Social Commerce

Social commerce is definitely one of the buzzwords of 2011. Several fully functioning Facebook Stores and storefronts that link to an external site have been founded this year, and even predictions of Facebook surpassing Google in terms of advertising revenue have surfaced. With all this hype and new terms like f-commerce, m-commerce and the good old e-commerce popping up, one might think that social commerce is something completely new and revolutionizing.

The fact is however, that even though the technology and software are new, the social aspect of shopping isn’t. What is emerging as the new trend in online retailing has already been done for over 50 years. Only the medium of the social aspect is changing.

Facebook and social commerce

As an example where this is most evident, lets examine Facebook. Using it as medium for engaging, creating relationships with customers and building a better brand image, has become self-evident for most companies. So it makes only sense that the gradual adaptation of shopping online should be taken to the next level, by adding the social aspect.

In his article about the viability of Facebook as a commerce channel, Stefan Schmidt raises some valid points about the payment system, limitations in having a separated silo platform and moral questions about accessing consumer’s information. While I agree that these issues need to be addressed, I still see them as only temporary hiccups that are overcome by a growing consumer demand.

Social shopping

The reason why I believe this is because it simply makes commercial sense for a retailer to sell, where customers spend their time. Despite requiring time, effort and money to function properly, social media platforms offer a cost-effective way for any B2C retailer to reach a large audience. The added benefit to this is that it enables something called “thin-slicing” (Source 1). This concept from social psychology argues that people tend to ignore most “traditional ”information available when making a purchase decision and instead base their decision on “salient information cues” (Source 2). In layman’s terms this translates into behavior based on person’s social peers, which has been used in marketing for decades.

Just one example of this is the concept of “liking”. People tend to follow people they like and when applied commercially, it means that people are more likely to buy something if an influential person endorses it. Yesterday’s Tupperware parties are today’s “Like-button”.  Even though this is already done outside of Facebook, it can be taken further and have a greater impact if the purchase is made possible within Facebook. Allowing influential and liked people to influence purchase decisions can take different forms in social networks. News feeds of your friends’ latest purchases and group purchases are just some applications of how this could be done.

What are the company’s goals?

Different ways companies can approach Facebook will depend on their goals. The store can only consist of a fan store that is meant to drive advocacy instead of actually making commercially vital sales. Another way to go, is to set up a full equivalent of the company’s website to drive sales, much like ASOS and French Connection did earlier this year. The third way to approach the Facebook store is to set up a similar site like Starbucks and O2 have done.

These Facebook stores allow customers to top-up on the Facebook page and even though they generate sales for the companies, their main purpose is to improve customer service by providing a loyalty platform. This kind of approach might prove most successful for companies, especially if they decide to gradually rollout more features and items over time. It allows the customers to get used to the idea of shopping in Facebook while increasing their lifetime value. 

Fear not the change

Even though entering the social commerce era will present new challenges for retailers, the same time-tested concepts from past decades still apply. Separating commercial activities into different trendy silos will not be commercially viable for long. A more unified commercial approach will be the way to go, whatever tools and channels retailers decide to use. And like it or not, as a social media platform, Facebook is the trendsetter for practicing social commerce. As another generation of digital natives graduates this summer and moves out to the real world, this trend is only going to get stronger.