Social Commerce

eBay acquires Svpply and the essence of social commerce

Beyond all the hype and technobabble, the value proposition of social commerce is very simple – social commerce makes word of mouth measurable and manageable.

At Apple, the word of mouth mouth value of each happy customer is estimated to be $1927; the recommendations they make drive additional sales. Compare this $1927 word of mouth value with sales value to Apple of the purchases actually made by each customer – $2446, and you’ll see that word of mouth adds a 78% to customer value (total $4373).

In other words, nearly half the value (44%) of a customer lies in their word of mouth value.  The promise of social commerce is that it’ll help you realise this word of mouth value by using social media content to drive sales.

All very simple in principle, but hard in practice.  Beyond selling products worth recommending and helping customers recommend them, what’s a business to do?

The strategy of eBay, and other big retailers seems increasingly to be to buy in technology designed to eek out word of mouth value rather than develop it themselves. In 2011, eBay bought Hunch – a word of mouth recommendation engine that makes recommendations based on similarities between people and their tastes (after buying and selling StumbleUpon, another online word of mouth recommendation tool). And yesterday, eBay announced that it has purchased Svpply, yet another word of mouth recommendation tool that helps people share stuff they like with their friends. No indication was given as to the price paid, or how eBay will use Svpply to help unlock the word of mouth value of its users.

But you don’t need expensive technology to start doing social commerce – just use this simple question to inform what you sell and how you sell it; “Is this worth recommending?

Today’s article is sponsored by Milyoni: The Leader in Social Entertainment

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.

2 Comments Add New Comment

  1. “But you don’t need expensive technology to start doing social commerce” is a very important statement to make. I think the daunting task with new companies ie start ups is overcoming the idea that expensive technology will advise on the right strategy for social commerce. Ultimately, social commerce depends on cultivating and maintaining relationships with the people behind the screens, “liking” and recommending all the products floating throughout the digital space. You really only takes one person to spearhead the efforts of social commerce, at least initially.

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