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Wed June 2 2010 08:05:28

Social Commerce - Phenom or Failure?

By: Ina Steiner

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Amazon.com is the king of "boring" shopping, according to Etsy founder Rob Kalin, who made the statement at last week's Disrupt conference. Kalin was speaking on a panel about social commerce, and apparently all the panelists agreed that agreed that Amazon would continue to reign supreme in "commodity commerce," but would not be able to lead social commerce.

In an blog post about the session, TechCrunch pointed to Fashion Vault as evidence that eBay is "horizontally integrating into the social commerce space." I wonder what's social about Fashion Vault flash sales, which leads me to wonder if anyone really understands what social ecommerce is. Commerce itself has been around for thousands of years - is social networking really recreating commerce, or just putting a new face on it?

The author of the TechCrunch blog post about the session wrote, "But the rise of Groupon, Gilt, LivingSocial, Vente Privee and other social e-commerce sites have taught us an undeniable truth that customers are ready for something different. The question is whether Amazon will disrupt its own model in order to preserve its reign as the king."

I'm pretty sure that is the kind of advice people gave eBay a few years ago that led it on a journey of disruptive innovation in which it de-emphasized auctions and small sellers and focused on fixed-price commodities from mega-sellers. There are plenty of people, such as the author of this recent AuctionBytes Letter to the Editor, who believe that eBay's journey of disruption led to the destruction of its original value proposition.

At last week's annual meeting, Amazon.com's Jeff Bezos said his company is focused on the apparel category, and it now offers free return shipping for clothing and accessories for items fulfilled by Amazon. Which means it will be focused on how to reduce clothing returns, since it will be footing the bill, so when I saw this article about a virtual fitting room, I immediately thought of Amazon.

Fitting rooms. Sounds a bit boring. But helping customers try things on for size before purchasing leads to happier customers and reduced costs - something that any experienced online retailer would surely find satisfying.

While startups may dream of social shopping and mobile commerce innovations, Amazon's Jeff Bezos implements things consumers want, no matter how un-exciting. During last week's annual meeting, he spoke about the rather pedestrian topic of same-day delivery, and said that is Amazon's Shangri-la. "This is a place we want to go, but we don't know how to get there." Thinking about how to provide same-day delivery is interesting to him.

That's not to say Amazon is ignoring social commerce, it just integrates it so seamlessly into its site that it doesn't distract from the process of buying something. It's product reviews broke ground by letting customers rate products right on the product page, leading to some surprisingly entertaining content (remember the Three Wolves Moon tshirt product reviews that went viral?).

It also allows consumers to upload product photos and video reviews (a la YouTube). Amazon has always allowed people to make their Wish Lists public, and has launched Facebook Apps such as Giver and Grapevine, an application that lets people publish their Wish Lists in Facebook.  

The question becomes, what is the role of social media in commerce and does it really present a new opportunity? Or are merchants distracting themselves with the "Technology Du Jour" of social commerce instead of focusing on the boring (yet profitable) fundamentals of online selling? As TechCrunch asks, did Amazon miss the boat on social commerce - or do they know something the others don't?




Comments (17) | Permalink

Readers Comments

Social Commerce - Phenom or Failure?   Social Commerce - Phenom or Failure?

by: Not A Tweeter

Wed Jun 2 08:24:17 2010

I'm not a tweeter, but perhaps I should be. I'm just a Facebooker.

I've got about 100 friends/followers on FB and I'll regularly post a link to a new item (or a popular older item). It's not a magic bullet, but it does generate additional interest and sales.

The other day, one of my customers commented ''Oh I love your new widget, I just tweeted about it.''

Now, I don't know how many followers this customer has on her tweeter account, but the following day, I reviewed my traffic count and page hits...and the item she tweeted about was my #1 item for pagehits.

Unfortunately, none of those hits resulted in a sale of THAT item, but perhaps those visitors will come back and become customers.

Anyway, I just wanted to share my experiences. Tweetering and Facebooking can help, but unless you've got a significant number of followers, it's not a magic bullet to cure everything.

For me, its worth the effort. It certainly doesn't hurt as far as I can tell.

Social Commerce - Phenom or Failure?   Social Commerce - Phenom or Failure?

This user has validated their user name. by: Al G

Wed Jun 2 08:56:29 2010

First - my credentials for offering the following opinions on social commerce - none, just a BS many moon ago, and about 40 years of business experience.

