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Social E-Commerce: An Ambience for Consumers and an Engagement Engine for Brands

e-commerce Social e-commerce is a term used to describe new online retail models or marketing strategies that incorporate social networks and peer to peer communication to drive sales.  Social e-commerce denotes a wide range of shopping, recommending and selling behaviors.  While shoppers indulge in smart buying, brands interact with them to give them a tailored brand experience.

Types of Social e-commerce:

  • Peer to peer sales platforms: This platform consists of community-based market places, or bazaars, where individuals communicate and sell directly to other individuals.  There was an increase of 22% in 2013 when compared with 2012.  Around 75% of users started using the platform through Word of mouth promotions.
  • Social network driven sales: Sales have been driven through referrals from established online social networks or offline networks.  There are many advertisers on Facebook, and in a day Tumbler has approximately 250 million page views and 33 million new posts.  There are 33% users who follow a brand on Twitter and 67% of them buy brands they follow.
  • Group buying: Products and services are offered at a reduced rate if more buyers agree to make the purchase.
  • Peer recommendation: Sites that aggregate product or service reviews recommend the products based on consumer purchasing history, reward individuals for sharing products and purchases with friends through social networks.  Amazon has 209 million active users.  90% customers on Yelp say that positive reviews impact their buying choices.
  • User-curated shopping: In the shopping focused site, users create and share lists of products and services for others to shop from.  The fancy shopping website is valued at around $600 million.  Lyst has more than 1 milion unique visitors and more than $1 million of monthly sales.
  • Participatory commerce: Consumers become involved directly in the production process through voting, funding and collaboratively designing products.  Recently Threadless raised $8,774,411 for over 1200 artists worldwide.  In the year 2009 Kickstarter had pledged $788 million and it has successfully funded 48,606 startups through crowdfunding.
  • Social shopping: Sites that attempt to replicate shopping offline with friends include chat and forum features for exchanging advice and opinions.

Social e-commerce is still in infant stage as none of the major social networks like Facebook, Twitter and Pinterest have figured out how to bring transactions directly to their platforms.  They are directing retailers to use paid media to bring customers to their online storefronts.  Online retailers, too, are continually experimenting with new models and marketing methods to allow for greater peer-to-peer and group-based interactions, being aware of the fact that recommendations from friends can play a powerful role in shopping.

A number of sites now include product review from buyers.  Like and Pin It buttons are increasingly popping up in the e-commerce websites to encourage shoppers in sharing their finds with their online social network contacts.  Established retailers including Nike and ModCloth are allowing shoppers to take a great role in the production process, inviting them to design their own shoes and vote on what designs are stocked in store.

Even though some brands have been skeptical about how social media can bring revenue, a new info graphic reveals that social e-commerce is expected to bring $30 billion sales every year by 2015, with half of the sales occurring through social media.  This is due to multiple factors like, consumers spending more time on social media networks, brands targeting consumers in the news feed (as opposed to fan pages) of the network, and advances in technology such as mobile geo-location shopping apps and enterprise marketing tools.  A recent survey from Crowdtap found that 67% of shoppers purchased a gift they found on social media and 64.8 % of them are using social media to find that perfect item.  According to the infographic data, Facebook drives 26% of referral traffic to business websites and the numbers are only expected to increase.  About 20% of shoppers already prefer buying products through a brand’s Facebook page compared to its website.  Nearly 10 million registered small businesses have a Facebook presence and 89% of agencies use the social network to advertise for their business clients.  Facebook fans are a brand’s most valuable customers as 79% of them are most likely to purchase than non-fans as only 41% are expected to purchase.

Many startups have cropped up, which are transforming the e-commerce social media with revolutionary ways.  Extole is one such marketing platform that taps customer advocates to foster word-of-mouth stories about brands.  Advocates are targeted at key touch points such as Facebook fan pages, confirmation pages, account pages and dedicated emails.  Then, the advocates are invited to participate in a branded experience and are rewarded for social sharing.  That, in turn, drives awareness and sales.

8th Bridge website makes it possible for shoppers to shop where they socialize.  Social Expressions is company’s one such app that turns shoppers into advocates by making it easier for them to express how they feel about products and offers.

Marketers have realized that social e-commerce helps overcome some of the biggest marketing challenges, awareness, education and trust/influence.  Consumers get inclined to a brand when their friends are engaged with that brand or business, which has made an impact across the social graph.  As an added benefit, social e-commerce and social communications have considered shoppers behavior, which has been shown to be highly correlated with SEO performance.  That makes a great social media marketing strategy all the more important.  Social e-commerce creates social media content, enables peer recommendations, offers group buying opportunities, and is helping develop shopping opportunities directly on social media platforms.

 

This article was written by Anand Shanker, Senior Analyst with DART Consulting.

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