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Social commerce is a subset of electronic commerce that involves social media, online media that supports social interaction, and user contributions to assist online buying and selling of products and services.
More succinctly, social commerce is the use of social network(s) in the context of e-commerce transactions.
The term social commerce was introduced by Yahoo! in November 2005 which describes a set of online collaborative shopping tools such as shared pick lists, user ratings and other user-generated content-sharing of online product information and advice.
The concept of social commerce was developed by David Beisel to denote user-generated advertorial content on e-commerce sites, and by Steve Rubel to include collaborative e-commerce tools that enable shoppers "to get advice from trusted individuals, find goods and services and then purchase them". The social networks that spread this advice have been found to increase the customer's trust in one retailer over another.
Social commerce aims to assist companies in achieving the following purposes. Firstly, social commerce helps companies engage customers with their brands according to the customers' social behaviors. Secondly, it provides an incentive for customers to return to their website. Thirdly, it provides customers with a platform to talk about their brand on their website. Fourthly, it provides all the information customers need to research, compare, and ultimately choose you over your competitor, thus purchasing from you and not others.
Today, the range of social commerce has been expanded to include social media tools and content used in the context of e-commerce, especially in the fashion industry. Examples of social commerce include customer ratings and reviews, user recommendations and referrals, social shopping tools (sharing the act of shopping online), forums and communities, social media optimization, social applications and social advertising. Technologies such as Augmented Reality have also been integrated with social commerce, allowing shoppers to visualize apparel items on themselves and solicit feedback through social media tools.
Some academics have sought to distinguish "social commerce" from "social shopping", with the former being referred to as collaborative networks of online vendors; the latter, the collaborative activity of online shoppers.
- 2005: The term "social commerce" was first introduced on Yahoo! in 2005.
- Reciprocity – When a company gives a person something for free, that person will feel the need to return the favor, whether by buying again or giving good recommendations for the company.
- Community – When people find an individual or a group that shares the same values, likes, beliefs, etc., they find community. People are more committed to a community that they feel accepted within. When this commitment happens, they tend to follow the same trends as a group and when one member introduces a new idea or product, it is accepted more readily based on the previous trust that has been established. It would be beneficial for companies to develop partnerships with social media sites to engage social communities with their products.
- Social proof – To receive positive feedback, a company needs to be willing to accept social feedback and to show proof that other people are buying, and like, the same things that I like. This can be seen in a lot of online companies such as eBay and Amazon, that allow public feedback of products and when a purchase is made, they immediately generate a list showing purchases that other people have made in relation to my recent purchase. It is beneficial to encourage open recommendation and feedback. This creates trust for you as a seller. 55% of buyers turn to social media when they're looking for information.
- Authority – Many people need proof that a product is of good quality. This proof can be based on the recommendations of others who have bought the same product. If there are many user reviews about a product, then a consumer will be more willing to trust their own decision to buy this item.
- Liking – People trust based on the recommendations of others. If there are a lot of "likes" of a particular product, then the consumer will feel more confident and justified in making this purchase.
- Scarcity – As part of supply and demand, a greater value is assigned to products that are regarded as either being in high demand or are seen as being in a shortage. Therefore, if a person is convinced that they are purchasing something that is unique, special, or not easy to acquire, they will have more of a willingness to make a purchase. If there is trust established from the seller, they will want to buy these items immediately. This can be seen in the cases of Zara (retailer) and Apple Inc. who create demand for their products by convincing the public that there is a possibility of missing out on being able to purchase them.
The main features of social commerce were discussed at the 2011 BankInter Foundation for Innovation conference on Social Technologies, and were concluded as 'the 6 C's of Social Technologies'. This references the original 3 C's of E-Commerce and adds 3 new C's to update for an era of Social sharing.
- Content – The basic need to engage with customers, prospects and stakeholders through valuable published content on the web. Early examples of this were the brochure sites for organizations and this has matured into a vast and growing body of material being published in real time onto the web. Google is the organization that has been at the forefront of indexing and making findable content on the web.
- Community – Treating the audience as a community with the objective of building sustainable relationships by providing tangible value. Early incarnations of Community were mobilized through registration and engaged via email programs, this evolved into online forums, chat-rooms and membership groups where users were able to interact with each other, an early example being Yahoo! Groups. Social Networks are the latest incarnation of community and of the many networks Facebook is the leading organization providing the platform for interpersonal interactions.
- Commerce – Being able to fulfill customers' needs via a transactional web presence, typically online retailers, banks, insurance companies, travel sales sites provide the most useful business-to-consumer services. Business-to-business sites range from online storage and hosting to product sourcing and fulfillment services. Amazon emerged in the 1990s and has gone on to dominate the B2C commerce space extending its services beyond traditional retail commerce.
