GroupOn might be darlings of the web right now, but as the launch of Facebook Deals shows, the game is far from over and we have just now taken first steps towards what is real (online) social commerce. I had briefly touched upon what the future of social commerce looks like in my April 19 edition of my e-newsletter, Om Says, So What Comes After Social Commerce.
The crux of my argument was that if the first phase of e-commerce was the utilitarian hunt for staples, the next phase of e-commerce is about recreational shopping where the merger of social and interest graphs would drive buying decisions.
Paul Adams, the Google engineer who put together a very popular presentation, The Real Life Social Network, is now working for Facebook as a product manager. He recently uploaded his latest presentation, How Your Customers’ Social Circles Influence What They Buy, What They Do and Where They Go to SlideShare. It articulates some of my thoughts and digs deeper into the future of social commerce. On this weekend, sit back and enjoy the whole thing. Yes, it is a long presentation, but it is well worth the effort and time. And you can follow him on twitter on twitter @padday.
PS: Hey Paul, if you want to compare notes, just direct message me 🙂
15 thoughts on “How Social Commerce Really Works & Why”
Where is mobile? People are influenced as much by a “situation”  as by “friends” as by an “influencer”.
Where are all the “maybes” or “negative”(to the contrary) influences? What happens when one half of the strongest links in your network says “buy,” the other, “no”? How about out-of-network influences?
The presentation is all too simplistic to be useful, not to mention true.
Yup .. you are right …
A not so techy and highly social friend wanted a “dislike” button on facebook. When we discuseed how it would work and what it means, we realised it was a lot more complicated than it seems …
Same comes to decisons where everybody is saying “not this one” as opposed to “this one”
None of this is new. People have been living in networks and influencing each other for purchase decisions even before the web existed. The only thing different in facebook era is that now you have a “Reach” to your friends. That “Reach” is “sharing on facebook/twitter etc. Nothing more. Nothing less.
@Greg, The unfortunate truth about the field of influence is that the social science community doesn’t understand it very well. Psychologists have identified many factors in how people make decisions, but we don’t have a strong understanding of how these factors relate to each other. What I’m trying to do with my work is to map out frameworks that are simplistic, but actionable. We will always need to over simplify social science research to translate it into actionable insights for business. I highly recommend Duncan Watts’ new book “Everything is obvious” for some further background reading.
@Ronald I agree that there are many environmental influences. This talk isn’t a comprehensive overview of influence, just one framework around which to make business decisions.
Thanks for your insight. I see what you are trying to do in creating an action-oriented framework for understanding and dealing with networks. I think many of us have heard this same language over and over again and that we need to possibly develop new language in talking about online networks and how it is different than other social networks and environmental influencers.Thoughts?
thanks I agree I got that. But we can always push it a little father along.
When I see your model, I immediately look for the dampening factor in information transfer. The easiest to think about is as interference. People say information wants to be free, but information is based on context. Context is self organized data, which therefor changes between people. Same culture can be ever so slightly different, different culture can be radical.
Anyway since the information changes while it’s transferred the interference builds up, until it will not be transferred anymore, culture boundery as a simple example or it’s destroyed by out of time events. In other words information transfer is like a virus mutating on the way and we should be able to simulated it that way. As more complex the message/information value as more mutation as higher the dampening …. you get the point. Twitter fits nicely in with one to many relations …
In other words your approximation model in data transfer between people is not going to work, or we can build better approximations. Based on data,context,information …
As for individual decision making , think about it as a pane with parallel inputs where loop back dampen on excite signals in time and over time. In principal a very advanced observer model.
Should I have not pushed hard enough let me know, I just sometimes have a different way at looking at things.
@Paul. Thank you for taking the time to respond.
I do understand what you are trying to accomplish. I also keep in mind that you work for Facebook now — a (or perhaps “the”) social network. Facebook might claim that “quality” or “strength” of one’s circle of friends/fans is important, but the reality is: the numbers come first. Because only when users are confronted with large numbers of choices, as well as unsolicited “like-me-too” requests, your network can introduce “tools” to help us filter out all these undesirable influences or to target those who matter most. And, these tools (incl. FB ads) are not for free, of course.
I am sure you are familiar with the recent study by Forrester Research and GSI Commerce where they conclude that social media has almost no impact on sales. Less than 2% of sm marketing efforts lead directly to purchases online. You must also know that the average social media CTR is a dismal 0.09%.
I have nothing against translating complex social or business theories into actions, but I am afraid that some of this “translation” is to obscure the fact that social networks do not deliver what they claim they can or do — not yet.
Om, I agree – Paul’s perspectives are very important. For marketers, especially relevant points appear on pp. 105 and 111-120 (http://j.mp/myLG1c), where he highlights the potential for social commerce to accelerate “diffusion” (through Earned Media) and the value of identifying and focusing efforts on influencers. I think it’s also useful to consider the impact of social on consumers’ behavior in two different contexts: active (when consumers are “goal directed” and actively shopping) and passive (all other times), as depicted here (p. 5, http://j.mp/g5gxJk). We will examine these issues and opportunities on my M-Commerce panel next week at Social-Loco (http://j.mp/k3tieE). Among the panelists are Dr. Michael Wu, Lithium’s Principal Scientist of Analytics – his blog http://j.mp/hsjg1d is another key resource for anyone interested in social commerce.
Dr. Phil Hendrix, immr and GigaOm Pro analyst
Interesting presentation. This explains why facebook invested energy on the send feature. It is also going to be interesting to see how technology and evolving network topology patterns change the notion of trust over the next few years: the influence barrier gets a lot higher when trusts goes down. People do not trust today the same people day did 10 years ago.
SOCIAL COMMERCE = OLD CONCEPT
I agree with Sharad (see below) – none of the content is new and novel. Concepts such as “strong ties”, “weak ties”, “trust” etc. have been around in the field of sociology for a long time.
It does feel as if it is taking a long time to come around. I’m not sure why because it’s not as if the technology is especially challenging or anything like that. You’d really have to think that Facebook are going to be the big winners once it is finally cracked though!
Thnx for sharing the deck.
Social commerce is hard to pull off online but magic and economically powerful when it happens. There are lots of tools availablee and the extensions of human behaviors that the social nets make more visible but creating a natural space for commerce that feels just right is a challenge and greater than the sum of the parts.
I’m a wine blogger and aficionado on the side and the the best example of social commerce I’ve found is Naked Wines in the UK. This a social wine community which pools its resources through a wine club and creates a shared supply chain from winery to angels (funders). At its core this is social commerce.
My explanation of this community is “Naked Wines, a social approach to online wine markets that really works” @ http://bit.ly/jqms4g
Social commerce definitely works, and Socialigration is launching a no holds barred applications platform to address many of its needs.
How Social Commerce Really Works & Why http://t.co/C1C4gsPD