Web Commerce Isn't Really Social…Yet
My colleague Tricia Duryee has an excellent post up on eMoney about the big trends in e-commerce: Mobile, local and social. But when you think about massive new Web commerce businesses like Groupon and Gilt Groupe, they’re barely social at all.
Sites like Gilt are supposedly exclusive discount fashion communities, but the reality is they will take anyone who will pay. Groupon, which just got Google to say it was worth as much as $6 billion and is on the verge of an investor valuation of $4.75 billion, is a glorified email list. Sure, users must swarm a deal to activate it, but that always happens. And users can share deals with their friends on Facebook and Twitter, earning referral rewards if they buy a deal.
Hitwise researcher Bill Tancer told me via email that only 8.3 percent of Groupon traffic comes from social media referrals. That’s compared to 24 percent of Groupon traffic coming from shopping and classifieds Web pages (as in, ads) and 13 percent from email sites.
Upstream traffic from social networks as a portion of total Groupon traffic declined 83 percent from Nov. 9 to Nov. 10. Tancer said the move from social networks to email reflects the shift of Groupon visitors from early adopters to mainstream users.
The thing is, as seen particularly in the gaming business, social may have the capacity to be an incredible multiplier for any industry. Facebook CEO Mark Zuckerberg has said more than once that he thinks e-commerce will be one of the next big sectors to be disrupted by companies that are built to be social from the ground up.
Linking social with commerce is tricky. Besides user reviews and accounts, which have been around forever, much of social commerce is very basic.
For example, Amazon recently launched the most minimal of minimal Facebook integrations, recommending products based on opted-in users’ public “Likes” and giving gift suggestions for friends with upcoming birthdays. The Web retailer could have gone much deeper, by, for instance, automatically connecting Amazon users to their Facebook accounts or helping users tell friends about new items they have bought.
But that would have raised privacy hackles, as with previous Facebook initiatives, such as the discontinued Facebook Beacon effort or the current Instant Personalization program.
Some retailers are trying to sell things directly on Facebook, such as Delta Air Lines tickets and JCPenney apparel. I see the point of trying to capture users on the sites where they spend all their time, but it seems a little awkward.
Not to say Facebook isn’t already developing a burgeoning business in virtual e-commerce through its gaming partners that could eventually extend to real-world goods (although the margins would be much worse).
And, yes, there are all sorts of real-world deals you can access by playing the “mayor game” on a local social service like Foursquare.
Also on the start-up front, the collage community Polyvore arranges deals and creates tools to help its two million users influence fashion designers, and indie retailer Moxsie asks its Twitter followers to help it choose what items to sell.
There are also start-ups, like Payvment and Milyoni, that provide tools for Facebook storefronts. And the purchase-sharing platforms Blippy and Swipely are social commerce taken to the extreme.
While none of those are Groupon-scale businesses, there are many playing around with the potentially explosive combination of social and commerce.
One cool example of social commerce I just saw today was in a post by E.B. Boyd at Fast Company.
Tea Collection, a boutique children’s clothing maker, used the Facebook Like button to decide which of its selection of discontinued girls’ dresses to deeply discount. When a $59 dress was chosen by user Likes, it was discounted to $10. It quickly sold out at a loss, but additional purchases by customers brought in by the sale gave the company one of its biggest overall sales days ever.