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If social commerce is a Unicorn, there are a lot of Unicorns in China

So social commerce is a unicorn, a beautiful but imaginary idea; or that’s the headline finding of a brilliant (free) report is just out by Monetate on social commerce – with Mitch Joel and Jay Baer as contributors.

If you look at the numbers, rather than the hype, you see that social media drives just 1.55% of e-commerce traffic and has a conversion rate of less than three-quarters of one percent (.71%).  Using social media for direct response marketing sucks – with the logical conclusion is that “social media participation is over-hyped and disproportionately resourced for ecommerce websites”.

The incontrovertible conclusion – from 500 million visits analysed – is, as Mitch Joel points out, that social media does indeed suck as direct response marketing. Social spam – offers, deals and ‘Likes’ from others – does not convert well into sales.  Just don’t. Instead, do something that does work in the direct response world – like search and email marketing.

The problem, of course, is that the report headline sets up social commerce as a straw man dressed in spam.  Any business thinking of social commerce that social commerce is (direct response) social spam has entirely misunderstood social commerce; the use of social technology to help people buy and sell is not about social spam, it is about a social service that creates value for shoppers.  Think Sam’s Club, not Social Spam. In other words, social commerce is about using social technology to create a shopping experience worth recommending

By creating value for shoppers, you – as a business, capture customer value.  It’s a quid pro quo.

Look, for example, at the burgeoning Tuangou team buying market in Asia – shoppers regularly club together to get bulk-buy discounts on items.  The vendor wins because the aggregate margin on 100 sales is greater than the margin on a single sale.  The shopper wins because they get better value (more for less).  The social commerce opportunity is to deploy social technology as a service to shoppers to help them shop smarter.

Or think how Amazon does social commerce through social recommendations – “Frequently Bought Together” or “Customers Who Bought This Item Also Bought…). It’s social deployed as a service to help shoppers shop smarter. That, on occasion, this can drive sales directly is a bonus – the goal is to create a great shopping experience.  Apple nailed this kind of social commerce in its retail store network – which was explicitly created to create a social shopping experience so insanely great, people would come back for more, and bring their friends.  Social is something you earn, not spam.

Whilst we’re firmly of the if-you-want-loyalty-get-a-dog school of thought, Mitch Joel makes the similar point that social technology should indeed by deployed by vendors as a service – for creating customer value through relationships (that payout in enhanced loyalty).  We’re sceptical about the whole engagement/loyalty thing,  but Mitch’s point stands – social is a brand-building tool for vendors, not a direct-reponse tool.  Deploying social technology is about creating choice-shaping associations in the mind of the customer (like easy social login, social recommenders, tuangou offers…)

If social commerce is a Unicorn, there are a lot of Unicorns in China.

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Written by
Dr Paul Marsden
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Digital wellbeing covers the latest scientific research on the impact of digital technology on human wellbeing. Curated by psychologist Dr. Paul Marsden (@marsattacks). Sponsored by WPP agency SYZYGY.