It would seem that ANYONE trying to cash in on a social commerce model is delusional.

Any social network is dependent on the values that ties the network together - cultural, religious, ''mod'', ''goth'', sports, etc. A quick look at your cable TV, with its 2000 channels [actually closer to 300+ different channels] in the US alone will give you some idea as to the fragmentation of the market just for media. Now you want to sell physical items in a fragmented market using a unified model?

Sounds like someone is trying to invent a square wheel and call it round.

Another point is that social commerce is and will be fickle, much like high-school hairdo's/clothing which vary from class to class. That is not to say a lithe company cannot take advantage and create a niche market for themselves in the chaos, but to even think Amazon or [maybe or maybe not] eBay's management would attempt to spend capital and energy into capturing such a market would be ludicrous.

Methinks that some people have a little too much time on their hands.

Have fun & peace.

Social Commerce - Phenom or Failure?   Social Commerce - Phenom or Failure?

by: Stefano Neis
Web Site

Wed Jun 2 09:27:22 2010

One of the most repeated tenants of Marketing online or off is that once a seller reaches a "critical Mass" of either items for sale or customers, that merchant will be successful.

The theory is that Products attract customers and customers attract more customers.

I personally have seen that theory work for my business online. I have various websites that I sell on. One is very "Social Media" connected and the others are not.

When looking at traffic by volume..the social media connected web site falls well short of a critical mass of buyers & traffic.

Traffic to my products Online seems to be determined more by the amount & quality of the products themselves and then also to the "word of mouth" advertising of previous customers.

One would think that this "word of mouth advertising" is ideal for Social networking, but so far, at least for me...that is not yet the case

It is also not feasible to put up a critical mass of items for sale on a social network without arousing the Ire of the networks users.

I think that social media networks are OK for attracting some interest...but they are not yet mature enough for a business plan that depends on the social networks for a large part of it's sales.

Perhaps we are one "Killer Ap" away from that happening. I think not.

The Amazon formula is simple, a critical mass of Quality items with peer review of each item on the selling page.

When I shop, that peer review in crucial to my sale decision.

Last week I searched the web for a Child's ROMAN soldier metal shield. I figured that it would be available on an reenactment site somewhere in Europe.  

I was right, but it was also available on Amazon. In fact several types were available on Amazon.

I compared the search results from several private sites, Amazon and a lone entry off of Ebay. A Social Network option was not available.

I found the best deal to be Amazon on a shield that cost 10% less than the private sites, better shipping fees, a great return policy and it could be delivered within a week. The item also had three previous customers rating the items at 5 stars with detailed descriptions of the product.

The Ebay option was never really a factor. It's shipping was twice as high as Amazon and the private sites. The return policy of the seller sucked and he had a history of very slow shipping and poor products. The description of the item was very sketchy, and the pictures of poor quality.

Social Networking beating Amazon in selling?

Not yet.

So

Social Commerce - Phenom or Failure?   Social Commerce - Phenom or Failure?

by: Dman

Wed Jun 2 09:34:39 2010

I think the whole social commerce idea is a bit of a double-edged sword. Sure, on the one hand it may bring new eyeballs to your site and/or auctions. But if you lose control of the interaction and allow your customers to expect more social than commerce you risk alienating the very people you tried to attract in the first place when you find out you do not have time to be everyone’s friend.

I have a busy life, wife, kids, grandkids, fulltime job, social life and an Ebay  “store” a.k.a part-time job. I have pulled several large volume customers off Ebay and engage with them on a more social level, it may get me nice tour or place to stay in Europe some day, but for now it’s a win – win for us to deal directly, and it’s mostly business.  At this point I wouldn’t dream of opening myself up to any real social interaction with any one or two item customer on Ebay.  It’s a commodity, buy it and move on, I’ll give you a good price, great condition and fast shipping. Talk to your real world friends about it.


Ewwww, does it show that I finally did that Seller problem survey last night.

Social Commerce - Phenom or Failure?   Social Commerce - Phenom or Failure?

by: Red Ink Diary This user has validated their user name.
Web Site

Wed Jun 2 10:05:29 2010

Just phreaking ignorant?

As I understand it the concept of social marketing is to bring together a group with similar tastes and interests and soft sell your wares which are targeted to that demographic.

The ultra exclusive flash sale sites who claim to require prospective participants to be invited (there are always ways around this) have a shallow claim to the social label.

