Social commerce finally arrived?

Social commerce had a rocky start but with a swathe of start-ups revolutionising the space and partnerships forming between platforms and payment companies, it could be about to prove its critics wrong.

Social commerce is a phrase which has been bandied about ever since brands noticed the opportunities that platforms like Facebook and Twitter offered them to reach out to customers.

What what does it really mean? The most common definition you come across is, “a type of electronic commerce that employs social media to promote online transactions,” but this often changes depending on who is talking.

For the first few years, this trend consisted mainly of brands using social media to direct customers to their own websites to buy products. Some have argued that this is more advertising than commerce – with no transactions taking place within the social platforms. Many retailers started to doubt the true sales value garnered from sites such as Facebook and Twitter.

Early attempts at selling on the platforms did actually take place however. There was a spate of Facebook ‘shop’ openings in 2011 with brands such as Gap and GameStop opening stores on the platform but these closed down after a matter of months.

“We just didn’t get the return on investment we needed from the Facebook market, so we shut it down pretty quickly,” Ashley Sheetz, VP of marketing and strategy at GameStop, told Bloomberg. “For us, it’s been a way we communicate with customers on deals, not a place to sell.”

It was suggested by Forrester Research analyst Sucharita Mulpuru that selling through Facebook was “like trying to sell stuff to people while they’re hanging out with their friends at the bar.”

Social gifting

One way in which the platforms and enterprising companies chose to battle this idea was through ‘social gifting’. This is the action of buying and sending a gift card, or voucher for a particular product through social media.

In April 2012 Facebook acquired social gifting app Karma and later launched its new fangled ‘Gifts’ feature which allowed members to pick from a range of gifts to buy for their friends who would then either receive a voucher have the product shipped to them.

Meanwhile Swedish start-up Wrap secured $10.5m investment to push its social gifting platform. By connecting your Wrap to your Facebook account, Wrap sends notifications of birthdays, engagements etc. and shows a range of gift options matched to the person whose birthday it is. Before Christmas it was reportedly sending 1 million gifts a week through Facebook.

“The advantages that digital gifting offers users are largely based around convenience,” says Ajay Sethi, retail and ecommerce expert at PrePay Solutions.

“The ability to review a birthday reminder and then instantly translate that into a personalised gift, without needing to divert the time and money required to do this manually, is a huge advantage. In the instantaneous world of social media, this kind of advantage is not just extremely useful but, for retailers, can make the difference between a purchase and a missed opportunity.”

This tactic removes the ‘intrusive’ element of selling on Facebook, it merely feels like the platform is doing you massive favour in suggesting gifts. Transactions are certainly taking place on the platform but it feels less like commerce. But it seems the tides are about to change.

Social commerce is back

Despite the initial backlash against selling on social media, the platforms might be coming back fighting and a swathe of start-ups are throwing their weight behind the idea that sales can occur on these platforms. Gartner Research has gone as far to say that 50% of web sales will come via social media by 2015.

We spoke with Chris Teso the CEO and founder of one such start-up Chipify about his mission, “In fact, we’re the only company actually enabling social commerce. Every other application has actually been social advertising – sharing a link in an attempt to redirect a consumer’s attention, and browser, away from a social experience to a traditional e-commerce experience.”

Brands that have signed up to Chirpify can give users the opportunity to buy the products featured in their tweets or posts with one reply. The user never leaves the platform. This service works across Twitter, Facebook and Instagram, turning each of these into potential ‘cash registers’ for brands.

Another name in the game is BuyReply which recently received $1m investment for its platform which allows users to buy in Twitter, by text and by scanning QR codes.

Not to be outdone on its own platform, Twitter itself has recently partnered up with AMEX to create a tweet to buy system where users connect their card details to their Twitter accounts and start buying within the platform.

It looks like social commerce is taking off, but will these rival brands face challenges from Twitter?

“Ironically, I think Twitter’s own foray into social commerce might hinder how quickly this takes off – if they see Chirpify and BuyReply as encroaching on their “territory” with Amex, they might go down the same route they did with Instagram and make things difficult for them,” says Gavin Masters, Head of eCommerce Consulting at Maginus Software Solutions.

This could certainly be the case as history teaches us but whatever happens, the matter of fact is – users can now make purchases from within streams on social media. Forget social advertising, social selling has truly arrived. What remains to be seen is how quickly it takes off with brands and consumers.

“I think this is going to remain a niche piece of functionality used for things like micro-transactions for the foreseeable future, but it only takes one big name to come up with a really innovative way of utilising it to push it into the mainstream,” says Masters.

“Online retailers should watch this with interest, but I don’t think it’s something most consumers will be jumping to use in preference to other payment methods.”