Is the Future of Social Commerce a Facebook Like?

Social Commerce the ROI of Social Media

Many people have doubted the return on investment (ROI) of social media (see our previous post). But even for these sceptics social commerce provides a tangible link between activity, channel and results. But it is not just about the ROI; for marketers it delivers unbelievably rich data (e.g. linking products to peoples social graph, creating digital word of mouth and provides game-changing insights about customers, products, and brands. Social commerce benefits both the brand and the customer. Why? Well first let's take a look at what social commerce is.

Paul Marsden provides a great introduction into social commerce and how it can be used:

What does Social Commerce deliver?


Social commerce works because we trust our friends and peers more than we do advertising (source Nielsen).

It links customers reviews, stories, or product questions and answers directly to products – some of these may be friends or peers therefore providing trusted information. This saves time on research they might otherwise have spent hours on.  These conversations and reviews from a shopper’s own friends on a branded site (e.g. if a product has 150 reviews at a store and 3 are from people) provide valuable information for the buyer but also the retailer can link personal data to each purchase.

How the Change in Consumer Behaviour Reinforces Social Commerce

Gerd Leonhard in the presentation below highlights the need to add value, recognise the shift in how consumers behaviours are changing and be adaptive to these changes. Businesses need to adapt to the pace of change that is and think about how they engage customers in this connected world. Gerd has long championed the concept of  convergence; the merging of technologies to create new business models using social media, mobile, location based services....this is the new commerce. Despite the opportunities mobile commerce presents, but as yet many retailers have no clear strategy for this Econsultancy - 10m UK consumers use mobile commerce.

Why is Facebook winning at Social Commerce?

Facebook is the platform in which we spend more time (Facebook users spend 1.5x more online that other Internet user) and invest in more social interactions than any other. Its meteoric growth is only matched by the insightful way the socialisation of data has enabled the 'like' button to be extended out to websites including e-commerce sites.

It is this extension of Facebook social plugins and easy integration into websites that has allowed elements of Facebook to be  placed into websites and blogs extending Facebooks reach. Furthermore full integration with Facebook's Open Graph can turn a product page on the brand site into the equivalent of a Facebook page. As Jay Baer put it Facebook is becoming the plumbing on the web.

So why do retailers and brands spend money building up millions of Facebook Page fans and then drive them away from Facebook to convert a sale?

The Facebook Page is the New Microsite


Many brands use Microsites for promotional campaigns. They enable strong digital experiences and deep campaign integration. But Microsites are also a serious problem because they have a limited shelf life (and cost a lot to develop) and in addition there is still the need to spend money driving traffic to the site.

On the other hand you could use a Facebook brand page. Facebook pages deliver new opportunities to build a brand community, maintain longer relationships with customers thus reducing costs.

With the ability to integrate digital media directly into the page - what is there not to 'like' about this.  Facebook Likes can also enable one-time (and in some cases ongoing) data transfer between the user and the brand to deliver better marketing experiences and feed enterprise databases. Facebook pages can become an integral part of a high-quality band experience and establish long-term messaging and data relationships. These offer ongoing value to the brand at little incremental cost.

Facebook facts for Facebook stores

• Here is a link to some great examples of Facebook stores and some here from Mashable.


• Brands are already being followed and consumers are often looking for benefits .


• The The top 3 brands on Facebook (by fans) all sell directly on Facebook - Coca-Cola (24m),Starbucks (20m) and Disney (19m).


• 76%  of retailers surveyed plan to use Facebook for ‘social commerce’ initiatives.


• 2.5 million sites and counting have integrated Facebook Connect.


• 10,000 new sites integrate with Facebook every day (with social plugins)

Facebook is perfectly positioned to seize the opportunities of social commerce and brands are eager to tie together the ROI and link relationships to sales. However, the challenge for brands will be to create experiences worth sharing,be selective and tailored in their offers (if habitual it diminishes the brand position) and provide feedback and open sharing. Importantly businesses will need to ensure that they are relevant, use data to improve customer experiences and deliver value - leading with human relationships.

