Here’s a speed summary of this week’s article in the Economist on social commerce, “Online shopping: Selling becomes sociable”. Good fodder for convincing the CXO that your retail strategy needs to go social.
- E-commerce is becoming more social and more connected to the offline world
- Swipely, the new service for digital exhibitionists that posts payment card purchases to a social network to be discussed by others, is for a post-privacy age
- The Net has already disrupted the content industry, the next disruption will be commerce
- Swipely is part of 3rd new generation of e-commerce fusing commerce with social networking
- First generation e-commerce was little more than an online mail order catalogue business
- Best of breed 1st generation e-commerce meant integrating user reviews into catalogue copy, and making purchase recommendations based on similarities between user profiles and behavior
- 2nd generation e-commerce involves flash sale sites (such as Vente Privée (€800m sales) and Gilt Groupe $500M) and other live shopping event sites such as Groupon, the city-based group-buy deal of the day site present in 230 cities (29 counties, 15 million subscribers, 2,000 deal negotiators, and 150 copywriters)
- Third generation social e-commerce combine e-commerce and social networks, building business on top of the social graph. Examples include Swipely, Modcloth (that lets customers vote on products to stock), Lockerz (that allows customers to earn discounts by watching ads, inviting friends), and Shopkick that rewards consumers for offline activities such as visiting stores and scanning products with their smart-phones.
- Will making shopping more social really disrupt commerce? It’s hard to predict whether 2nd and 3rd gen. e-commerce sites will continue their rapid growth. Social shopping fatigue may set in – people may tire of flash sales (as they did online auctions) and group-buying.
- But social e-commerce will continue to grow because it helps solve two persistent retailing problems: the high cost of attracting visitors, the low probability that they become buyers and the difficulty of getting them to come back.