Is ‘Social Commerce’ finally taking off?

Last month’s $6 million investment in Chirpify, an Oregon based outfit of 13 employees is an example of the seeming renewed interest in social commerce solutions in the last year.

Amongst other capabilities, Chirpify enables in-stream purchases on Facebook, Twitter and Instagram, through commenting on posts that are set up as commerce listings. Comments are linked to user credit card details to enable purchase. Investors, who include the ex CEO of McCann worldwide, think that Chirpify can draw more large brands to social, by making their investment more measurable.

Social commerce has been a “hot topic” for several years now and was actually coined as early as 2005 by Yahoo. Despite this, there seem to have been a number of false starts, so has the business model finally proved itself and has it arrived for good?

It depends on how you define ‘social commerce’. Part of the reason for these false starts is that ‘social commerce’ has been used as a blanket term for at least three quite different concepts, some of which have been more problematic to deliver successfully, than others.

When first coined by Yahoo, social commerce described a suite of collaborative shopping tools such as user ratings, pick lists and user-generated content (UGC) sharing of online product information and advice. This concept can be described as ‘using social media content to close the sale’ – using other opinions to help persuade consumers to purchase, within a traditional ecommerce experience.

Well it is partly because new entrants are starting to use technology to mimic the social interactions found instore.

By this limited definition, it’s already proved to be very successful; product ratings and reviews are known to increase likelihood of purchase by over 50% and 84% of “Millenials” say UGC has an influence on what they buy*.

But social commerce can also be used to describe a second concept, where third party social networks become marketing channels, that drive consideration and purchase offline, or via other ecommerce destinations; from something as basic as publishing in-store vouchers or discount codes on Facebook and Twitter, to more integrated campaigns or promotions.Likewise there are plenty of case studies showing how social media offers and campaigns have driven both user sign-ups and incremental revenues for brands.

However, it’s the third social commerce concept that’s proved hardest to crack. This is where social networks themselves are used as an integrated means to browse and purchase, as part of a single customer journey.

Facebook-enabled shop fronts are an example. Much vaunted at launch, “F-commerce” has become a useful tool for specific brands and services and there are thousands of Facebook stores driving revenue for both their owners and technology providers. However, the 50 most popular are dominated by pop and sport stars including Lady Gaga, Justin Bieber and the NBA rather than retail brands.

The picture for retailers has been largely less rosy. In the US, Gap, J.C. Penney, Nordstrom and GameStop, all opened and closed shops on Facebook within the past couple of years. The usual reason is “lack of return on investment”. Whilst social networks provide a great way to communicate with customers, they aren’t necessarily platforms for selling.

These traditional catalogue experiences encounter difficulties with capturing the full attention of its audience, which is largely there to chat. What’s interesting about Chirpify is that, rather than trying to artificially overlay a catalogue on top of a social network, it seeks to firmly distinguish both the payment process and the recommendations within an experience that social media users are familiar with.

So why is social commerce on the agenda again?

Well it is partly because new entrants are starting to use technology to mimic the social interactions found instore. A joined-up approach that includes the experience of browsing a rail, whilst seeking advice from friends, is one that potentially deepens engagement, conversion rates and customer lifetime value.  With the rise of Smartphone usage, these types of experiences also have the ability to bridge the gap between the offline and online world.

This ‘social shopping’ approach separates user behaviour from the more functional attributes of social commerce. It has its roots in group shopping sites, created by brands such as Groupon. However, it’s moved beyond that into destinations that combine aspects of shopping communities, recommendation engines and buyer and seller marketplaces, into experiences that become part of our day-to-day lives.

To deliver an active, valuable community, social shoppers need not only to be able to discover, share and like an interesting range of items but also buy them easily and be rewarded for their participation.

Fashion and lifestyle sectors are leading the way with a fast-growing range of examples. Lyst is a personalised fashion marketplace that allows users to create customised shopping feeds, of products from their favourite fashion brands. Over 25% of traffic to Lyst is from mobile, where users can follow the brands they like to wear, or bloggers they admire, select items and buy them as soon they are in stock.

Wanelo allows visitors to discover products through the people they’re connected to, rather than advertising.  All products are posted by users and Wanelo actively seeks to ensure that featured items are available to purchase somewhere.

Although we haven’t reached a golden age of social shopping just yet, these examples show that it’s more than a fad – certainly in retail sectors, that elicit more emotional engagement.

What’s fascinating is the relative scarcity of large retail brands creating their own single minded social shopping experiences.  Using a well-known brand name to become a ‘curator’ of trend and opinion is surely a way to extend brand-awareness, equity and revenue-earning opportunities?  Whilst there are technical challenges in integrating a wall and ecommerce proposition, at least both can be quite tightly defined when you already own your own catalogue and database.

As it stands ASOS’ Fashion Finder is one of the few own-branded social commerce communities out there. Fashion Finder elegantly themes and sells its audiences’ self-generated looks from over 80 fashion brands, including its own. With 1.3 million visits per month it not only helps to position ASOS as an arbiter of high street fashion, but also provides it with additional revenue generating opportunities.

My prediction is that as more social shopping start-ups gain traction, and retailers’ catalogues become ever more commoditised across these deal and review sites, we’ll see more retailers starting to publish their own self-branded social shopping destinations.

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By Andy Farmer


  • BankersDelight

    Excellent article.
    Interesting point about UGC and Millenials. Are there any stats for other demographics?