A recent article from Financial Times (registration required) questions the ballyhoo over social commerce, especially as it pertains to Facebook.
The article calls the social network a disappointment, at least where Internet entrepreneurs are concerned, saying that, “Retail executives and consultants say Facebook has yet to take off as a retail platform.”
It cites executives from brands like Overstock.com and Gilt Groupe who chime in with statements such as “the commercial aspect of social media is overhyped and no one’s really caught that rabbit yet” and ” there is less commerce on Facebook than many people had anticipated just nine months ago.” Further, it cites skeptics who call social commerce a “rhetorical fad.”
I agree there needs to be balance to the argument that social commerce is the next big thing, and far be it from SCT’s editor, Dr. Paul Marsden, and I to act as proponents for the medium if a substantive case cannot be made for it.
But, that’s just it – a case can be made, and a quite convincing one.
First of all, social commerce makes sense because it solves a nagging problem where the use of social media for marketing is concerned – ROI.
“Social commerce makes commercial sense because it is good marketing, marketing with a big M that is, in the sense of Marketing as the business of solving people’s problems at a profit,” said Dr. Marsden. “By providing online shoppers with useful tools to make better and more informed choices, social commerce helps shoppers do smart and savvy shopping. And in doing so, retailers can deliver expectation-beating shopper experiences that drive loyalty and advocacy.”
A second reason social commerce makes sense is that it put retailers in contact with current and prospective customers where they hang out, and today that is on social networks – most significantly Facebook.
Skeptics have always been with us. If these naysayers had their way we would still be riding in horse-drawn carriages and handing messages off to couriers. There would be no radio, television, airplanes, personal computers, nuclear energy, space travel, etc. Heck, even electricity was debunked by none other than Thomas Edison himself! But, to cite the author Taylor Caldwell, “I am a skeptic of skeptics.”
Where social commerce is concerned, we are between the now and the not yet. Social media mavericks like Bezos, Zuckerberg and Mason are using social technologies to drive change.
In her 2010 report, Rise of Social Commerce, Altimeter Group analyst Lora Cecere said, “This evolution of social commerce harkens us back to the birth of e-commerce 10 years ago. At that time, e-commerce represented both a new channel and a new way of communicating brand promise to a shopper. The change was pervasive, and it rewrote the relationship between company and consumer.”
In regard to this evolutionary process, Cecere went on to say that social commerce is both a new channel and a new way of doing business that is reshaping how consumers shop. She referred to social commerce as a “journey,” not a “destination.”
Currently, we are in an experimental stage. In our view, most companies are doing social commerce all wrong, putting emphasis on creating transactions instead of building customer life-time value.
The core ethic behind social commerce – helping consumers connect where they buy and buy where they connect – has its basis in social psychology. People are influenced by their peers and the integration of social technologies has only served to amplify that effect.
Dr. Marsden refers to it as “heuristic-thinking,” which is a mindset that involves ignoring most of the information available and, instead, using a few salient information cues that are often social in nature.
To its credit, the Financial Times article ended on a hopeful tone with a quote from Siva Kumar, CEO of comparison shopping site TheFind, who said, “I expect 2012 is really the year that social commerce is going to take off…It’s like crawl, walk, run. The running should happen next year.”