Many businesses will fail at social commerce, not venturing beyond offering the benefits of transactions within Facebook. If you look at the brands that are doing well they are providing far more value than merely the opportunity to buy their product.

A last look at Social Commerce comes from Erik Qualman and highlights the need for busineses not to think of this change as a question of if it is going to happen but simply when and how fast - and if they are going to survive!

5 Reasons Why Retailers Should Be Digital - Social Business

What is the dilemma retailers are facing?
The High Street has changed in the last five years driven by the rise of internet shopping coupled with the recession. But the continuing battle for retailers is how to adapt to changing consumer shopping habits and the technology that is enabling new ways to shop. High streets are at a cross roads that could determine their future; do they adapt or die. Here are some key facts that illustrate the balance:

• UK retailers blasted for poor online stores


• The retail industry employs more than 2.9 million people (approximately 11% of the total UK workforce; that is over 1 in 10 people),  sales total £293Bn, which generates 8% of the GDP of the UK and that there are 286,680 retail outlets.


• A report commissioned by the BBC found that shop vacancies now stand at 14%, up from 10.5% a year ago, say retail analysts the Local Data Company.


• Who's Gone Bust in Retailing 2010-11; the change in brands and ownership.


• Brits buy more online than any other European country; according to the latest figures for every £10 spent, £1 of that goes to online stores


• The UK spent £58.8Bn online in 2010; a further 18% growth is predicted for 2011 taking online sales to £69 billion. Some sectors like clothing are seeing big increases of over 34% yr on yr sales.


• According to Mintel 87% of internet users had bought online goods or services during 2010

We quickly get a picture that people are spending more time online because it is convenient. However the social aspect of retail shopping will still be important and whereas we used to research online before we shop we now do this whilst out shopping; this makes the need to be digital even more urgent. The key point here is that busier lifestyles mean consumers want to shop when, where and how they choose. But what does this mean for a retailer?

The essential need in todays fast moving commercial world is to be where your customers are, when they want to buy. To maximise commercial opportunities retailers need to be present across multiple digital channels. The three main digital channels currently are Website, Facebook and Mobile (almost one in three European Union mobile subscribers now owns a smartphone).

Why? - well it extends the reach of the retail brand and how a retailer sells their services and products; this enables them to wrap their business around the consumer rather than trying to get the consumer to fit to an old bricks and mortar model. Yet many retailers are not harnessing these channels and as a consequence floundering or failing.

"...but the majority of retail marketers are trying to catch-up with the shopper and figure out how all these channels work together,” said Richard Winter, POPAI President during a recent presentation at EuroShop 2011.

A good indicator of this shift is advertising spend. Traditionally marketing budgets have always followed where people spend their time; it is an indicator of where marketers are going to spend their money in the future; clearly the future trend is heavily weighted towards digital channels.

Who is doing this well?

Brands with consumer products are particularly suited to selling on Facebook.

Here are a few examples:

Heels.com (click to see store)



Asos (click to see)



Asos claims it is the first in Europe to open such a store, which will allow fans to buy its clothes without leaving the Facebook site. ASOS mobile sales exceeded £1m in December 2010.

French Connection (YouTique) (click to go to YouTube)



Marks and Spencer



Why is Social Business Important to Retail?

The examples above show some of the leading brands but if we look at the future it is only the start of things to come. Technology is 'rocketing' forward and subsequently creating a digital divide between those that get it and those that are still figuring out what it is.



The value of goods sold through social media is currently $5bn, but is set to grow to $30 in the next 5 years. . We use Social Business as way of expressing how technologies that enable social collaboration; comments, feedback, input, ratings....and commerce are used by brands for developing their business.

Most large companies are now wrestling not with the need to be digital, but more on how to plan and execute. The complaints we hear from the boardroom are about (people) resources, about target pressures, about the lack of time, about internal legacy ways of working and the need to change quickly - to make things happen.

