Friday, April 19, 2013

Is Social Commerce the Next Big Thing?

There have been high hopes for e-commerce on social platforms almost since the beginning. For instance, I wrote about pop-up stores on Facebook a couple of years ago. There are current uses of the pop-up store, but they all seem to be classified as retail events.

What is the state of actual social commerce? One prediction, captured in an infographic, seems to extrapolate the reach of social platforms to an estimate “50% of Web Sales to Occur Via Social Media by 2015.” Given what we can see in mid-2013 that seems to be a wildly over-optimistic prediction.

Here are some recent developments and announcements:
• In January Facebook announced that Stipple technology would be available to create interactive images on posts and in ads. Stipple technology is similar to Thinglink, which I tried out in a post a few months ago. I repeat my warning that you must own the image in order to lawfully use it for this purpose. (Note: Thinglink was added to the mix in April).
• Pinterest continues its rapid growth. I read one article that called it a “virtual shopping mall.” Since it is easy to use it is especially attractive to small business. Much evidence suggests it is very effective in driving traffic to retail sites.
• Perhaps piggy-backing on the success of Pinterest are other visual sites.  Some that are drawing considerable investor interest are:
  - Polyvore is touted as a “social discovery” site where fashion shoppers create and share sets of images. It is experiencing rapid growth and is reported to have a higher conversion rate from referrals than Pinterest.
  - The Hunt which allows members to post images of items they like and ask other members to help them locate the items at retail. Its current revenue model is not clear.
  - Wanelo “Want, Need, Love” is another visual site in which users create their own feed based on products they like. The site appears to be driving traffic to retail sites. Whether affiliate revenue is sufficient to sustain the site or whether it can develop as an actual e-commerce site is still an open question.

These sites have one thing in common. They are currently being used to drive traffic to retail sites, not as e-commerce platforms. That is probably positive for ad revenue; e-commerce is still arguable.

 A newcomer that is clearly a social e-commerce platform is Chirpify. It describes itself as the only in-stream social commerce site.  According to Chirpify, users can buy, sell, or fundraise on the site. They accept PayPal as well as a variety of credit cards, but I wonder if others will be concerned about the security of transactions.

It is clearly a hot space! Existing and new platforms are likely to continue driving a growing amount of traffic to e-commerce retail sites. However, actual e-commerce on social platforms doesn’t appear to be anywhere close to 50% of web sales, nor does it appear that it will approach that by 2015!

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