Social Commerce

Posted on November 2nd 2010

Social Commerce

Many businesses have been ‘exploring’ the opportunities of social media over the past number of years. However, the time has now come for companies to think about realising a direct sales return from social media.

A Nielsen report last year highlighted that 90% of consumers trust the opinions of people they know. 70% trust anonymous ratings and reviews posted online. Compare this with just 33% who trust online banner ads.  Social commerce is about leveraging word of mouth referrals to support the sales process; harnessing the power of social and participatory technologies to drive conversions.

Many brands have been shy about asking for the sale when engaging with social media. As Jay Dunn points out in his article on the topic of social selling; it is time to get over this. It’s not all about the conversation. Consumers follow brands on social media platforms in the expectation that they will be sold to.

There has been an etiquette on social media that says we shouldn’t do the hard sell. Sure, but let’s be honest about it; brands only engage in social media in anticipation that it will deliver on the bottom line… eventually. Here are some examples of brands using social applications in direct support of e-commerce activities;

1. Use Twitter for  Sales Promotion – Dell:

Dell makes millions through their ‘outlet store’ on Twitter where they inform customers about offers on refurbished computers and electronics.  They currently have 1.5 million followers. There are no follow backs or conversations here, just simple and effective sales promotion.

2. Embed Facebook within the Sales Funnel – TripAdvisor:

Social Commerce - TripAdvisor

TripAdvisor has been doing social commerce forever with those ratings and reviews we all rely on. Given some of the trust issues with anonymous (and sometimes planted) contributions they have recently developed a deep integration with Facebook. You can now immediately see which of your friends have been to a particular location and ask them questions directly through TripAdvisor.

3. F-Commerce – Delta Airlines:

Social Commerce - Delta

Earlier this year Delta Airlines embedded their booking engine into their Facebook page. For increasing numbers of their customers, Facebook is the effective gateway to the web. Why make them go somewhere else to book their flights, when they can do it here in the company of friends? Check out the 1800 Flowers and Old Spice f-commerce offerings also.

4. Facilitate Social Shopping – Mattel:

Social Commerce - Mattel

It’s not all about Facebook and Twitter of course. When Mattel, the giant US toy store relaunched its website in time for Christmas last year they were aware of the power of social shopping. They launched Shop Together which enabled people in different locations to see what each other see (co-browse) and to talk about different products using an onscreen chat window. They set out to make shopping social and fun. Getting the kids to tell grandpa and grandma what toys they wanted for Christmas also had a big impact on the bottom line.

5. Incentivise Social Referral – Dropbox:

Social Commerce - Dropbox

Social commerce hinges on recognising the power of social referral and finding ways to incentivise that. Dropbox, an online file synchronisation service, has a clever way of driving social referrals through their currency – storage. When you join Dropbox you get 2GB of free storage. You can pay for extra storage OR can get it through a clever link entitled ‘Get Extra Space Free’. Click on this link and you are brought to a screen that encourages you to invite more people to join Dropbox. For each friend that joins you receive 250mb of free storage and your friend gets 250MB free. Everyone is a winner; you, your friend and Dropbox who gets a new user.

6. Group Purchasing – Groupon:

Social Commerce - Groupon

New business models are rapidly emerging. Groupon is a leader in the social commerce phenomenon known as group purchasing. They offer a deal a day which is a significant discount on a product or service. The deal only becomes active when enough people sign up – encouraging people who sign up early to share with friends. LivingSocial, another group purchasing platform, gives you your deal for free if you can get three friends to also purchase it. Twongo, yet another, continually reduces the prices when more people sign up for a particular deal. In Ireland check out BoardsDeals, GruUpy and CityDeal.ie (owned by Groupon). Groupon raised $200m in funding over the past 12 months, so watch out for many more group purchasing sites in 2011.

7. Trading with Friends – TradePal:

Social Commerce - TradePal

Tradepal is a  new service that is a bit like eBay, but instead of trading with merchants you don’t know, you can trade with people in your social network. Overcome any trust issues you may have by buying from people  you have a connection with. Weedle, which I was involved with earlier this year, is similar to TradePal but is focused on procuring services from people in your social or professional networks or based on recommendations from people you have a connection with. Afterall, we prefer to do business with people we know.

