What is Social Commerce?

When I first became interested in the subject in 2008, I was struck by the feeling that most of what was described as “social commerce” really wasn’t very social at all. It was mostly based on product reviews, which while useful, provided little more than the “wisdom of strangers”. It was like walking into a store and shouting out “who thinks I should buy this?”, or worse, everyone yelling “you should buy this!” at you. You know nothing about these people, they know nothing about you. How do you know whether you can trust their opinion? Yes, it’s better than no wisdom at all, but far less useful than the valued opinions of trusted friends and colleagues.

So I felt that for eCommerce to become truly social, it needed to integrate with existing social networks like Facebook and MySpace, or for storefronts to be established on these networks.

Fast forward two years, and there has definitely been a move towards this, but eCommerce is still nowhere near as social as it could (and indeed, probably will, become). On Paul Marsden’s excellent blog Social Commerce Today, he defines social commerce as:

Selling with social media – the use of social media in the context of e-commerce

OK, I can live with that, but I do think it’s a little simplistic. Just because a retailer is using social media to help sell, doesn’t make it social commerce. Dell’s use of Twitter to alert customers to offers in their Outlet store certainly uses social media, but it is primarily just a broadcast medium. 1-800-Flowers’ Facebook store was one of the first examples of it’s kind, but at least initially was little more than an eCommerce widget within Facebook, without taking much advantage of the user’s social graph. I would argue that an eCommerce capability on a social network is not true social commerce if it fails to take advantage of the social environment it is in.

Then around a year ago, I came across a hugely thought-provoking piece of work from Jeremiah Owyang, while when he was still at Forrester, and it made me realise how narrowly most people (myself included) had been looking at the subject. He defines social commerce as being the fifth of five eras of the social web, and predicts this starting in 2011, reaching maturity in 2013. Further definition of these eras and the impact on consumers and brands is included in the graphic in this article.

So what are all these social features we see today if they’re not social commerce? One commenter on Jeremiah’s article observed that much of what passes for social commerce today is actually in Jeremiah’s “era of social colonization”. In particular it merely enables people to “lean on their peers’ opinions to make decisions about products”. OK, call it social commerce if you want, but it really only socializes the product selection decision, not the transaction itself.

Some of Jeremiah’s predictions for the “era of social commerce” are logical extensions of using social networks for eCommerce.

“work with peers to define the next generation of products; also purchase in groups”

“lean on groups to define products”

Others far more revolutionary and disruptive, such as:

“online groups supplant brands”

“a new PR agency emerges which represents online groups – not brands”

If these happen, a lot of companies are going to have to think very hard about whether they embrace this change or fight it. Maybe we will see more experiments like giffgaff, a community-powered mobile telco, which is actually a subsidiary of O2/Telefonica.

Examples of several of the predictions for this era are already beginning to emerge. Over the last 6-9 months, group-buying companies such as Groupon and LivingSocial have expanded rapidly. LivingSocial opened in the UK for the first time this week, and Amazon acquired Woot.

Last year, Walkers Crisps ran a competition to let people invent new flavours, with the winner not only receiving a prize, but 1% of the profits (it has since been discontinued, not surprising, it was horrible – the customer is NOT always right!). Vitaminwater did a similar thing on Facebook.

Whether all of Jeremiah’s predictions come true or not, it’s clear that there is a lot more to come in social commerce over the next few years. This may well cause a shift in the balance of power between vendors and customers, and not all vendors will be comfortable with this. Despite what I said earlier, I do think we can count “the use of social media in the context of e-commerce” as social commerce, but we should acknowledge that it is just the beginning. And this is before we’ve even got on to thinking about what it might mean to B2B eCommerce.

So hang on tight… it’s going to be an interesting ride.

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