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Social commerce is a subset of electronic commerce that involves using social media, online media that supports social interaction, and user contributions to assist in the 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 to describe 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.
Today, the area of social commerce has been expanded to include the range of 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 used 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", referring to social commerce as collaborative networks of online vendors, and social shopping as collaborative activity of online shoppers.
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.
Onsite vs. Offsite Social Commerce
Social Commerce has become a really broad term encapsulating a lot of different technologies. One way to categorize it is Offsite vs. Onsite social commerce.
"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 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, Macys 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.
7 Species of Social Commerce
From the definition of Social Commerce, actually it is a combination of social media and shopping. This category is based on individuals' shopping, selling, recommending behaviors.
Social network-driven sales - 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, JustBought) - Users can see recommendations from other users.
User-curated shopping(The Fancy, Lyst, Svpply) - Users create and share lists of products and services for others to shop from.
Participatory commerce(Threadless, Kickstarter, CutOnYourBias) - Users can get involved in the production process.
Social shopping(Motilo, Fashism, GoTryItOn) - Sites provide chat sessions for users so they can communicate with their friends or other users for some advice.
The 6 C's of Social Commerce
Discussed at the 2011 BankInter Foundation for Innovation conference on Social Technologies were 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 90's 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'
Elements of Social Commerce
There are a few elements to keep in mind while utilizing persuasive social commerce effectively. These are:
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.(Anderson et al.: 2011). 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. (Amblee and Bui: 2012). This creates trust for you as a seller. 55% of buyers turn to social media when they’re looking for information(Giamanco and Gregoir: 2012).
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 - 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 and Apple who create demand for their products by convincing the public that there is a possibility of missing out on being able to purchase them.
Measuring Social Commerce Success
Social Commerce Success can be measured by any of the principle ways to measure social media.
Return on Investment (ROI) 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.
- Electronic commerce
- Social shopping
- Referral marketing
- Social networks
- Web 2.0
- The Cluetrain Manifesto
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