Social Commerce: The Recommendation Economy On Steroids

As the effects of the recession roll into year four –  relief is in sight:  2010 holiday online spending grew substantially over an abysmal 2009 of eCommerce revenues.

Nevertheless, it’s increasingly clear to Marketers that lifestyle and behaviour changes born of economic abundance and endless borrowing have translated into values of thrift, and conscious choices by consumers. This new dynamic is described by SAI Marketing as the “New Normal”.

The “new normal” leads to a more cautious approach by consumers to personal fiance management. We see that by a reduction in the appetite for credit and the ongoing rise in savings in both Canada and the US. This trend has impacted not only the way consumers “buy” but also must explicitly imapct way Marketers “sell”.

Changes in consumption patters are undeniable. Marketers continue to resort to extreme discounting and product bundling, but consumers are reluctant to spend money outside of their tightly defined needs. This phenomenon will only worsen as gas prices continue to climb in Q1 2011 and consumers’ disposable income continue to dwindle.

“Exuberant claims, tag lines, promises and celeb endorsements are no longer enough to sway consumers who are more value-driven than ever. Consumers have taken control back from marketers and will only engage with brands on their terms.” -SAI Marketing

“I don’t trust the Marketers, but I’ll trust my friends.” Enter Social Commerce.

Among the many definitions of Social Commerce documented by Paul Marsden of Social Commerce Today here’s a few I liked for their simplicity and matter-of-fact-ness…

Definition 15: Paul Dunay (Avaya) (October 2009)
  • Social commerce: Working with or using your social graph, which is defined as your followers or your friends, and allowing them to help you make buying decisions.
Definition 17: IBM (October 2009)
  • Social Commerce: Connect and foster active participation with customers to help improve your customer experience… including ratings and reviews, blogs, micro-blogging as well as forums and communities
  • 17a Social Commerce: The concept of word of mouth in the context of e-commerce
Definition 20: John Jackson (DecisionStep) (February 2010)
  • Social Commerce: The ability of two or more people to collaborate online, to share opinions and influence each other’s buying decisions
  • In practical terms, what social commerce or social eCommerce means is that most consumer interactions with your brand and invariably the buying decisions that go along with that – won’t happen on your brand’s main website.

    As a result, a recommendation economy has become ubiquitous and immeasurably simplified across mass distances by Social Media. Consumers will ask themselves… What are people like me buying? What are people I aspire to be buying? What are people who I trust buying? Invariably, not only are friends influencing friends eCommerce shopping choices online, those choices are translated offline as well.

    Here are a few tips for Marketers and eCommerce engaged brands to consider in the world of Social Commerce:

    1. Connect products with people in a distributed network – sort out your data and distribute it across networks

    2. Add value through third party sites – suck in data from review sites, photos from Flickr

    3. Enable real-time, social eCommerce shopping- let friends shop together online

    4. Allow your customers to buy from anywhere, from any device – democratize the sales process

    5. Create and distribute Widgets that allow customers and partners to embed your information and share it with their social networks

    6. Consider exchanging smart data – which is a number of free-to-connect nodes or social networks where exchange cost is zero


    1. Richard says:

      Social Commerce is something people have been doing for years. After all, we talk about what we buy and what we want to buy with our friends and have done for thousands of years – that is social commerce to me.

    2. Osh says:

      To Richard’s comment I’d add that we also talk about what we have bought, or didn’t manage to buy. “I got a great deal on X at Y”,”I’ve looked everywhere and can’t find X”, “Service at Z was really poor”, or “Check out this amazing X I just got”. I don’t personally engage in much of this, but once in a while I feel compelled to rave or rant about a particularly exceptional experience.

      I think what’s different now from, say, 20 years ago, is the abundance of online services like search engines, social networks like Facebook and Twitter, and sites that offer crowd-sourced knowledge in the form of reviews, tips, and q&a. Combined they have a powerful effect, because they let us reach beyond immediate friends to other people who are (maybe) in the know.

      For instance, I spent a troublesome few hours yesterday trying to find a replacement fan for a laptop. I got help from Twitter friends, search engines, and two kind local merchants who took the time to point me in the right direction. 20 years ago I would have been thumbing through the Yellow Pages looking for a computer repair shop, and I’d have had zero price transparency. Things are changing, for the better.

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