Social Commerce: Does it Get Any Better Than This?

Social Commerce: Does it Get Any Better Than This?

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The thrill of the deal, spreading the word, networking with birds of your feather, getting the scoop – social shopping has all of the trappings, joys and innuendos that fuel commerce.

In 2008, U.S. advertisers are expected to spend nearly $1.6 billion on social networking sites – up 69 percent from the $920 million they will have spent in 2007, according to the report, “Social Network Marketing: Ad Spending and Usage.” In four years, U.S. ad spend on social-networking sites is expected to reach $2.7 billion.

Social commerce has arrived…so pay attention. Simply put, social commerce is about customers having the means to interact with one another in order to make better buying decisions.

The social aspects of shopping have long been an integral part of our culture first institutionalized and marketed perhaps with the original Tupperware Home Party in 1948. Asking someone where she got that great bag, hearing about the latest sale from a friend or socializing at the mall are all integral parts of our consumer culture.

The advent of ecommerce and, more specifically, word-of-mouth vehicles such as reviews on shopping sites and other online platforms is a bold extension of the power of word of mouth and the social joys that accompany shopping.

Many Social Faces
Social shopping online expresses itself in a multitude of different ways, from so-called social shopping sites with features that encourage word of mouth to social networks such as Facebook that have added shopping applications.

What does this all mean for marketers? How can they join in the conversation, start the buzz, spread the word without seeming like…well, like they are trying to sell stuff? What is acceptable in this environment? What are the current options, opportunities and challenges?

To begin to answer these questions requires gaining an understanding of how social shopping is being enacted, the environment, the opportunities and challenges.

The Environment

From social networks to social shopping sites and site features that encourage and facilitate social commerce, social shopping is evolving. With most teens and nearly 40 percent of adults visiting social networking sites, advertisers are avidly experimenting on Facebook, MySpace and niche online social networks, according to a new eMarketer report.

Social networking sites and services designed around shopping such as Stylehive, Kaboodle and CrowdStorm encourage customer feedback, discussion and reviews. They are rooted in encouraging dialogue and peer-to-peer sharing of info.

Who are the leaders in this market? Where are people socializing? What are the marketing opps?

Despite increases month over month in traffic, social shopping has not yet become as mainstream as other social networks such as MySpace (67,000,000 uniques/month) with only 1.43 percent of MySpace’s traffic. That said, Kaboodle, ThisNext, StyleHive and StyleFeeder are the leaders in the social shopping market. Kaboodle has the most traffic to date (959,000 uniques/month).

Kaboodle is also on the forefront in terms of monetizing social shopping. Recently, Kaboodle partnered with Shopping.com in an effort to increase revenue. When users feature products on their blogs, Shopping.com will post the prices at which the product is sold online by various merchants. If a user clicks through to the merchant’s site, Kaboodle will earn a share of the fee the merchant pays to Shopping.com.

Social networks such as Facebook are trying to monetize their audience with shopping content and features. While wildly popular, these networks are struggling and experimenting with different revenue models. Some sites plan to form so-called affiliate relationships with merchants, who often pay percent commissions on sales that come as a result of their products being featured on other sites.

Communities that are built around specific products or genres also encourage social commerce. For instance, FashMatch and StyleZone are online communities for the fashionistas to discuss the latest clothing, shoe and accessory trends. Manolo’s Shoe Blog and All Lacquered Up are blogs devoted to shoes and nail polish, respectively.

Through these forums and communities, brands can directly engage with consumers with demonstrated interest in their products. Consumers are also socializing around e-commerce sites. Online reviews and recommendations have been increasing in importance and have evolved from simple product reviews to be more social in nature. Even bloggers are now pointing consumers to social shopping sites. People would rather take the word of another consumer over advertising from the brand itself.

The Opportunities
A recent iCrossing study titled “How America Searches: Online Retail,” found that 42 percent of consumers who view information about brands and products on sites like Wikipedia said the information was extremely or very influential to their online purchase decisions. Blog posts, online videos and brand profiles on social networking sites hold significant weight with 18- to 44-year-old shoppers. Use of customer product reviews and evaluations to research online purchases jumped from 40 percent in 2005 to 49 percent in 2007. Seventy percent of all online shoppers said online reviews were extremely/very important factors in their decision-making process.

For advertisers, social shopping is still increasing in popularity; therefore, from a pure media buy perspective many of the sites do not accept all forms of advertising. Those that do have signed on with rep firms or networks instead of selling the inventory directly. ThisNext, despite ranking number two in terms of traffic, does not accept advertising at this time. Wists is a social shopping site that only accepts Google PPC advertising.

Some social shopping sites offer the unique opportunity for brands to connect with their audiences by integrating with and/or creating shopping communities often with direct communication capabilities within the network. StyleHive is the forerunner in partnering with brands to create brand community pages, aka “Nectar Hives.” The Nectar Hive is a landing page that contains all of the bookmarks that StyleHive members have created around the brand that also includes chat features.

The Challenges
Hurdles that could impede the growth of social shopping include:

• Users may not be motivated enough to bother posting their favorite products.
• They may not want to go through the trouble of downloading software in order to grab images of products they like to add to their widgets. Some sites utilize buttons to grab the images. Other sites require the user to cut and paste the html into their Web page. This could be challenging for users who are not computer savvy. Additionally, every site calls the image that is grabbed and put into the display format something different – from tags, to badges to shopcasts. This leads to confusion.
• Users may post images of out-of-stock products -extra vigilance is required by merchandisers.
• Privacy issues on social network sites.

The Future
Opinions vary on social shopping’s staying power. Merchandisers who are selling their products via user-hype on social shopping sites obviously think it’s here to stay. Media analysts, such as Forrester Research, think the low traffic numbers will impede its growth and market value. Shopping engines, such as Shopping.com, see social shopping as being more like venture investments than line extensions. While the jury is still out, by its nature social shopping is more likely to impact brand awareness, purchase consideration and maybe even intent, but not necessarily direct sales, at least as measured by the last touchpoint.

The shopping engines such as Yahoo Shopping and Google Product Search that are very direct sales-focused will likely integrate social shopping with their current offerings; with others potentially to follow if they believe it will further drive sales for their customers and/or revenue for them.

Undoubtedly, social shopping will continue to weave its way in and around ecommerce and other points of online networking and shopping services. It is part of the fabric of our culture and it is not surprising that the social aspect of shopping is now expanding and finding its voice online – and it is a consumer voice.

Denise Zimmerman is president and chief strategy officer of NetPlus Marketing, in Philadelphia, Pennsylvania. This story originally ran in iMedia Connection – (www.imediaconnection.com).

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