5 Myths About Social Commerce

MYTH 1: Social commerce is Facebook commerce.

Naturally, it’s difficult to talk about social and not talk about Facebook. The social network that now counts over 900 million users worldwide has definitely paved the way to social commerce, with brand pages, Marketplace, virtual gifts and more.

When people talk about Facebook commerce, they typically think of Facebook stores. But Facebook commerce is actually about leveraging the social capabilities of the platform, more than anything.  With millions of sites leveraging the open graph to provide Internet users with a social experience on their sites, retailers included, Facebook has clearly emerged as the dominant social player.

When we chose to launch Shopcade, we first launched our Facebook application because we knew that we had to first and foremost leverage Facebook. Now, other platforms are also emerging as important for social commerce. Twitter is definitely one, with some 53% of people recommending products or companies in their tweets. Companies like Chirpify are already seeking to leverage this aspect of the micro-blogging platform.

The one platform in social commerce that simply cannot be ignored is mobile. Facebook has clearly recognized this, with its acquisitions of Gowalla and Tagtile, and Groupon as well, with the acquisition of Mertado. With mobile and smartphone penetration increasing rapidly around the world, more and more consumers are turning to their devices. In fact, the number of people accessing retailer sites via mobile device grew 44% between September 2011 and February 2012.

MYTH 2: Facebook commerce doesn’t work.

There have been numerous articles published about how retailers are losing faith in Facebook for commerce. Even Altimeter’s influential Brian Solis published an article titled “Brands give F-Commerce an F,” where he called Facebook commerce “the failed execution of the uninspired.” Ouch.

But – as Solis points out – only 7% of brands with branded page have even experimented with Facebook commerce at all. While some of these companies have struggled more than others – but there are definitely examples that prove that Facebook can be leveraged to dramatically increase sales. Naturally, such conflicting results make it seem a little hasty to jump to the conclusion that F-commerce simply doesn’t work.

Companies like Tesco, P&G, Levi’s, Shoedazzle, Ticketmaster, Eventbrite and American Eagle are just a few examples of companies that have cracked the code to F-commerce with proven successes. There are even companies like BabyAndMeGifts that attribute over 50% of their total sales to Facebook.

MYTH 3: Users only share if they are rewarded.

There is also a common belief that people who shop online are bargain hunters and that they are simply seeking the lowest price possible. Therefore, they’ll only share if they are likely to benefit from a reward.

Daily deal sites like Groupon or even Fab.com have used interesting monetary incentives to encourage users to share and invite their friends. But social behaviour is not strictly motivated by rewards. In fact, a majority of social engagement is actually driven by status.

Users share certain products with their friends and followers for various reasons but in part because it allows them to create a certain image of themselves. It’s the same rationale behind why someone “likes” specific brands or products on Facebook, why they follow certain people on Twitter, or why they “pin” various images on Pinterest.

We see the same phenomenon happening with Shopcade. Users are sharing products that they endorse but also that they feel allows them to create a certain image for themselves. For example, some of our users have developed profiles that of products only pink products, Hello Kitty products or even Moose-inspired products.

Plus, while we have integrated a monetary incentive into the platform that allows users to earn cash rewards for sharing products they love with their friends, 25% of our users actually choose to donate their earned cash rewards to charity – which confirms that they are perhaps motivated by something more than money.

MYTH 4: Spam is inevitable.

Especially with the recent rise of Pinterest, there has been a lot of discussion about spam. When it surfaced in March that a 24-year-old Pinterest user was able to use spam bots in order to make $1000 or more per day and that his account was rarely flagged or shut down, spam definitely became a huge concern. Fortunately, Pinterest is really working on trying to combat this concern and educate users.

As with any social platform – whether it be Facebook, Twitter, Pinterest, Instagram, Quora, etc. – it is always possible to find users that abuse the platform and distribute “spam” to their friends and followers. But there are ways to control and incentivize users not to so.

For example, at Shopcade, our users do not gain anything by posting products hundreds of times. Users are not rewarded per click but instead when someone else makes an actual purchase. Therefore, users are encouraged and incentivized to promote the best products to their friends and followers – products that they actually think they will like and buy.

In addition, we’ve assembled a 65 million-product database so that user essentially “pin” or select products from within Shopcade – not anywhere on the web. This means that our users never risk clicking on a spam link because all external links lead to verified partner or merchant websites.

We’ve been fortunate enough not to encounter any issues with spam on our platform so far. We also find that users actually don’t want to upset their friends and care enough about their followers not to “spam” them. Of course, users can also choose to follow and unfollow anyone at any given time, which means spammers will ultimately result with fewer followers.

MYTH 5: There are no social commerce success stories.

This is perhaps the biggest myth of all, as shopping and commerce have always been social activities. People have always wanted to know what other consumers think before they invest in buying a new product. In fact, in the US, some 70% of the population says they look at reviews before making purchase – with a majority saying that their friends and family exert “a great deal” of influence on their choices. Therefore, commerce, whether or not it takes place on a social platform is already very socially driven.

I already mentioned some companies that have seen successes with social or Facebook commerce, including Tescos, P&G, Levi’s, ShoeDazzle, Ticketmaster, Eventbrite, American Eagle and BabyAndMeGifts. But even more traditional ecommerce sites are becoming increasingly social.

Since September, big traditional ecommerce players, like Ebay and Amazon, have been ramping up their social integration. Ebay’s most recent acquisition of social recommendation service Hunch clearly pointed to an increased interest in social. Similarly, Amazon acquired Quorus in December in order to help bring social conversation and interactions to its ecommerce platform.

Finally, it seems silly that the successes of Fab.com, Etsy or even Groupon are often not included amongst social commerce successes. All three of these companies have integrated social functionalities into their user experience in very different ways and have been wildly successful as a result.

Social elements clearly play an important role in commerce, yet sometimes it is difficult to tell exactly how and when. Social recommendations are clearly influential at the discovery stage, and for this reason, increased sales may not always be attributed to them. Still, as ecommerce continues to evolve, it’s clear that we’ll be able to attribute more and more to social in the purchase funnel.

  • http://twitter.com/MyGiftWand MyGiftWand

    Apps for social commerce and especially social gifting are actually taking off. We’re really glad to hear that! It seems like there is a lot of room for innovation in the space. We believe in the social gifting model – Facebook provides a great platform for the spread of egift cards. For retailers, a Facebook app like MyGiftWand is a powerful tool that helps them leverage the social network to reach a targeted demographic by providing special incentives to users based on the age, gender and location of the recipient. For consumers, the fact that social gifting is easy, fast and fun makes it a big win.