8. Peer-t0-Peer Financial Transactions – Zopa:

Social Commerce - Zopa

Zopa is a social site that facilitates peer-to-peer lending – get a better deposit rate than you would in the bank or get a better loan rate by dealing directly with other individuals. Zopa acts as the honest broker and takes a small commission.  Currency Fair is similar to Zopa but facilitates peer-to-peer currency exchange. If you have dollars you want exchange for euros, for example, and someone else is looking for those dollars, you can do a deal on an exchange rate with each other that will beat what the banks give either of you. Currency Fair was launched in April this year and is based here in Dublin.

9. Co-Create – Dell

Social Commerce - Ideastorm

Another opportunity available through social commerce is to encourage greater participation in product development. Brands like Dell and Starbucks are creating deeper levels of customer engagement with their products by encouraging and centralising feedback on product design and development. Through IDEASTORM they encourage users to outline improvements they would like to see. Others can then vote on the improvements. In 2007, Dell started selling three computer systems with Ubuntu 7.04 (a Linux operating system) pre-installed – after 100,000 customers requested it.

10. Create and Share – NikeID

Social Commerce - Nike

Nike takes co-creation to the ultimate level by enabling you to create your own unique designs for your sports gear. You can even design your whole team’s kit. Create a design; share it with friends to see what they think. Buy and wear it to create massive OFFLINE talkability and social referral. Nike is empowering customers to create trends themselves. In addition, Nike can very quickly identify new emerging consumer-led trends. Unfortunately, yellow and purple trainers with “BRENDAN” emblazoned across them will probably not be next season’s big thing :(

11. Build a Virtual Community Around the Sales Funnel – B&Q:

Social Commerce B&Q

B&Q, the third largest DIY store in the world, has recently launched a ‘Social Hub‘ which enables customers to add product ratings and reviews, ask and answer each others’ questions about products, share stories and experiences with the products and join an exclusive online community passionate about DIY. By building an online community B&Q intends to help “motivate and give confidence” to DIY enthusiasts, thus supporting their purchase decisions.

12. Facilitate Offline Communities – Meetup

Social Commerce - Meetup

New tools enable and encourage online communities to meet offline. Meetup is one such service that facilitates self-forming real world gatherings. Here in Dublin, Oddbins facilitate free wine tasting in their shops by using services such as Meetup. People on bulletin boards and discussion forums have been doing this for years. Now brands have a way to facilitate like-minded individuals or fans to gather at their outlets.

13. Driving Offline Sales – Starbucks

Social Commerce - Starbucks

Not all products can be purchased online. Starbucks integrate with location-based social networks such as Foursquare to reward customers who ‘check-in’ or visit their coffee shops regularly. Any customer who achieves the social status of ‘Mayor’ of a Starbucks outlet is automatically entitled to discounts on products. Watch this space as new services emerge combining location technology with rewards and group discounts. Check out Irish company GeoDealio and keep an eye on Facebook who look set to launch a new service that will be a hybrid of Foursquare and Groupon.

14. Delivering a Return – EventBrite

Social Commerce - EventBrite

Of course the big question everyone has is “Does social commerce deliver?”. Online event booking service, EventBrite recently released some data that showed the average value to them of each type of social share:

Facebook –  $2.52

Email (Share) = $2.34

LinkedIn = $0.90

Twitter = $0.43

Each time someone shares an event via Facebook, EventBrite earn an additional $2.52 in revenue. Email comes in a close second, with LinkedIn and Twitter delivering much smaller returns. Clearly there is a return and what’s more you can measure it.

GETTING STARTED

If none of the above has inspired you on how you can start doing social commerce, think about these three things:

  1. What can I give people to share that they will want to share and someone else will want to receive? Is it useful, entertaining or of value?
  2. What is my currency? What can I create on my website/platform that is unique to me which I can use to incentivise social referral? Is it social standing or something intimately embedded in my product?
  3. Am I making it easy for my customers to share? Am I integrating properly with the appropriate applications so that it is very simple for customers to share?
BrendanHughes

Brendan Hughes

COO, etruvian.com

Brendan Hughes is an e-commerce, Internet marketing and social media strategist who helps large and mid-sized companies achieve success online.

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Comments

Posted on November 2nd 2010 at 6:53PM

Great post.All are real time examples having a great success.Social Commerce is on rise.

Posted on November 3rd 2010 at 7:42AM

Great to see how eCommerce is evolving so rapidly, and for the better.

Posted on November 5th 2010 at 10:24PM

It's great to see so many examples of big brands really using social media for commerce. Many small businesses have harnessed social media for social networking but have yet to get their heads round the commerce angle so it will be interesting to see how things develop in that area. Your 'Getting Started' questions are excellent, thanks.