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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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1 comment
  • China has become a digital superpower. If a decade ago they only were an industrial / export superpower nowadays they understand the potential of controlling data / information and this is exactly what they are doing!

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.