Why Retail Needs to be A Social Business

With digital becoming ubiquitous, and the pace of change in mobile showing no sign of slowing, the need to change and adopt digital channels is obvious. Here are some compelling reasons we think a retailer should adopt mobile and use social channels to reach customers.

1. Social becomes a shopping experience

As this infographic neatly explains 1 in 11 humans on Facebook, thus making it an obvious place to move from just brand engagement to selling - f-commerce. Brands are moving away from corporate websites to engage with customers where they are e.g. Kraft and in ways that add relevance, value and deliver a customer experience. Retailers need to build a community of people around their brand and use the interactions and feedback to sharpen their understanding of their customers.

2. Video is ubiquitous and interactive

YouTube's growth and success has been undeniable; as of Feb. 2011, YouTube has 490 million unique users worldwide that searched about 92 billion pages per month. It means that we spend around 2.9 billion hours (over 325,000 years) on YouTube in a month.

Now Add video to a Facebook commerce site and you have a powerful combination of how you can deliver video content within Facebook and at the time it is relevant to a product. Zappos experienced an increase from 6% to 30% in sales for products with video on it website. As French Connections site demonstrates it is an obvious combination. Retailers need to harness video into their offering and use video channels to distribute content.

3. Mobile, Location, Local



In our last blog we talked about the growing need to have a mobile website as increasing smartphones will enable new ways for brands to interact with consumers. Mobile will become our day to day tool taking over from the PC and some predict that mobile shopping could be as big as online shopping.

In addition to this you also have the growing use of Location Based Services e.g. Shopkick , FourSquare , Gowalla or Facebook places for checkins which can be used to incentivise a customer to buy. Notifications will automatically go to a user’s profile and news. In effect this is a great word of mouth and extends the reach of the business and brand.

4. QR Codes Blending Online and Offline

QR codes seem to be getting traction but this research shows people don’t really know what they are and what they need to do with them. QR codes are here to stay as an accepted form of marketing, cleverly integrating the offline with the online. Here are some innovative uses of QR Codes:

• 72 percent of Smartphone users likely to recall an Ad with a QR Code


• Shoppers who buy a bottle of M&S brand orange juice are directed to scan a QR code with their phone’s camera which directs them to a Food To Go mobile site


• Ralph Lauren use QR codes in their windows allowing you to shop when the store is closed. You simply scan the QR code and instantly be taken to the relevant product on the website, which you can then purchase.


• Miss Me jeans - cardboard tag was attached to a pair of jeans I recently purchased. The QR code takes you to a video showing a woman walking around in her Miss Me jeans in a sexy manner.

5. Community, Contact, Promotions

As brands develop a community on their Facebook page they have a direct and ongoing relationship with them. These fans are more likely to talk about a new product or promotional campaign to their own friends and followers, increasing both awareness and word-of-mouth.

In light of this, companies are presented with a great opportunity through social channels to reward those fans and followers that are sharing, liking, posting, and generally talking about their new products.

By aligning new product launches with Facebook competitions, brands can both increase fan acquisition and engagement, as well as present customers with special offers, exclusive discounts, additional content, and even free product trials e.g. Heinz.

Retail is everywhere

Retail is changing, how brands now engage with customers is still in its early stages with some brands clearly being more innovative than others. There is virtually no limitation now to how different technologies can be combined and used within Facebook, Mobile and on the Web. It is now an imagination business - retailers need to start imagining their futures.

So what do you think about shopping in these new ways?

Social Commerce - e-Commerce becomes Social

What is Social Commerce?

Social Commerce is the monetisation of Social Media using eCommerce. It is the concept of word of mouth marketing aligned to eCommerce. It is being driven by convergence .

Advertising and commerce are inevitably drawn like gravity to where people spend their time. As people have migrated more to using social networks the question has been debated as to how to effectively market to consumers on social networks. More importantly there has been much debate around the return on investment (ROI) of marketing to customers using social networks. For many Social Commerce answers the ROI question.

The two pinciples of Social Commerce are:

• connecting people and their friends where they buy (e.g. using Facebook connect to join an eCommerce site)


• helping people buy where they connect (e.g. adding an eCommerce store within a Facebook page)

We are entering a new period of shopping that is collaborative and social, where  people influence peers and brands compete based on value and experience within the social networks.

