8 Major Social Commerce Trends for 2011

“Social commerce” became a buzz word in the summer of 2010:

Here are eight new trends in social commerce that will appear in 2011:

1) Demand based shopping applications

Groupon demonstrated how supply in the form of retail inventory can be packaged into deep discount opportunities. Demand is the inverse – how many people in the community want 49ers tickets, a dinner at French Laundry, or the hottest electronic gadget? Applications will develop that meets demands from local shoppers. Requests can be input into an application, and addressed either automatically from an inventory warehousing system like Walmart or manually with a “bid” price and location for pickup.

The implications? By fulfilling demand direct from consumers in aggregate, both large chains and SMBs can fulfill orders far more efficiently and reduce sales and marketing overhead.

2) Identity brokering and qualification

The transparency of the social graph will facilitate transparent match making systems that expose all parties to a transaction. One example of an old marketing paradigm where identity data was hidden is the mailing list – tradeable, sellable, undifferentiated and an acknowledged source of spam. There’s always been a seamy side to traditional lead generation and affiliate marketing systems because one doesn’t get to “opt-in” before receiving spam or a phone call to your request for more information about, say, a home listed for sale.

With the detailed social graph, every match can be qualified. Supply/demand applications will evolve to create matches where both parties to a transaction can easily vet the other party before a dialogue takes place. The “Groupon” concept of offering a kind of reward to attract local business will extend to SMBs like accountants, lawyers and real estate brokers who haven’t yet participated in offering an online “daily deal”. Moreover, advertisers can qualify leads by researching them on social networks like Linkedin or Facebook. In fact, leads will presented not just as a simple name and email address, but as a profile based on their social graph so it’s easy to see whether that lead might be your best friend’s cousin.

3) The reduction of the sales force.

Why? Just as anybody can create a social media presence, anybody can now become a marketer and create a social commercial presence.

Online commerce distribution – getting the exact product to the consumer purchaser as efficiently as possible – disintermediates sales forces, which function as middlemen to provide conversion value. Now social/mobile commerce is set to do for local SMBs what Amazon did for national brand products – create the variegated distribution channels that make it easier for consumers to find and purchase what they want from SMBs.

Take group buying as an example. Hundreds of competing “Groupons” (including all the local media/news who advertise with Daily Deals) can’t all be knocking on every cafe in every city to source a deal. Deal aggregation engines such as Wantsa, TheDealMap and Yipit are/can create deal syndicates that present publishable deal inventory. Now publishers can trade off sales staff and marketing overhead for affiliate income from deals sourced by others.

Social commerce facilitates this trend because literally any business or media outlet can be an ad publisher. For starters, they can publish a free deal on Facebook Deals or Groupon Stores, and then escalate their marketing presence by adding their deals into syndication.

4) Social Commerce conversion – the call to action returns

Marketers have always tiptoed around social media marketing. They need to message their product, but not bluntly pitch it. Group buying succeeds at creating a call to action in the form of a time sensitive deal, but the most efficient social media marketing strategy is to engage the customer into discussing your product. Here are the methods for social commerce conversion:

The simple one-click Facebook “Like” (and corresponding “share” buttons on social media) is the quickest way to market deals across the Social Graph.

For consumers, checking reviews is the due diligence step. They already want what the business offers, and the 4-5 star reviews just converts them.

Conversion can be triggered by influencers, just ask any teenage girl. Marketers will court influencers with perks. New analytical applications will ascribe dollar value to the referral or “like” of individuals and groups.

Customer service becomes a marketing channel. Consumers respond to Zappos – inspired great service. Every business/brand should have a customer service landing page, whether it’s on-site or on GetSatisfaction.com

5) The emergence of the pure social commerce campaign – game changing brand marketing

Have a new product? Can’t get it into traditional distribution channels? And even if you can get it into Target, how do you market it to get consumers to notice it? This was the challenge facing entrepreneur Dr. Robert Wagstaff with his simple tongue scraping invention to counter bad breath. Expect more products to template the Orabrush marketing approach in the same way Zappos has become a beacon for great customer service. Here’s the ABC/Nightline video:

If you don’t watch the full video, here is the takeaway:

  • YouTube = TV commercial
  • Facebook = National media buy
  • College business class = Business incubator

6) Facebook is a defacto platform for social commerce, but it may be too massive for local socialization

Facebook is just too big for most users. A Facebook page for a city or neighborhood can’t be customized to the individuals of the community. Granted, every business may eventually have a Facebook page for their customers because Facebook has become a defacto platform, almost like the archaic World Wide Web, or more loosely AOL in the 90’s. But social commerce will become relevant at a local level when online meets offline, creating virtual town squares where communities of local folk congregate. But they need on-the-ground participation and management to flourish as social vehicles, otherwise the sites are ghost towns.

How does social commerce become social at the local level? To get the consumers to aggregate around local commerce offline, there needs to be a relevant community overlay on top of the deals. For example, Japan has a social network of housewives who input the best shopping deals that day manually for the benefit of others in the community. Unlike a one-off Groupon deal where buyers are unrelated, the housewives form a local social network tied together initially in their pursuit of a deal.

2011 will see further development of these niche networks based on geographies, culture and industry. You can see this development happening with the launch of more exclusive social networks like Namesake, Quora and Path.

7) Globalization of social commerce

More than half of the Asian-Americans living in the US today were born in their native country. Melting pot Americans use applications like Skype to maintain their connection, but getting products they grew up with is still done by overseas shipment from relatives (personal note: we get CARE packages from Japan all the time). The next frontier for social commerce could be descriptively coined Cost Plus World Market 2.0. Overseas trading firms / commerce entrepreneurs can source timely products at lower prices mirroring native country labor costs, utilize just in time shipping and warehousing systems, and market via their global cultural social network systems. This is not an iterative variant of global, undifferentiated trading marketplaces like eBay or Alibaba, it’s a new window of opportunity for building the next set of global commerce properties that focus on very specific sets of customers. Here’s a good example of a social commerce site for Indian women – Exclusively.in

8 ) And obviously, location based apps will drive social commerce

I saved mobile commerce for last just because it’s the most obvious, and the trends have been well documented and recognized. Here are some of the things that consumers can already do on a location based app:

Check-ins are being monetized with deals and other perks on every LBS. But we all know that.                                                                                       .

The Christmas 2010 shopping season goes down as the year of the in-store price check. The store is now the showroom, and the phone app the cash register.

Here’s what’s coming in the future:

Mobile device as credit card. Obvious to anybody who knows mobile services in Europe and Asia.                                                                             .

Local shopping search in real time. Couldn’t find that sold out product at Best Buy? Apps will provide real time inventory to find what you need.

Extend real time demand based applications across other industries beyond retail – hotels, airlines, concerts. Looking for a hotel room at 10pm? The new apps will find you a good deal, mainly because any hotel inventory at 10pm is open for negotiation.

Related articles:

10 Media Predictions for 2010 – 12/17/09

How did I do? Reviewing 2010 – based on 2009 Media Predictions

10 Trends in Social Media 2009 – 1/1/09

About Pat Kitano

Patrick Kitano works with brands in developing hyperlocal engagement solutions and is administrator of the Breaking News Network, a national hyperlocal network devoted to community service. He is the author of The Local Network on Street Fight, and is reachable via Twitter @pkitano and email pkitano@gmail.com.

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