Monetizing social media through social commerce

eCommerce has been one of the Internet's stand-out success stories over the past decade, sustaining an annual rate of growth of almost 20% and significantly outstripping traditional brick and mortar sales performance.

eCommerce has been one of the Internet's stand-out success stories over the past decade, sustaining an annual rate of growth of almost 20% and significantly outstripping traditional brick and mortar sales performance. With a winning combination of convenience and competitive pricing, e-commerce has even grown during the recent economic downturn (albeit at a slowing rate).

Online retailers have worked hard to innovate and create a more compelling shopping experience for the benefit of customers. Now we are on the verge of a step change in customer experience, as Social Commerce surges to the fore.  Social Commerce combines social media and eCommerce to change the nature of the online shopping experience, and improve online sales.

According to a U.S. survey from research firm Altimeter Group, 86% of 135 top retailers and consumer goods companies plan to launch some sort of social commerce strategy by 2011.

Creating an effective social commerce strategy

In some ways, Social Commerce leverages long standing and sound shopping principals around creating a fun shopping environment, building a vibrant community, and encouraging friends to refer and make recommendations.

We can anticipate more creative and social ways of promoting limited time or limited quantity offers, taking a lead from companies like Groupon, more engaging and effective storytelling, particularly using video, through companies like YouTube or Knexus, and a continuing hunger to exploit sites like Twitter and Facebook to promote virally. We also see Facebook racing to build commerce capabilities into its 500 million strong social network. 

Limited time & limited quantity offers

Companies like Groupon and LivingSocial offer subscribers a deal of the day from a local business based on enough people signing up to trigger the deal. Users are incentivized to evangelize the offer to their own network to secure the deal, creating a powerful virtual salesforce for Groupon and others.

Private sale sites such as & Zulily offer members-only access to deeply discounted designer goods available in limited quantities only. By creating a perception of scarcity, these e-tailers achieve much higher levels of engagement e.g. increasing e-mail open rates tenfold.

Driving traffic through viral

Though many retailers have not yet been able to drive meaningful traffic from social media, 11% of them consider social media to be their most effective acquisition tactic, and that number is likely to grow.

Woot!, an innovator of the “one deal at a time” proposition (and recently acquired by Amazon), generates more than 1 million visits each day by broadcasting its daily deal through Twitter. With 1.6 million Twitter followers, its bypassed e-mail and built a powerful, viral promotion engine.

Facebook's Like button creates a direct connection between Facebook users and a brands own site(s), allowing a user to express affinity for a brand or product that is then shared back through their network. More than 350,000 sites have installed the Facebook Like button to-date. In spite of the Facebook PR machine spinning at full revs, there's little doubt that as a means of increasing traffic from Facebook  this is a quick win (when deployed appropriately). According to a recent FT article, the ABC news site saw traffic from Facebook increase 250% after adding the button. Tea Collection, an e-commerce site for kid's clothes increased traffic 300% and sales tenfold for promotional sales items where the Like button had allowed users to vote on which items were selected.


Facebook users are moving decisively to transform their social network into a social commerce hub. High profile early adopters include FMCG giant Procter & Gamble who recently opened a Facebook store selling 29 of its brands (e.g. Head & Shoulders & Pampers). P&G is working in a close partnership with Amazon to manage all back office fulfilment.

P&G's move is particularly fascinating because not only are they using Facebook to sell, but they're actually seeing social commerce as the opportunity to move directly into online commerce.

Exciting opportunities, complex choices

Creating an effective social commerce strategy involves many tried and tested sales principals. However, there is also complexity given the wide range of possibilities and judgements required on the proportion of effort investing into external social commerce destinations (like Facebook), versus strengthening the engagement and experience within a brands own controlled environment. And furthermore, how to draw together these two sets of activities and optimize their performance together.

Graeme Foux is founder CEO at Knexus (, a social software company which helps companies make their content social through social platform and family of apps.

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