain item right there in the store, and using their mobile phones to do so, instead of waiting to get home and doing it online, is a smart move in our fast paced world. Provided Amazon carries the item in question and that they offer it at a lower price (along with fast and affordable shipping costs) this could also prove to be almost like having a physical store, but without the added cost.
Yash Talreja, Vanja Kovacic
Social commerce is a broad term and encompasses everything from Twitter, to GroupOn, to having a blog. All of these tools have one thing in common, namely that you can lose all the benefits that they offer, if you fail to use them correctly. Effective social commerce requires the interplay of offering a great product, delivering good content on your social commerce vehicle, such as your blog, Facebook page, or Twitter feed, and interacting with your followers in a real and honest way.
Most Common Social Commerce Mistakes
The fundamental mistake you can make in your social commerce efforts is not using all the tools that it offers. Many companies do not blog, are not present on Facebook, or Twitter, and still rely only on email newsletters to get the word out to their potential customers. These days, the latter is simply not enough. As comScore’s 2010 Digital Year in Review showed, email usage is in decline, and being replaced by social networking sites practically all over the world, and for most age groups.
Next, social commerce, especially offering coupons through sites like GroupOn, Living Social and Facebook Deals, lets companies very accurately track the return on their online marketing investment. Not checking these statistics periodically and fixing, tweaking, or otherwise changing the campaign to make it more effective is also a mistake businesses often make in their approach to social commerce.
However, the most detrimental mistake made by companies when implementing social commerce approaches is not making the message personal enough. The main driving force behind the success of social commerce stems from the evolution of the Internet, the so-called Web 2.0, which is all about online communities and networks. And people want to know that there’s a real person behind the company profile that they’ve “Liked” on Facebook, or that they follow on Twitter.
There’s more to being successful in the sphere of social commerce than just having thousands of followers and informing them, in a routine and uninteresting manner, of your deals, promotions, and so on. It is far better to engage with them on a more personal basis, by asking questions, taking polls, posting comments, and so on. In addition to regularly updating them about your promotions, and new products or services, of course. You are selling something after all. But the goal with social commerce should always be to put people first, and products second.
Yash Talreja, Vanja Kovacic
According to comScore’s 2010 Europe Digital Year in Review, social networking, and with it social commerce, is quickly taking over the online advertising and retail field in Europe. So, vendors everywhere, you do not want to miss out on this trend.
Social networking and online discounting are the two areas that have seen the most explosive growth in Europe. To illustrate, in the last year the total number of monthly users of coupon sharing sites has grown by 164%, while Facebook commands over three quarters of the European social networking market. Interestingly, Turkey, as the sole representative of Eastern Europe mentioned in the report, took fourth place in terms of the reach of coupon sites, putting it behind Italy, but in front of Germany.
Advertising on social networking sites has also grown considerably in most European countries, which is a direct consequence of the rise in popularitiy of social networking sites. For example, in Germany the total display ad impressions on social networking sites grew by 102 percent, while France and the UK saw a growth of 64 and 47 percent, respectively. What this means is that social network advertising has taken the top spot in effective online advertising.
So in summary, the old continent is no longer lagging behind the US in terms of using social networking and coupon sharing sites. So anyone looking to increase their market share in Europe is well advised to take their social commerce efforts very seriously in this coming year.
The most surefire way seems to be offering coupons through GroupOn, or Facebook Deals, though a regularly updated Facebook page is an absolute must. As is the fact that this page must be updated by someone with a genuine interest of interacting with followers. After all, at the heart of social commerce lies the effort of making eCommerce more human. And this is, quite possibly, the main reason why social commerce has proven to be so successful and profitable.
Vanja Kovacic & Yash Talreja
The rise in the use of smartphones, tablets, and so on, for surfing the Internet is quickly rendering classic website selling obsolete. This is primarily due to the faster and more convenient shopping experiences made possible by using these, and other mobile devices. The area of mobile commerce will explode in 2011 and it will be the companies who get an early start on it that will be reaping the greatest benefits.
The Mobile Commerce Explosion
In 2010 many companies saw huge profits as a result of taking advantage of mobile commerce. EBay, for example, revealed that they made $2 billion in mobile sales worldwide in 2010. A similar success was also recorded by Steve Madden Inc. who announced that they made over $1 million in revenue in 2010 from goods purchased by the use of mobile devices. However, according to a study conducted by Acquity Group, the top spot in the area of mobile commerce revenue goes to Amazon, who has already made over $1 billion in mobile sales. Most of this is, however, the result of their slightly different approach to mobile commerce, namely allowing customers to purchase and download eBooks straight from their Kindle eReader. Acquity Group also found that, despite this huge potential for profits in mobile commerce, only an estimated 12% of online retailers have a mobile-ready website, while only 7% actually have checkout capability to go with it.
However, many website building companies, such as Usablenet and Vitacost, are already offering their customers the option of incorporating the Paypal mobile checkout with the final product. And the developers of ShopSavvy, one of the leading mobile commerce apps, have also recently invited Matthew Weathers, the lead developer of Paypal’s mobile checkout, to help them develop their mobile commerce strategy for this year, which will include the so-called QuickPay. This will enable users of the ShopSavvy app to buy the items without having to leave the ShopSavvy interface.
