Social Commerce

$1.93bn Funding for Social Commerce Startups in First Trimester 2011 [Report Card]

$1.93bn in funding for social commerce startups in the first trimester of 2011 (Jan-April).  That’s a lot of funding being thrown at the fusion of social media and e-commerce.  And we’re not counting the $1.5bn that Facebook raised after declaring social commerce is the next big thing, or the 2/3 billion+ for social commerce startups cashing-out with new owners (Spreet (by Yahoo for $40m), Hautelook (by Nordstom $270m) and Kosmix (by Walmart $300m, DecisionStep (by Buy.com (undisclosed)).

Apart from the sheer size of social commerce investment in early 2011, and with it – the inevitable talk as to whether social commerce is responsible for a new tech bubble, what’s interesting is that the breakdown of the funding activity below also provides a useful insight into where the ‘social commerce’ industry (which means different things to different people) sees itself heading.  As you’d expect group-buy businesses (e.g. Groupon) and shopping clubs (e.g. ideeli, KupiVIP) dominate, and we’re seeing a trend of specialist niche platforms emerging in these spaces (e.g. Art Space, One Kings Lane, Plum District, VillageVines).

The social plugins for e-commerce space is also holding its own – including ratings, reviews and recommendations technology, as is the social marketplace space (99designs, chirply) space and we’re seeing the emergence of a new class of social rewards platforms/plugins emerge  in the form of social media powered referral rewards programs (e.g. Lockerz, MyLikes). In fact, the industry seems to be building on the insight that social commerce is no more nor less than (as IBM has put it), word of mouth in the context of commerce.  So funding for word of mouth tools to facilitate transactions appear to be on the rise.

So if you’re involved with social commerce – as either a buyer or seller – take a look at where the money is going; as the old saying goes – if you want to get rich, stand next to the money.

Chartered psychologist specialising in consumer behaviour, wellbeing and technology. Certified CX professional experienced in Design Thinking. A researcher, writer and speaker, Paul is head of Digital Insight at SYZYGY.

14 Comments Add New Comment

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  2. Social is changing commerce in a very real (and disruptive) way and the bets made by VCs reflect that trend. I think you’ll see some of these bets play out successfully, and others fail miserably. My prediction is that the “social” that drives net new revenue is what will come to dominate this space. “Engagement” and other fluffier metrics will take a backseat. Note that the amount of money raised may be even higher. In our case–at PowerReviews–we raised $10m this year, not $2m as reported above: http://techcrunch.com/2011/05/04/powerreviews-raises-10-million-to-power-customer-reviews-for-retailers-and-brands/

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