Using 'social' and eBay together is both a mind numbing concept and an oxymoron. How social can you get with censored and anonymized communication?

Fashion Vault is no more social than signing up for a newsletter. The only common factor is eBay user registration, when did that become 'membership'? eBay is not a society or club, it is ''only a venue''.

Any horizontal integration into the social commerce space on eBay is by tired sellers lying down to make it easier for eBay to stomp on them.

Social Commerce - Phenom or Failure?   Social Commerce - Phenom or Failure?

by: ahwooga
Web Site

Wed Jun 2 10:12:39 2010

I think we need to add being social to our daily tasks or by passed up by those that are. The major social sites stats (say that three times fast) are way too large to be ignored. We have each of our staff do a small amount everyday to increase our footprint across the web.
My $0.02

Social Commerce - Phenom or Failure?   Social Commerce - Phenom or Failure?

by: Genie
Web Site

Wed Jun 2 10:13:59 2010

We sell niche products, such as personalized Christmas stockings and custom Christmas ornaments, so some of our sites have social commerce add-ons.

I uploaded one of our Christmas stocking images to Polyvore (a social ecommerce site worth checking into) two years ago and the first person who saved that picture was an extremely popular teen actress / singer who is also a member with thousands of followers.  Incremental sales - yes but I would not write a business plan on those basis.

Social Commerce has been around as long as I can remember, it used to be called ''word of mouth sales''.  As more and more people do not actually communicate verbally, transmitting their communications via SMS, facebook, and other virtual means, the way ''word of mouth'' spreads is now channeled through those electronic methods.

Social Commerce is bound to be an incremental sales opportunity as opposed to the mainstream driver, just like word of mouth sales are.  If you sell niche unique products, social commerce is worth investing your time into.  If you sell run of the mill products you can still benefit from word of mouth sales if the value YOU add is unique in that specific marketplace: see discounting, super service, extremely fast delivery, value added sphere of add on products and services your competition cannot match.  

Amazon focuses on products available in big box stores so it does not make much sense for it to invest heavily in social commerce, it is fine with simply offering easy access to it, such as consumer reviews = A BIG PLUS, social bookmarking, retweeting etc...

eBay would benefit more as it used to focus on one of a kind unique products but past 3 years eBay departed from that philosophy and tried to become an Amazon.  eBay does not appear to have the patience to invest time, money and care to the social addons that would make this type of commerce effective.  Skype was bought so the seller and buyer can communicate instantly. Did not happen.  eBay Blogs platform closed on 10/31/2009.  

If you plan to invest your time to increase your sales via social commerce make sure you are promoting your website / web page, not a third party venue pages - so you are not at a mercy of that venue who may one day decide to close that add on feature of their site.

Social Commerce - Phenom or Failure?   Social Commerce - Phenom or Failure?

by: Tim

Wed Jun 2 10:17:20 2010

Social networking enabled shopping... or any other trend or gimmick... only works long term for a company with a strong foundation and a philosophy that is rooted in core beliefs - allowing innovation without undue disruption.  That describes boring old Amazon... meanwhile eBay is busy changing its core beliefs every quarter and tearing up its foundation.

Social Commerce - Phenom or Failure?   Social Commerce - Phenom or Failure?

by: Denise

Wed Jun 2 10:22:56 2010

Boring shopping? Social Commerce? Same day shipping?

Sounds like those "experts" want everyone to go back to shopping at the mall with their friends.

For me personally- shopping online is a Convenience. I can browse without salespeople, I can "save" the item to compare while looking at tother sites/sellers. I can compare price.

I don't need 50 people blogging about an item to get me to buy it, I either want it or I don't.

Why on earth would Amazon want to "disrupt" a winning startegy? I can't imagine they were watching the results of JD's Disruptive Innovation and said "Gee, let's see if we can drive everyone away next"

Social Commerce - Phenom or Failure?   Social Commerce - Phenom or Failure?

by: Patricia This user has validated their user name.

Wed Jun 2 11:38:38 2010

Frankly, I don't see it.  I find places like Facebook to be intrusive...perhaps I'm just too private a person but I don't want the world (or even close friends) to know certain things about me.  I believe Amazon is the success it is....and will continue to be due to its own diligence in making the site easy to navigate and in bringing the buyer more of what he wants to see and less nonsense.  When I come online looking for something...that is where I go first!  Bottom line should always be SALES - something Amazon obviously never loses sight of - but Ebay does! Ebay seems shabby and disorganized compared to the likes of Amazon - to make it even worse they've lost that community ''feel'' that could have set Ebay apart from Amazon and they have a CEO who is on the wrong path and cannot admit it.  Ebay has gone more toward being boy scout pack leaders - awarding sellers with childish badges and stars when they should be leveling the playing field so that every seller has a chance!  Buyers don't care what badges sellers have or how many sales they've made - they DO care about what the seller is selling!