Convergence of Social and Mobile Commerce
Social and mobile commerce complement each other perfectly. While social commerce tools of sharing deals and offering individualized special savings, through sites such as GroupOn and LivingSocial, or by using Facebook Deals, drives people to visit online retailers, mobile commerce checkout tools help seal the deal without the need to visit another location. And, for retailers, it is here that the key benefit of using mobile checkout tools lies.
To put it more bluntly, it is ease of use, speed of transaction and instant gratification that the customer is ultimately looking for in online and mobile commerce. The pace of our lives has quickened considerably and everyone is looking for ways to do more in less time. Mobile commerce has the potential to provide this in the area of online shopping. Because of this, retailers offering mobile checkout options on their websites, along with their social commerce endeavors of course, will be the first to drastically increase their 2011 revenue.
Vanja Kovacic & Yash Talreja
The key to successfully implementing the social commerce layer into a marketing strategy is getting customers to share their experience of using a product, or service with their friends. Thanks to the myriad social networks out there today, the term friends has taken on a much broader meaning. It now includes virtual strangers, who are nonetheless very much connected through, for example, the Facebook, or Twitter newsfeeds. And mouth-to-mouth advertising has always been more effective than any other form of advertising.
People love to share information about their purchases and resulting experiences, they will do so regardless of the threat to their online privacy and safety. However, as LinkedIn founder Ryan Hoffman warns, not all products will benefit from social commerce in the same way. Music, movies and books will naturally benefit, while more commonplace items, such as toasters, might not.
Quantifiable Marketing Results
Another very important benefit of social commerce is that, for the first time, the results of advertising campaigns can actually be accurately quantified and analyzed. For example, the ticket selling site Eventbrite.com knows that every time a Facebook user shares an event with their network of friends, using the “Like” button, the site gets 11 visits, which generates $2.52 in sales. In comparison, sharing on LinkedIn and Twitter brings in $0.90 and $0.43 respectively. Needless to say, this type of information is invaluable to companies and businesses in any sector, as it allows for the exact assessment of the return on advertising.
While social commerce is still in the early stages, it is expected to explode in the near future. This will be aided primarily by companies enhancing their online presence, as well as studies into the psychology behind social commerce.
Vanja Kovacic, Staff Blogger; Yash Talreja, Principal, The Technology Gurus.
Social commerce refers to e-commerce which occurs within the framework of social influence – i.e. people influencing others’ buying decision using the power of internet and social networks.
The term “Social Commerce” was first used by Yahoo in 2005 and referred to product reviews and ratings posted by actual buyers, rather than expert reviewers. However, in 2011, the term Social commerce primarily refers to such a social influence exerted by use of Social networks, is where people who are strangers to us are nevertheless able to influence what we buy.
However, reviews and ratings – especially for low-volume products – can be easily rigged. Also, recommendations by people who are strangers to us are not as effective as recommendations from people we actually know and trust.
The public’s rapid adoption of social networking platforms such as Facebook, LinkedIN, and Twitter – where people constantly let others know what they are currently engaged in – has allowed social commerce to develop a whole new dimension.
Today there are more than 550 million active members on Facebook, and there are more than a million small groups and businesses operating there as well. LinkedIN has more than 80 million professionals in 150 industries that connect from around the world. YouTube, which has evolved from a video sharing site to a social network, has more than 70 million registered users, and there are more than 100 million tweets a day on twitter.
With such a large group of people using Facebook, there is a tremendous opportunity for product and service providers to utilize the power of people to promote and sell the providers’ products and services effectively and inexpensively.
This emerging trend, however, requires sellers to connect to people as individuals, not as firms.
To effectively use social networks for commerce, sellers need to foster the participation of satisfied buyers and potential customers by enabling them to recommend, browse, view, review, and even buy products within the purview of the social networking sites.
For instance, Zappos shoe store shoes greatly expanded it sales and built a solid reputation by effectively using social networks. It has now become one of the biggest online shoe stores and has a substantial following on Twitter. Disney used the members of their fan page and Facebook groups to successfully market “Toy Story 3”: people who bought tickets on the networking site suggested to their friends to do the same. Dell had a revenue of over $3 Million in Sales via Twitter whereas the sales of Blendtec soared by more than 700% after they used a series of online videos as a part of their social media marketing strategy
Of course, on the flip side, the viral nature of social networking can work against a company or a brand. The most famous example of this is perhaps the posting of the video “United Breaks Guitar” by Dave Carrol, a singer and a customer of the United Airlines Limited (UAL) whose guitar was allegedly mal-handled by United personnel. On the date of this writing, it has been viewed more than 9.9 million times on YouTube creating a brand nightmare for the United Airlines.
Social commerce is viral marketing at its best. People prefer to listen to the voice of someone they know closely, such as a friend or an acquaintance, over the corporate marketers and professional critics. To be effectively used, Social commerce requires building a friendly and trustworthy relationship with and among customers. If effectively used, Social commerce can very effectively augment other sales channels, optimizing return on investment (ROI). At the same time, it helps build a trusting relationship with the clients, and thus guarantees an open road to building the company’s profile as a well-established brand.