- Context – The online world is able to track real-world events and this is primarily being enabled by mobile devices. An online bill payment via Google Checkout or a checkin at a physical location via Facebook or Foursquare links a real world event to an online data entity such as a business or a place. This is a vital element to Social Commerce where the data is now available to organizations wishing to provide products and services to consumers.
- Connection – The new online networks are defining and documenting the relationships between people – these relationships may originate in the physical world or online and may manifest in the other as a result of a connection in the first. LinkedIn, Facebook, Twitter are prime examples of online networks – Professional, Social and Casual. The relationships, the scope of those relationships and the interactions between individuals are a basis for the actions of Social Commerce.
- Conversation – The Cluetrain Manifesto noted that all markets are conversations – this may now be reversed for Social Commerce to say that all conversations are markets. A conversation between two parties will likely surface a need that could be fulfilled, thus providing a potential market for supplier organizations. The challenge is for suppliers to be able to tap into those conversations and map those into the range of products and services that they supply. Simple examples of such 'conversations that indicate demand' are where people place objects of desire on their Pinterest board or a 'Like' of an item inside Facebook.
Using this structure, organizations wishing to transcend the notions of 'Social Media' (defined as the interaction pathways) and move to true 'Social Commerce' must aim to leverage 'Context, Connection and Conversation'
Social Commerce has become a really broad term encapsulating a lot of different technologies. It can be categorized as Offsite and Onsite social commerce.
Onsite social commerce refers to retailers including social sharing and other social functionality on their website. Some notable examples include Zazzle which enables users to share their purchases, Macy's which allows users to create a poll to find the right product, and Fab.com which shows a live feed of what other shoppers are buying. Onsite user reviews are also considered a part of social commerce. This approach has been successful in improving customer engagement, conversion and word-of-mouth branding according to several industry sources.
Offsite social commerce includes activities that happen outside of the retailers' website. These may include Facebook storefronts, posting products on Facebook, Twitter, Pinterest and other social networks, advertisement etc. However, many large brands seem to be abandoning that approach. A recent study by W3B suggests that just two percent of Facebook's 1.5 billion users have ever made a purchase through the social network. The poor performance has been attributed to the lack of purchase intent when users are engaged on social media sites.
Onsite vs. offsite
Social Commerce is still a newer concept that most retailers may not have employed. In creating a social commerce strategy, there is an important distinction that should be made between Onsite social and Offsite Social. Offsite social is made up of social media brand pages or plug ins that live on social platforms and not on your actual website. Onsite social consists of adding a social layer to your actual website. The main benefit of Onsite social is that you are keeping the user on your site where they can actually convert and you can improve your site experience through this social layer. Although social commerce will continue to grow and evolve, it is clear that that onsite social commerce is extremely valuable for both retailers and consumers alike.
- Return on Investment: measures the effect or action of social media on sales.
- Reputation: indices measure the influence of social media investment in terms of changes to online reputation – made up of the volume and valence of social media mentions.
- Reach: metrics use traditional media advertising metrics to measure the exposure rates and levels of an audience with social media.
- Social network-driven sales (Soldsie) – Facebook commerce and Twitter commerce belong to this part. Sales take place on established social network sites.
- Peer-to-peer sales platforms (EBay, Etsy, Amazon) – In these websites, users can directly communicate and sell products to other users.
- Group buying (Groupon, LivingSocial) – Users can buy products or services at a lower price when enough users agree to make this purchase.
- Peer recommendations (Amazon, Yelp) – Users can see recommendations from other users.
- User-curated shopping (The Fancy, Lyst) – Users create and share lists of products and services for others to shop from.
- Participatory commerce (Threadless, Kickstarter) – Users can get involved in the production process.
- Social shopping (Fashism) – Sites provide chat sessions for users so they can communicate with their friends or other users for some advice.
Here are some notable business examples of Social Commerce:
- Cafepress: an online retailer of stock and user-customized on demand products.
- Etsy: an e-commerce website focused on handmade or vintage items and supplies, as well as unique factory-manufactured items under Etsy's new guidelines.
- Eventbrite: an online ticketing service that allows event organizers to plan, set up ticket sales and promote events (event management) and publish them across Facebook, Twitter and other social-networking tools directly from the site's interface.
- Groupon: a deal-of-the-day website that features discounted gift certificates usable at local or national companies.
- Houzz: a web site and online community about architecture, interior design and decorating, landscape design and home improvement.
- LivingSocial: an online marketplace that allows clients to buy and share things to do in their city.
- Lockerz: an international social commerce website based in Seattle, Washington.
- OpenSky: is a registered trademark of Harris Corporation and is the trade name for a wireless communication system, invented by M/A-COM Inc., that is now a division of Harris RF Communications.
- Pikaba: a US consumer-oriented social shopping community that harnesses the power of social networking to bring sellers and buyers together.