Ebay needs to make its site easy to navigate - make sure its search works well and is NOT manipulative.  This is just as important as low prices!

They best start working and do it fast because the great partnership between Japan and China will be the largest online shopping place in the world and they will eventually reach out to US buyers and sellers!

Social Commerce - Phenom or Failure?   Social Commerce - Phenom or Failure?

by: TekGems
Web Site

Wed Jun 2 13:38:12 2010

Amazon has had social aspects to the shopping process before "social" became a trendy word. You don't need to be on Facebook or Twitter to have social shopping. Other businesses can only dream of having all the free user content Amazon receives from their loyal buyers.

Social Commerce - Phenom or Failure?   Social Commerce - Phenom or Failure?

by: nobody

Wed Jun 2 15:08:04 2010

I remember when ebay was very social, in that you could not only actually communicate with your customers, but most turned into at very least repeat customers and at best new friends.

It was a happy -- vs the now hostile -- environment and we sellers made buckets of money, ebay made barrels of money from us sellers and all was good with the world.

Then ebay got greedy blind and stuck on stupid. Screwing with a beautiful thing, they decided to create fear and hatred among the sellers, as well as between buyers and sellers. They catered to fraudsters, and by doing that many people were cheated. To cover their a$$e$ for allowing the scammers and rip offs to stay, they blamed all sellers for people getting ripped off, thus giving all ebay sellers a bad name, simply because the fraudsters were paying them fees as well.

ebay wanted their money and didn't give a crap who got scammed or hurt along the way.

ebay is now an ugly, angry place to hang around. I go to ebay for exactly nothing these days.

When making a purchase on the many other sites, I can spot an "old school" ebay seller in a flash. They're the friendly, communicative ones who value their buyers and inject the human factor into the equation. Rather than the newbie with a total lack of any communique whatsoever, no sale confirmation, no thank you, nada, zip, zilch, you just get a box showing up at your door a week or so later. (pay attention, newbies). Then a few eeks go by and they demand you leave them positive feedback, delivered to you by robo-mail of course. Priceless.

Nothing irritates me more, than having some idiot on a social networking site, like twitter, who spams the crap out of their stream with nothing but a long list of their items for sale, pay spam ads or even worse, both.

Delete.

Social networking is just that, if I want to shop I'll go to random search engines, amazon, etsy, ecrater and the rest (I hate the chat window in bonanzle. yes, i know you can close it). If I want to catch up with friends, I'll call or email them. If I want to make a bunch of people smile or laugh, I'll post something fun or funny on FB or twitter.

I love customer reviews, and thank the internet gods for them, when shopping for a pricey item.

Otherwise, I don't want to be spammed with your wares.

Social Commerce - Phenom or Failure?   Social Commerce - Phenom or Failure?

by: unusual1 This user has validated their user name.
Web Site

Wed Jun 2 16:30:06 2010

I just do not see the facebook or twitter twits looking to shop for $10,000.00 + items. It would IMO be a waste of time to even try to sell to them. I am on Linkedin with a good professional network to work with. To me a much better idea.

Social Commerce - Phenom or Failure?   Social Commerce - Phenom or Failure?

by: summer in the city

Wed Jun 2 17:51:11 2010



''Social Commerce'' is the way venues such as Etsy and Bonanzle get out of spending any money themselves on advertising.

Constant exhortations for merchants to Tweet, Facebook, widget and blog their butts off are meant to reassign responsibility for marketing the venue to the sellers themselves. This way, if you're not getting any sales, it must be because you're not spending enough hours online spamming people.

But does Social Commerce work? Think of your family and friends: how many of them are the chatty, texting, extroverted types who, before the digital age, were always on the phone all day? Those people are the social commerce market. Not exactly a majority, which explains why Amazon is kicking social commerce venues up and down the block and always will.

Social commerce can be effective to an extent for online sellers, but it's not a marketing plan, and it will never take the place of real advertising on the part of the venue itself. Even the Etsy sellers are starting to get wise, and Bonanzle sellers are still wondering why nobody has ever heard of the place.

