Trend to Watch: Social Commerce

As I study the global landscape for e-commerce, I’m becoming more convinced several trends are converging which will bring us into new eras of commerce. I’ve built some of the framework for this thinking in The Mobile Commerce Inflection Point and Eastern vs. Western Business Models, among others. Both highlight, at a fundamental level, a shift that will happen from advertising-based business models to transaction-based business models. Mobile will be a driving factor of both, creating a global increase in overall e-commerce transactions. However, if we take a step back, all of this may be converging around the concept of social commerce.

Social commerce is, at a high level, the idea we will be inundated with “Buy Buttons.” In essence, the online world becomes a giant Amazon store. Places like Twitter, Snapchat, Pinterest, Facebook, Instagram, Google, and many others will integrate buy buttons whenever and wherever they can. Certainly, this has the potential to become annoying (and it likely will be at first) but something like Pinterest is a good example. I consider Pinterest to be a niche social network catering to the DIY and idea crowd. Lots of crafty folks sell their products on Pinterest but so do mainstream outlets like Macy’s. Pinterest is a great place to get good ideas and, when the product is a good fit, why not take a chance and buy it within Pinterest. Like all of these offerings, the goal is to eliminate friction. Once I find it, let me buy it. The stickiness comes from the location in which I’m discovering things to buy.

In a broader set of my primary research with global customers, we asked recently if a buy button on a social network site would impact the motivation to purchase. Through my methodology, I was able to filter these answers by active users of specific social networks to see their answers. Interestingly, Snapchat users indicated strong motivation to purchase within Snapchat via a buy button. Nearly 20% of Snapchat users said a buy button would motivate them to purchase products through the app. Facebook was second at 15% and third was Pinterest at 12%. This particular research focused on western markets, hence the exclusion of services like WeChat or Weibo. (I’m doing something separate on China for social commerce research.)

What interests me about this trend is not that social constructs will influence spending. It is logical it will. Who better to recommend and basically sell a product than me to my friends and family. A recommendation from a trusted friend or family member is among the top reasons people indicate as influential for many purchases. Buy buttons, or the result of buy buttons, showing friends on social networks what I’ve purchased could influence others. Or, if someone is looking at a product and sees that myself and a number of others in their circles have also purchased this product, it could influence the behaviour even more.

At a deeper level, social commerce could add another element that itself could impact retailers. Right now, I go to Amazon. But with buy buttons, it isn’t Amazon’s destination (website or app) that matters, it is their inventory. I’m not limited to going to Amazon to buy something. I can purchase from Amazon or any number of retailers from any number of destinations not their own.

In a way, this could level the playing field. But it also highlights the question of the payment method. Either these destinations will make me put in credit card information at each of their sites or they will simply let me use whatever wallet solution I’ve already chosen, like Apple Pay.

I see social commerce as an added dimension to eliminate friction and, more importantly, add a dimension of discovery not available today. While not the tipping point to drive e-commerce globally to new levels, its role will be most interesting competitively for social services.

I maintain mobile commerce will lead us to the inflection point and lay the groundwork to drive new ways for us to transact. Couple mobile commerce with free shipping and we may very well have the tipping point moment.

I have an update to our global e-commerce report which I’ll publish for insiders in the coming weeks.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

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