Social Commerce

Social Commerce: About People or Software?

There’s an interesting debate going on over at TechCrunch on a post by Craig Donato (CEO of Oodle, that runs the Facebook Marketplace), who is arguing that real social commerce is about “humanising online commerce” with conversations and relationships – not group deals, anonymous reviews, or other algorithmic e-commerce widgets.

To illustrate, Craig asks if you’re looking for a new housekeeper, then which would you prefer

  • a) A half-dozen reviews from people you don’t know?
  • b) A coupon for 10% off the cleaner’s first visit?
  • c) Two friends that use the same cleaner—and are fans?

The point being made is that shopping with your social graph (social commerce 2.0) – i.e. with people you know and trust is smarter that other variations that pass for social commerce – principally group-buy – and user reviews (social commerce 1.0 – connecting customers online).

If this is true, then the article suggests two implications for retailers and brands using social commerce

  • Practice the art of conversation. Social commerce is not about capturing leads and building databases. It’s about talking to people with an authentic voice, the same voice you would use if you were talking to them in person.  (Remember, you’re talking to your customers in the same place they use to chat with their friends.)
  • Build and deepen customer relationships. Customers are the trusted network, the community that surrounds a business. By taking care of your customers, you not only deepen those relationships, but you also fuel referrals.

Whilst we agree with the thrust of the article, we’re not sure that a one-(human)-size-fits-all approach to social commerce is always best.  Sometimes a page of glowing user reviews may trump feedback from a friend (e.g. perhaps for a new car), and sometimes user reviews may be your only realistic option (e.g you need a lot of sales for two or more friends to have experienced you). And sometimes a first-hand experience from a discounted trial via a group-buy site may trump both. Social learning is great, but sometimes individual learning is better – specifically when there is little risk to the shopper.

From a time-management perspective adding social commerce software to allow shoppers to shop smarter with social intelligence may be a lot less onerous than practicing the art of conversation with customers and deepening customer relationships.  Conversations and relationships are time-bandits. One approach does not replace the other, but for time-pressed brands and retailers, software may be the only practical option.

And if you look at the hard evidence on how social commerce boosts sales, it’s difficult to beat the data on how user reviews boost sales or the hard sales of Groupon – the fastest growing business, ever.  This is indicative that sometimes people will in fact want to try stuff for themselves and make their own mind up, rather than follow the advice of others – for these independant-minded folk group-buy software beats friendsourcing-advice.

Actually, we think we’re talking apples and oranges here, what the article seems to be arguing is for ‘social media marketing’ rather than social commerce – proposing the ‘de-ecommercification’ of social commerce.  This is fine, but the definition of commerce is the exchange of goods or services for something of economic value, usually money.  If the “social” in social commerce denotes social media (online media supporting social interaction and user contributions) – then surely social commerce is about conducting such transactions using social media.

Or to put it succinctly, in the words of the social commerce LinkedIn group, social commerce is about selling with social media.  Social selling, not social marketing.

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.

11 Comments Add New Comment

  1. Donato’s advocacy of conversations, relationships, etc. is antithetical to social commerce, which is the answer to the perennial question of social media ROI. This seems to be a reversion to “engagement-centered” social media marketing, where ROI is not measured directly, or at least not in dollar terms.

    1. Hi Alvin, thanks for the input – I couldn’t agree more! Hopefully, this is last dead cat bounce of so called ‘engagement’ – which I really believe should be banned from the marketing lexicon, at least until someone can define it better than the current nonsense “turning on a prospect to a brand idea enhanced by the surrounding context” Marketers gone mad.

  2. While in principle, I agree with Craig Denato regarding answer “C”, this answer really only applies to real world and not the social media/network space. Illustrates an interesting point, I have to disagree with what he would answer, which is “C”. Generally we ask close friends that we are connected on a personal, real-life level. I think what consumers and sellers need for social commerce to be successful is:

    1) transparency
    2) croudsourcing
    3) collaboration.

    The ability to actually see what person is reviewing the product and who the seller is be it their twitter/facebook profiles. I think this is enough to drive the consumer to purchase the product the same way Paul Marsden has his picture and short bio on his page. Let me pose this question to you, would your traffic rate decrease if I think the 3 elements described above need to be incorporated in order to be sufficiently classified as social commerce.

    Craig Denato is forgetting the fact that Groupon really is not a social commerce outlet although the media would love to paint that picture. To quote CEO Andrew Mason from a TechCrunch article (http://tcrn.ch/fmV2Tz) , “Andrew: We’re not a discounting service, and I don’t know what ‘social commerce even means’.”

    1. Hi Ron, thanks for the thoughtful comment. Agree that transparency, crowdsourcing and collaboration are useful, they put a human face on the the business in a human powered network. I’m all for an inclusive definition of social commerce – group-buy is intrinsically social, and has its roots in the Chinese social phenomenon of Tuangou.

  3. We advocate making merchandise recommendations based on what women wear. If she’s added high-waisted jeans to her virtual closet (www.Fashion-Ade.com) versus elastic waist yoga pants we can present her with an item to go with those jeans. She appreciates that!

  4. As I commented on Donato’s post, social media marketing and social commerce are not the same. Although social media marketing may be implied in social commerce, there are some distinct differences, especially as it relates to incentivizing an audience to take collective or individual action. I would argue that it’s not a “people v. software” debate as hinted at in your headline–but more of a gaming system (e.g. mouse through a maze to get to the cheese) where people are (willingly) manipulated via specific mechanics in order to receive a reward, or other such item of value…perhaps recognition or status. The most successful social commerce initiatives, I would suggest, will be the ones that build the most entertaining maze and offer the cheesiest rewards.

  5. Hi…

    I am a entrepreneur from Costa Rica working in a social commerce project…

    Facebook + Amazon is social commerce?

    if we go to wikipedia the awser is yes…!!!

    Question:

    Why???
    How a powerful word like social and a powerful word as commerce means that???

    Researchers of Social:

    -Adam Smith
    -Karl Marx
    -Rene Dumont
    -1000 more

    Researchers of Commerce(Industry, economy or simple Shopping):
    -Taylor
    -Deming
    -Ishikawa
    -Tom Peters.
    -Werbach
    -Fresco
    -1000 more too…

    So, This is begining…??? Of course….People or software???…I change the question… WHAT CAN DO SOCIAL COMMERCE FOR HELP TO REDUCE CLIMATE CHANGE AND POORNESS IN THE WORLD?…

    Gracias…

  6. i think we have to ask ourselves that the meaning of social commerce all over the world. are they more into group buying power or trust bonding with low discount? I have to say its ideal to build strong relationship with users but in reality it fades away.

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