So, Rob and the Bonanzle boyz et al are going to have to get used to the idea of spending a few bucks here and there in magazines, televison etc. to reel in some buyers. Then, the sellers can work their social charm on them.


Social Commerce - Phenom or Failure?   Social Commerce - Phenom or Failure?

by: On Lies and Secrets This user has validated their user name.

Wed Jun 2 19:36:18 2010

IMO, Kalin's criticism of amazon as reported here is unfair and misguided.  He may personally find Amazon ''boring'' when he compares his own shopping habits to shopping on etsy, but I suspect that a lot of the routine or subsistence purchases (e.g. basic food, utilities, etc. and commodities such as toothpaste and toilet paper) that most people make are actually boring and there is nothing wrong with that.  I enjoy shopping on both amazon and etsy, but I buy entirely different things from the two sites and the different product categories require different approaches to shopping.  Etsy is completely useless for purchases that lie outside of its scope and its scope, while interesting, excludes many of the day-to-day items that most people buy.  

I think amazon is a highly innovative company and I also think that you don't *have* to be ''disurptive'' in order to be innovative.  The last time I checked a thesaurus of the English langauge, ''disruptive'' was *not* a synonym for ''innovative.''  I think you can be wonderfully innovative without being disruptive.  Many ''disruptive'' phenomena (wars, famine, homelessness, etc.) are actively avoided by many thoughtful people.  Overall, I think technology developments and the user experience is trending away from being noticed (such as it typically is when ''disruptive'') and trending towards seamlessness and invisibility. People want technology-enabled experiences that readily and easily blend into their lives as they currently lead it.  I think amazon is on target for the merchandise they sell and that etsy is on target as well, but they are appealing to different product categories and market segments so they have to use different approaches which are both innovative in their own ways.

I agree with the post made by ''nobody.''  Ebay *used* to be highly social ecommerce site years ago when sellers had significantly more autonomy than they do now.  I started buying collectibles on ebay over a decade ago, and the social aspect of buying from more experienced and knowlegeable sellers was a major reason why I bought there.  Back then, I was a novice in my collecting area and I built my knowledge base about my collectibles areas in part through reading well-written ebay listings (not the standardized dross you see today) and through communication with sellers on ebay.  Today, I cannot get the quality of interactions on ebay that I used to get years ago.

I also agree with the post by Genie - IMO, ''social ecommerce'' is the kissing cousin to ''word of mouth sales/marketing'' - the medium where the social interactions take place is different (twitter or IM rather than the telephone or face-to-face), but it is the same old thing.  What I think many ecommerce experts today forget is that ''word of mouth''/''social networking'' works both ways - it can increase sales or it can destroy them.  Social media can be used to destroy the demand for a product if the product is no good.  

Finally, I also agree with the post by nobody with respect to social media and the risk of spam. Ecommerce folks should take care that their uses of social media aren't perceived as spam by the recipients.  Unless individuals get what they perceive to be personal value (according to their own system of values) from social media, then they will ''unfriend'' you, stop ''following'' you or otherwise terminate your data stream or connection to them.  Right now, there is a huge backlash against Facebook - many people are not happy with that site because of privacy concerns.  I think the Facebook backlash has lead a lot of people to completely reevaluate  their use of all social media.  

Social Commerce - Phenom or Failure?   Social Commerce - Phenom or Failure?

by: Digby
Web Site

Thu Jun 3 00:27:16 2010

I don't know too much about social networks and social shopping as I am a bit too old for that.

But I did get quite a few sales from some ads I ran on Facebook (as they showed a pic of my unique product).

Also no one has mentioned Kaboodle or IReallyWantThat. Kaboodle has a VERY high and rising Alexa ranking.

The poster who mentioned about Bonanzle getting their own sellers to do all of their own marketing via tweeting, and Facebook and chatting is dead right. I can't be bothered with that.

I think Bonanzle, ebid and ecrater all need to get people to think of them as the first place to look online, not Amazon and not eday.

Social Commerce - Phenom or Failure?   Social Commerce - Phenom or Failure?

by: Joyful

Fri Jun 4 01:46:02 2010

Great article and comments. And as I was researching Amazon prices tonight to list my used books, I noticed "share" buttons for Facebook and Twitter. I was tempted to share my new listings this way, but, no, it seems too close to spamming.



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