Guest Article: Manu Prasad: Social's Next Frontier -- $ocial Commerce

It was around the same time that Pepsi's Social Vending Machine, a special vending machine which allows users to gift their friends a drink and customise it with a video message, made its appearance on my reading stream. Not the most suave of manifestations, but the message was getting clearer -- commerce and social platforms were now 'in a relationship'.

A survey by Booz & Company estimated the social commerce at US$5 billion in sales (only physical goods) now, and expected it to touch US$30 billion by 2015.

The buzz has been gaining momentum for a while now. From JWT's 100 things to watch in 2011, released at the beginning of the year, which featured f-commerce and Group Manipulated Pricing, to Trendwatching's May 2011 focus -- The F-Factor, where F stands for "friends, fans, followers who influence consumers' purchasing decisions in ever more sophisticated ways", social commerce stands out as a trend to watch, and formulate a strategy for. A few WWWs before we get to the How.

What, Where, Who

Wikipedia defines Social Commerce as "a subset of electronic commerce that involves using social media, online media that supports social interaction, and user contributions, to assist in the online buying and selling of products and services".

But perhaps, it might work better if we gave equal importance to the social aspects -- discovery, liking, sharing, giving feedback (reviews, ratings), influence, and credibility, along with commercial actions like search, compare, research, and purchase enabled in the design. In essence, enabling social at commercial outlets and enabling commerce at social outlets.

It would be unfair to dismiss it as another wave of e-commerce, not just because of a transaction vs interaction argument, but because emerging technologies are promising a much better integration of real and virtual worlds. At this early stage, social commerce is seen as many things, operating on many platforms, including:

• f-commerce

º On Facebook

• Facebook Stores with complete functionality, or Storefronts on Facebook (catalogue linked to external site), or using Facebook credits for merchandise. P&G was rewarded for its baby steps into f-commerce, with sales of 1,000 diapers in under an hour. Tesco generated in excess of £2 million in-store sales with the help of FB vouchers. For Eventbrite, every Facebook share generates US$2.53 in ticket sales. Lady Gaga sells her music, 1-800-Flowers sells (yes, you guessed it!), Dexter sells his merchandise (just caps, mugs etc, no knives), Starbucks allows users to login from Facebook and 'do more' with their Starbucks Card. Old Spice, Delta Airlines, Nike, Heinz, Volkswagen, Walmart, Best Buy, and many more have made an early start.

• Warner Bros allows users Facebook Credits for renting movies and Zynga for *ville merchandise.

º On websites using Facebook tools

• Using Facebook login like Amazon

• Open Social Plugins such as The Levi's Friends store

• Instant Personalisation like Trip Advisor

º In the real world

• Facebook CheckIn Deals (mobile-centric, regular deals) Mazda and Gap are prominent users of Facebook Deals.

• Facebook Social Deals (comparable to GroupOn and its ilk and using Facebook Credits)

• Fitting rooms connected to Facebook (such as Macy's Magic Fitting Room, DieselCam) and any combinations with those above.

A Google search will give you tons of Facebook statistics, including brand pages that are growing faster than Facebook itself, excellent engagement metrics, and closer home, Facebook's meteoric rise in the Indian digital space. A readymade platform with consumers and their social circles -- sharing, recommending, buying, all can happen under a single virtual roof. For many, that would make a case in itself.

• Group buying/ Daily deals (arguable because social is just another medium they use for marketing their proposition)

º Groupon, Living Social. Groupon has been one of the biggest success stories last year and the mushrooming of clones in India is testament to its potential.

º Google Offers is now live in Portland and is expected to give Groupon some stiff competition.

Though many brands use these for a quick spurt in sales/trials, without a strategy to back it up, there is definitely potential here when used in conjunction with other online tools and better sync with the real service delivery.

• Location Based Services -- Cafe Coffee Day has been a pioneer in using Foursquare Specials in India. But, even before that, McDonald's and Pepsi had successfully experimented with the platform abroad. But, Foursquare is not the only platform out there. The Coke Secret Formula campaign on Black Friday using SCVNGR, a location-based gaming platform, also generated a lot of buzz.

There are already quite a few examples of standalone outlets in India offering major discounts on Foursquare. Being real time, location-based services allow a stronger connection between real and virtual networks, especially for retail chains, if used smartly. Interestingly, at the time of writing this, Foursquare and Groupon are in talks with each other for a tie-up.

Twitter

• A Volkswagen or Ben and Jerry's would tell you that selling is probably not the best use case, but Twitter can also be used as a sales channel. That was stated simplistically, but requires a well-thought out strategy, since the Twitterverse doesn't take too kindly to sales pitches. Dell and BestBuy are the regularly (ab)used examples. There are also variations like 'Pay With a Tweet' which is being used by book publishers, bands, etc.