- Pinterest: a web and mobile application company that offers a visual discovery, collection, sharing, and storage tool.
- Polyvore: a community powered social commerce website. Members curate products into a shared product index and use them to create image collages called "Sets".
- Solavei: a social commerce network offering contract-free mobile service in the United States.
- Soldsie: an eCommerce startup based in San Francisco. It is able to show that Facebook commerce is a viable form of social commerce when it wasn't just another tab on a retailer's Facebook page for users to click onto.
- ShopStyle: a fashion and lifestyle commerce website that creates widgets and tools that enable bloggers and social media users to monetise their content, such as blog posts, Instagram posts and Snapchat stories.
- Tabjuice: a Facebook commerce application developed for small businesses.
- TheFind: a discovery shopping search engine targeting lifestyle products such as apparel, accessories, home and garden, fitness, kids and family, and health and beauty.
- Wanelo: a digital mall where people can discover and buy products on the internet.
Facebook commerce (f-commerce)
Facebook commerce, f-commerce, and f-comm refer to the buying and selling of goods or services through Facebook, either through Facebook directly or through the Facebook Open Graph. Until March 2010, 1.5 million businesses had pages on Facebook which were built by Facebook Markup Language (FBML). A year later, in March 2011, Facebook deprecated FBML and adopted iframes. This allowed developers to gather more information about their Facebook visitors.
Trend: past improvement and prospective view
The online population is increasing by leaps and bounds and more and more people are influenced by opinions shared on social media. Social media celebrities such as vloggers and serial product reviewers tend to have a huge impact on people's perception of product quality. Businesses are noting an increased level of impact that positive and negative reviews have on purchase behavior. This part will be focusing specifically on the period 2012 to 2015, within which social media is experiencing massive surge in public influence during this period.
Trends in 2011
The "2011 Social Commerce Study" estimates that 42% of online consumers have "followed" a retailer proactively through Facebook, Twitter or the retailer's blog, and that a full one-third of shoppers say they would be likely to make a purchase directly from Facebook (35%) or Twitter (32%).
Trends in 2012
These following four trends represent the trend in 2012.
Social is a paradigm shift.
The focus has been moved from channeled experiences and brand-controlled messages to empowered consumers in a channel-agnostic marketplace. Companies should identify and admit the enormity of this change.
Social data reveals the why behind the buy.
Customer conversations bring great opportunities for businesses. The awesome power of conversation will be felt in the insights gained and the actions inspired.
Becoming customer-centric demands organizational transformation.
Capturing the full value of social data takes place across the entire organization, often requiring cultural changes. Social data can drive change beyond marketing, impacting sales, customer service, and product development.
Context is king in social data.
Trends in 2013
A new focus on social media marketing may come to fruition in 2013. With Americans using sites like Facebook and Twitter more often than ever before, businesses should find new methods to make those social users online shoppers. While social media grew significantly in 2012, it's still a bit unclear as to how professionals can use these networks to drive revenue streams and show noticeable ROI. Of course, brands have different experiences with social media, and what works for one company may not be as successful for another. Therefore, it may be more accurate to say that 2012 will become the year of social media maturation – it's time to figure out how to use the channel to increase sales.
StrongMail reported that financial investments in social media marketing will increase next year. However, eMarketer recently published its "US Digital Media Usage: A Snapshot of 2013" report, which points out some potential areas where growth could occur online.
The eMarketer study also noted that online shoppers in 2012 increased by 2.9 percent to total 189.6 million consumers. More online buyers, people who actually converted, also increased, but by 4.2 percent, reaching 156.1 million. Americans feel more confident in online shopping, and with Facebook becoming an increasingly trusted resource for news, entertainment and product discovery, Facebook commerce may be the big trend in 2013.
Trends in 2014
Social media continue to integrate with and augment people's daily lives. As these platforms have matured over the past decade, it only follows that their impact on e-commerce has correspondingly grown, given how much Facebook, Instagram, Twitter, and Pinterest influence how we interact, discover, and consume content. Here are four trends brands should watch and prepare for in the 2014.
Rise of Mobile
In December, New York City announced plans to cover 95 blocks of Harlem with free municipal Wi-Fi, slated to be the nation's largest network yet. This is in keeping with dozens of other cities that have made connectivity a public service – a testament to how widespread smartphone and tablet use have become.
Data from Morgan Stanley predicts that 2014 is the year that the number of mobile users will finally surpass that of desktop users worldwide. It is proved that mobile app use grew 115% last year according to Flurry Analytics, and market research firm Gartner reported that "global PC shipments suffered the worst decline in PC Market history" in 2013.
With more consumers connecting to the web on mobile devices, brands have increased opportunity to market to users who are on-the-go. This doesn't just foretell a spike in mobile ads. A form of brand journalism, mobile storytelling involves "the ability to chronicle our lives and use our location to help unearth a story." Geolocation allows brands to deliver content that's relevant to the physical world of the user, and to strengthen products based on user-generated content.
