Is Groupon “real” social commerce? Yes, of course it’s a nonsense question, since “social commerce” is ultimately only a label for something that varies with the changing power relations of people choosing to define it, but it is a question that is exercising a number of minds – and wallets right now.
Take venture capitalist Sarah Tavel with Bessemer Venture Partners, who is calling for everyone to ‘stop calling Groupon “social commerce”‘ already. Just because Groupon is hot, and social commerce is hot, does not make Groupon social commerce. What’s social about a couponing site? In terms of social, Amazon out-socialed Groupon years ago with its social recommendations, recently (and amusingly) culture-jammed by Harvey Nichols. And we know what people think of Amazon and social (although we politely disagree – Amazon did’t miss the social boat, it built it).
What makes Groupon work, according to Sarah is not the tricksy social/group buying ‘minimum-number-of-purchasers-needed’ marketing gimmick, nor the member-get-member referral program, nor the integration with social networks – that’s just a social layer on a business driven by low prices and immediate gratification – the two critical success factors driving e-commerce. Strip out the social layer and Groupon is still the disruptive upstart redefining local online advertising. Don’t confuse the social sizzle with the smart business steak.
Whilst we concur with Sarah that the social bells and whistles on Groupon are little more than marketing decoration right now, the idea that consumers can group together to get better prices from manufacturers, service providers and retailers if they buy in bulk, either directly or via an intermediary such as Groupon – is a big social – collective action – idea. It changes the balance of power from seller to buyer – it is about consumer empowerment, demand-driven-pricing that can reshape markets, and about ‘we’ being stronger than ‘me’.
We’re not professional investors, but we’d suggest the sin0-social idea behind Groupon – known an tuangou – is bigger, more disruptive, and has more long term potential, than couponing-as-advertising. Local advertising will earn Groupon a quick buck, but long term, with it’s subscriber base and infrastructure, Groupon is well placed to take up the mantle of the ‘together-we-are-stronger’ people’s champion of demand-driven pricing. For us – group-buy is where we see the future of social commerce as a distinctive phenomenon; otherwise social commerce is no more than a social layer added to e-commerce to help discovery and decision – in other words, just best practice e-commerce. So, if you’re an investor or consumer – keep calling Groupon ‘social commerce’ – not for what it is, but for what it could be.
But where we are in total agreement with Sarah is in total disagreement with Om Malik suggesting, along with investor Jeremy Liew, for saying “The next phase of e-commerce is about recreational shopping, and as a result, it needs to be a more fun and social experience.” Rubbish, says Sarah, online shopping is about lower prices and availability – recreational online shopping has a poorer prognosis than the dodo. Do not invest. Social is not about fun, it’s about utility (go, Sarah, go!), specifically as an aid to discovery (and we’d add, decision).
So forget all that nonsense about fun and recreation, that’s social getting in the way of shopping – smart social commerce in our opinion is about Assistive Consumer Technology – helping people shop smarter (discover, decide, buy) with their social intelligence.