Social Commerce

In chapter #9 Schneider talks about electronic commerce software, the different functions and capabilities it provides, and solutions for different company's size.

But I think it is important to mention the rise of the subset of electronic commerce - the social commerce. This is getting more important now, when 500 million Facebook users are plotting their social graphs, 145 million Twitter users Tweet and ReTweet, 3 million people are checking-in on FourSquare, and app. 35 million users are using Groupon.

Venture capitalist David Beisel is credited with coining the term “social commerce” in 2005 in a blog post describing the trend of e-commerce sites publishing user-generated advertorial content – user pick lists, wish lists, reviews, recommendations etc – to help sell. In the post he says: "With social commerce specifically, what better way to advertise a product than to have a friend recommend it to you? When a product is directly integrated into becoming content itself, it bypasses the normal filter that consumers put up to ignore or at least be skeptical of the advertising."

Of course there is not one single definition about social commerce, in fact there are more then 20, because  the concept of social commerce has been expanded beyond e-commerce to include the use of social technologies in the context of retail – whether online or in-store.

Here is a short explanation about social commerce:



For me interesting comment from the video is: ”Social commerce is better for brands than social networking because social networking is about people connecting with people and at best brands are inserting themselves into that conversation”.

In a post in 2009 Paul Marsden in 2009 tried to organize social commerce into six dimensions:
Dimension 1: Social Shopping
Dimension 2: Ratings & Reviews
Dimension 3: Recommendations & Referrals
Dimension 4: Forums & Communities
Dimension 5: SMO (Social Media Optimisation)
Dimension 6: Social Ads & Apps

Also in an journal article from Columbia university Andrew Stephen and Olivier Toubia mention that social commerce marketplaces have four defining characteristics: "(i) sellers (or shopkeepers) are individuals instead of firms, (ii) sellers create product assortments organized as personalized online shops, (iii) sellers’ can create hyperlinks between their personalized shops, and (iv) sellers’ incentives are based on being paid commissions on sales made by their shops. What emerges is a consumer-driven online marketplace of personalized, individual-curated shops that are connected in a network."

Lets not forget the expected trends for 2011, which according to Paul Chaney will be– Facebook, Group Couponing, Local, Niche, Mobile:

1. Facebook will continue to dominate the social commerce scene
2. Group coupon deal buying will either mature or die
3. Social media will continue to become more local
4. Social commerce will become more “niche-global”
5. Expect a mobile commerce surge

Social commerce is a recent phenomenon and has not been studied extensively, but there is no doubt it will have many implications for businesses.