One of the major challenges of social commerce has been linking social media marketing to actual sales. There are some extremely encouraging statistics about brand engagement and in-store purchases, but marketers seeking to shorten the sales cycle have preferred customers click on a product link.
In 2014, however, in-stream purchases will make social ROI even more immediate. Companies like Starbucks have enabled users to buy items without ever leaving the platform – in this case, customers can "tweet-a-coffee" with a tweet that sends a friend a $5 Starbucks gift card. Recently, Twitter and Stripe have finalized a deal that would allow widespread purchases made directly on the social network.
Facebook, however, is still the heavyweight of social commerce. The variety of posts allowed – text status, photo, video, offer, event – allows big brands and small businesses alike to connect meaningfully with their fans. In fact, an emergent trend finds "mompreneurs" running million-dollar businesses out of their homes by selling on Facebook. These Facebook auctions ask customers to comment on photos to buy; apps like Soldsie simplify the process of selling on Facebook by automating invoices and tracking inventory.
Storytelling and Native Advertising
With companies growing into their roster of social media accounts, the flood of branded content has intensified the contest for viewership at the same time that attention spans have diminished. The challenge for brands in 2014 is to relate authentically to consumers, which means a heavier reliance on eye-catching visuals, content that informs and entertains the viewer, and behind-the-scenes accounts that humanize the brand.
Thankfully, most social media platforms already lend themselves to storytelling. Some brilliant brands apply Vine to post how-to videos, announce new products, or make a video punchline that it's possible to be a "friend" first, and brand second.
Creating engaging and shareable content is just an extension of native advertising, which is rapidly becoming the least intrusive, most effective way to market to consumers. A study from Sharethrough and IPG Media Lab reveals that users look at native ads 53% more frequently than display ads, and are 18% more likely to purchase in comparison. From promoted posts on Tumblr to exploding coupons on Snapchat, brands are finding innovative ways to wed their messages with the consumer's natural experience online.
The texture of each social media network morphs along with its demographics. Facebook skews young but is quickly accruing older users ages 45 to 54; over 90% of Instagram users are under 35; and Tumblr is a hotbed for teenagers, 61% of whom are online for several hours a week. Brands should manage content and advertising across channels to address the users unique to each one, taking into account factors like age and gender, online behavior, and lifestyle preferences.
Trends in 2015
5 general trends should be paid attention to in 2015.
The world will be a Mobile-First World
In the big smartphone times, more and more people are put more time on mobile. In the U.S., carriers' shelf-space for devices with 4.7-inch or larger screen displays increased from 4 percent to about a third in 2014 alone, matching a sales growth – larger-screen phones now account for more than one-quarter of all sales, according to NPD Group. Facebook's recent earnings report showed that while overall daily active users grew 8 percent in 2014, mobile daily active users grew 15 percent and mobile-only daily active users grew 34 percent.
A Pay-to-Play Social World is coming
Forrester recently reported that brand interaction on organic Facebook posts is now squeezed to 0.073 percent. Social advertising spend continues to rise, though as a whole it still doesn't match time spent overall on social. Only on Facebook has spending outstripped time spent – 6 percent of U.S. adults' digital media time is spent on Facebook, but 10 percent of U.S. digital ad spending is now assigned to Facebook. But that's because for most brands, Facebook means social. And Facebook's ad products continue to improve in sophistication. As other platforms get their ad products launched, spending there will increase, too. Again, where Facebook leads, others will follow.
Social Content Continues is still rapidly developing
It's not like using content to market came out of nowhere. It's always been there. But the topic of content marketing seemed to attract an inordinate amount of attention in 2014, not only with regard to efficacy, but also about how hard it is to produce quality content in quantity. Marketers have been challenged to produce content for more channels, and have been challenged to make that content meaningful and informative. Content will continue to be a central directive for brand marketers on social.
The Development Multi Video Platform Interacting is boosted
Posting advertisements on YouTube is not sufficient to make a success now. There is increasing interaction with video in places outside YouTube, particularly with short form video on Twitter's Vine channel, as well as even shorter form GIFs on Tumblr. Surprisingly, Facebook announced that they had more video views than YouTube of this year, with many people scoffing that it was because of auto-play, not because of a video watching revolution.
The Social Diversity Will Continue
Facebook is still the biggest, most dominant social network and the "lowest common denominator" of social marketing. However, social audiences will continue splintering. This social diversity represents a serious challenge for brand marketers – particularly for brands seeking the youth market – who are looking to find the right voice for their audiences in the right location. In 2015 the social imperative will remain to hit the right voice on the right social platform, which may not be Facebook at all.
- Electronic commerce
- Social shopping
- Referral marketing
- Social networks
- Web 2.0
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