Here’s a speed summary of ‘Turning “Like” to “Buy”: Social Media Emerges as a Commerce Channel‘ – a new report on the social commerce market by business consultants Booz&Co that estimates the value of the social commerce market to be $5bn, and set to grow to $30bn within 5 years.  Click here to download the full report.

  • The social commerce market is currently embryonic ($5bn sales for physical goods sold on social networks), but is growing fast and revenues are set to US$30 billion globally in the next 5 years.
    • This is in addition to the burgeoning social commerce market for non-phsyical (virtual/digital) goods sold on social networks.
  • This social commerce channel will take its place alongside stores, telesales, and traditional the Web to emerge as a significant sales channel in its own right.
  • In this way, the role of social media in retail has evolved from a simple marketing platform for awareness and lead generation into a e-commerce-enabled sales channel.
  • A 2010 survey by Booz & Company of consumers who spend at least one hour a month on social networking sites and who have bought at least one product online in the last year found that 27% of respondents said they would be willing to purchase physical goods through social networking sites. Moreover, 10 percent said their buying through social networking sites will be incremental to other buying they do—that is, they will end up buying more physical goods overall.
  • Security and privacy are currently the two biggest barriers to the use of social networks for e-commerce
  • The social commerce market will grow not only through sales on social networks, but also though incremental sales in traditional and site-based retail driven the addition of a social technologies that enhance the retail experience (e.g. as social shopping (shop-together) apps)
  • Thirdly, the social commerce market will also grow through the emergence of new social commerce platforms, such as Groupon, that provide a new retail channel for vendors.
  • In this way, the three core areas of social commerce involve
    • a) enabling e-commerce on social media
    • b) using social commerce platforms (e.g. Groupon, Gilt)
    • c) adding social apps on-site, in-store and on-screen, to enhance the shopping experience (e.g. group-buying, group-gifting, group-planning, and social shopping)
  • Marketers urgently need to update their understanding of the role of social media in the marketing funnel, from a channel for driving awareness and leads to retail channel for driving conversion, loyalty and advocacy
  • Post purchase, the opportunity for social commerce is build loyalty (CLV) and advocacy, whilst reducing churn, by using social media as a loyalty program platform (sCRM)
    • The “Like” button to become a one-click way to join a loyalty card system
    • Social loyalty platforms will have the advantage of allowing customers to exchange points in a socially based marketplace.
  • Four imperatives for getting started with social commerce:
    • Imperative 1: Jump in soon and learn by doing. It is usually a good idea to study a new opportunity closely, but given the fast pace at which social commerce is evolving, companies must be willing to learn while doing.
    • Imperative 2: Develop a strategy for getting the data you need. Social commerce is not only an opportunity to sell, it is an opportunity to learn – about preferences, needs, and behaviour
    • Imperative 3: Define what the customer experience should be. Companies should use tests, pilot projects, and sociographic data to map out different social commerce strategies to get a sense of what their customers will see, how they will respond, and what they like best.
    • Imperative 4: Integrate social commerce into an overall multi- channel strategy. As social commerce becomes a bigger part of the overall sales mix, it is important to understand its position in the company’s broader multi-channel strategy, not as a one-off program, but as a supported channel that is integrated from both a resource and an organizational perspective.