Social Commerce

As Web 2.0 technology matures, it’s no surprise that merchants are looking to marry social networking with e-commerce, a phenomenon known as “social commerce.” In a sense, it’s completely natural. What’s more social than shopping? People go to stores together, they advise each other on purchase decisions, and they share ideas. The Internet can make this natural process faster and easier.

Social commerce is emerging in three directions:

1) e-commerce sites adding social networking elements to encourage interaction among shoppers
2) social networking sites adding e-commerce functions, to generate new revenue streams
3) independent “social shopping” sites, where shoppers commune and get recommendations for what and where to buy

E-commerce sites add social functionality

Perhaps the most basic method for taking advantage of people’s natural sociability is being pursued by the bookstore chain, Barnes & Noble. BarnesAndNoble.com added simple blog and message board functionality, encouraging visitors to share ideas about books, and converting the offline book club to an online forum.

A competitive bookstore chain Borders has taken a more aggressive tack, by teaming up with the social networking site Gather.com to create a new site Borders.Gather.com, where Borders customers can talk about books, upload their own book reviews and start their own online book clubs. Launched in December 2006, already 8,400 members have joined the group. Members are rewarded for being active at the site with points they can turn into cash.

Fashion retailer Bloomingdale’s is pursuing a neat angle on social networking, which combines the store and the Internet. Shoppers at the flagship store on 59th Street in New York can capture an image of themselves in a new dress in a “magic mirror, and email it to their friends for comment. Friends can vote on how the dress looks, and send text message replies to the shopper on the spot. Imagine a mother-of-the-bride providing input on wedding dress choices from across the country-sure to be a popular application.

Social networking sites add e-commerce

Perhaps the best example of this trend is MySpace’s experiment with adding a music download option through a partnership with the digital licensing company SNOCAP. Looking to compete with Apple’s popular iTunes service, MySpace launched the music store in September of 2006.

MySpace already has over 3 million bands showcasing their music at the site. But with this new capability, the bands can both promote and sell, adding songs, music videos and pictures to their MySpace pages. Many observers say the MySpace/SNOCAP offering signals a new era in music distribution, where independent music producers can find a ready-made market outside of the control of the traditional music publishers.

Social shopping sites

A number of independent social shopping sites have emerged in recent years, each with a slightly different angle. For example,

  • Kaboodle is perhaps the best known, with 200,000 registered users, offering shoppers to give and get advice. One popular feature is called “Help Me Choose,” where you can post 3 products and ask for everyone’s opinion on which one to buy. Kaboodle recently announced a partnership with eBay to let members build lists of their own personal “collections” of products.
  • ThisNext claims to connect independent-minded shoppers with hard-to-find products. Members create and tag lists of products they like, in a process the site calls “shopcasting.”
  • MyPickList invites members to create lists of products they love, and then receive a commission if another member buys the product. Members can promote their lists by adding a “widget”—a small piece of software—to blogs, websites and social networks.
  • Other social shopping sites include StyleHive, ShopWiki, StyleFeeder and Wists.

Most of these sites make their money from ad sales and from referral fees—affiliate programs—from merchants. But they profess to be neutral. Recommendation sites are sure to play an important and growing role in the development of e-commerce. According to Jupiter Research, 30% of shoppers trust their peers when making a major purchase decision, versus only 10% who trust advertising.

Kaboodle social shopping

Kaboodle encourages members to advise each other on product ideas and purchase decisions.

Original Publication

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