Twitter is already a wannabe platform for many brands, though the graveyard of Twitter accounts also shows an increased count in tandem.

It could even include affiliate marketing or virtual shop-together applications (like M.A.C Cosmetics), using various social platforms. But, it really doesn't end here.

What's next?

Niche networks

The large networks are only Phase 1 of the evolution. Aided by the behavioural and consumption data collected from this, the next phase, in all probability would be niche networks (new, or within existing) with their own set of interest graphs and micro influencers. Groupon's purchase of Whrrl, the location-based personalised recommendation engine and eBay's acquisition of Where, a geo location service that shows you listings based on past behaviour, can all be seen in this light. But, that's not all.

Augmented reality

Augmented Reality, for example, is no longer seen as geek after adoption by various brands. Swivel is an AR app that uses a regular webcam or Kinect to allow people to try clothes virtually and then connects it to Facebook to get feedback from friends. There are several other technologies that will aid social commerce in various capacities as well -- automated checkins, Near Field Communication (which is increasingly appearing in mobile payment conversation), Tap to Pay, and so on.

SoLoMo (Social, Location, Mobile)

The rapidly increasing smartphone penetration ensures that SoLoMo is definitely not moving in slow mo. An indication of its impact on purchase behaviour is a study by Google which showed that in the US, 79 per cent of smartphone consumers use their phones to help with shopping, from comparing prices, finding more product info, to locating a retailer, and 74 per cent of smartphone shoppers make a purchase, whether online, in-store, or on their phones. Already, there are interesting services like Localmind, which uses foursquare check ins and location to help users engage in Q&A, or LocalResponse, that uses tweets and check-in data to create a marketing platform for brands to target consumers in real time.

So, should you be interested? Definitely, but these are only tools and as with all things social, presence on platforms should be dictated more by the brand's long term objectives than the platform's current popularity.

How

In terms of operations, the platforms, as well as many third parties offer solutions to brands to set up shop/offers. But, success would be determined by what the brand does there and how it does it.

There are plenty of lessons that social media marketing offers. For example, a page and a Facebook campaign can get you to a few ten thousands, if not lakhs of 'Like's in no time, but what it delivers for the brand after that remains a question mark. With not even a basic content strategy in place to build, maintain and engage a community, it withers away. Ditto for Twitter. So, what are a few best practices?

• Ease of Use: The more frictionless and seamless it is, the more it will encourage users. Enabling a laundry list of functionalities and tracking what works might be a good idea. Compare, Share, Suggest, Like, Recommend, Review, Shop, and so on.

• Be Social: Use exclusivity very wisely. Lower the entry barrier. If, for example, you want to be mass, but insist that a user 'Like(s)' you to avail of offers, like J C Penney, there will be problems.

• Offer Value: Answer the 'Why should he Like/Follow me' question. Think smarter and make it worthwhile for him to Like/Follow you, then it's more organic. Example: Give the user special offers if he tags the brand in Photos. For him, to tag the brand in Photos....

• Communicate: Ensure that you announce your endeavour across all your web presence. Use videos, images, exclusive content. More importantly, encourage and if possible, reward word-of-mouth. Ask for feedback from users.

• Set Measurable Objectives: Data and Analytics are very important. Use platform-specific and third party tools. Track, monitor, and see what works. More importantly, what didn't and why it didn't.

• Watch the Space: Learn from the experiments of other brands. Extensively play with available APIs and also look out for changes and developments happening on the platform and ecosystem.

• Community & Trust: Content is only one way of building community. Look for other ways specific to the brand's domain -- the product's unique use cases, crowdsourcing product development. Losing a user's trust is unfortunately easy, don't succumb to it. Be transparent, and stick to the rules you made together.

Use cases: Retail, entertainment and more

A few brand categories that would seem an obvious fit to the world of social commerce.

º Products which are inherently social in consumption like music, books, movies, concerts and other events.

º Products whose purchase process involves validation such as apparel, accessories, jewellery, gadgets.

º Products which offer consumption at the point of online sale such as virtual merchandise.

º Services which can leverage community and content such as travel.

º Existing retail chains -- real and virtual such as cafe/restaurant chains, online shopping portals.

In closing

Commerce has an alternate definition, too -- "Social exchange, especially of opinions, attitudes, etc", which is worth remembering when embarking on social commerce. The new manifestations of commerce will no doubt bring their set of challenges.

In all the hype, it is important to remember that a brand still has to answer the fundamental questions of why a consumer would want to associate with it. They will need to be relevant in time, location and other contexts, and offer tangible value to consumers. They will have to learn to integrate offline and online better. But, social commerce is definitely an area that offers opportunities for brands -- with its potential synergy with Social CRM and its solid perspective on answering that niggling social media ROI question.

(Manu Prasad is an independent brand and social web consultant)