Why is this important?

Social Commerce extends the abilities of brands to engage with customers in a social context, where relevant information, interaction and participation is shaped not only by the media, but by their friends and their broader social network.


Social shopping plays to a natural extension of our everyday behaviours, where we go shopping with friends, seek advice from friends and then decide based, at least in part, their feedback.

We learn from the knowledge and experience of others we know and/or trust. However, it is the social psychology of influence which characterises the difference between eCommerce and Social Commerce and how it can be used to improve conversion rates and sell products / services.  The main methods of influence are: popularity, authority, affinity, scarcity, consistency and reciprocity.

Here are some videos that explore the use of Social Commerce:

1. from IBM looking at some of the figures driving the rational for social commerce - click here


2. Zugara's augmented reality - click here


3. a look at the future of retail - click here

3 reasons why Social Commerce will be big in 2011:

• People trust products and services purchased and endorsed by ‘friends’; social commerce facilitates this within social platform. Social commerce uses word of mouth marketing effectively to monetise social media.
  
  
  
  • Nielsen report on consumer trust and some more information. Further to this you have the socialisation of ads examined here.
  
  
  
  

• Provides robust measurement model – traffic, reach, engagements, conversion and sales and ROI - here is some further reading-case studies on Bazaarvoice website


• Sales growth of online retail sales outstrips that of traditional bricks and mortar (source Financial Times). According to Comscore 89% of people online visit online retailers. If you then add into that the research by Nielsen that 1 in 6 then purchase you can see the numbers become compelling.

	1-800-Flowers - click to see on Facebook

A look at mobile; Facebook deals - click here and Dell - click here a look at collaborative buying

What to consider?


There are six key principles involved in social commerce:

1. Social shopping - shopping with friends e.g. www.shopwithyourfriends.com , Groupon. The array of features in the market are as follows: group buying, cooperative shopping (browsing together), group feedback (ask friends their opinion) and integrated social shopping e.g. Bestbuy ; Groupon , Woot

2. Ratings and Reviews - allows people to exchange product feedback and inform each others choices through views and   experiences e.g. Amazon and iTunes.

3. Recommendations and referrals - personalised endorsements of online products or services shared with social connections e.g. pay with a Kaboodle ,

4. Forums and communities - communities of customers with a common interest/passion/or goal e.g. Justboughtit

5. Social Media Optimisation -this consists of the deals, news, bookmarking, links and methods of sharing that builds the traffic and develops the social proposition.

6. Social Apps and Widgets - these allow integration of social commerce across different platforms and through different channels e.g. apps allow integration on mobiles and some apps also allow integration into Facebook pages.

Social shopping carts?

Payvment, a popular Facebook shopping-cart application.

SocialShop is a integrated Facebook application by BigCommerce. SocialShop is not a stand-alone shopping cart that allows consumers to complete their purchases without leaving Facebook, instead it links to the merchant's ecommerce site.

Social Store Builder integrates with Facebook but rquires you to have a gold plan account.

3DCart users can integrate their online stores within tabs on their Facebook fan pages. SocialCommerce will automatically match the look and feel of customers' ecommerce sites and allow for additional customization, as well.


What are the trends?




Facebook has a clear interest in developing the social commerce opportunity; it has a currency, Facebook credits, which allows a user to purchase credits with a credit card, receive credits as a gift, or earn credits through games and applications. Facebook connect allows the extension of the the Facebook platform outside of the Facebook platform and integrating into other websites. Smartphones and the onset of the mobile will further push the use of social commerce as integration with locations based services and augmented reality provide new models for engaging customers. Facebook deals using the check-in are already demonstrating the commercial value of deals and incentivising social collababoration.

New services such as Shopkick, introduce real-world incentives to recognize and encourage checking-in and might well represent the future for location-based marketing overall. Using mobile phones, consumers can check-in to a store to initially earn "Kickbucks."

What do you think?