Posted by : Amitha Amarasinghe Friday, March 5, 2010

Social Commerce may be the next big thing to storm the online discussion forums and blogs. Last two years brought many new changes to the world we live in; starting from the growing popularity of online social networks, web 2.0 technologies, micro blogging, and citizen journalism. Some argued this as the social media revolution. Marketers too wanted to quickly jump into the bandwagon with big talks about social media marketing, viral lops and customer engagement through online communities. While the effectiveness of most of these social media marketing endeavors remains questionable; buzz about a new concept called “social commerce” is gaining momentum on various forums.

It’s still the early days, so not much of resources you can find on the internet, written in depth about Social Commerce. I first read it in a Business Today article, and then stumbled upon on couple of blog posts discussing this upcoming concept.

But for my disappointment, most online resources I found about Social Commerce, limit its scope for leveraging social networks and online communities for selling a predefined product.

For example, Wikipedia defines Social Commerce as “the use of social media in the context of e-commerce” or as “a subset of electronic commerce that involves using social media, online media that supports social interaction and user contributions, to assist in the online buying and selling of products and services”

I tend to disagree on the fact that, social commerce is only about buying or selling products online. In my opinion, the essential part of social commerce is about “creating” product concepts with a commercial value embedded on it. Facilitating the buying and selling processes come as secondary functions of social commerce. In other words, it is the “creation of product concepts with commercial value” what distinguishes social commerce from ecommerce.

Using social media just to promote, to refer, or to review a product (which never takes the inputs from the users) should not be identified as social commerce. Because, such products can be sold through any other channels we want; even without the help of social media. In this case, social media is only a one tool for boosting the sales and word of mouth referrals for the product.

On the other hand, a truly social commerce business should take product development decisions at least based on some inputs from the social media web. The users should be allowed to give feedback for product modifications and improvements when they feel necessary (before their next purchase). Just letting them the option of reviewing the product, and referring to friends will not make it a social commerce business.

In the total idealistic situation, a social commerce business should not involve in product development decision at all. The community should be given total freedom of developing the new product idea, and the company should join in at the point of evaluating the commercial viability of the product. Such an ideal model of a social commerce business is far from being in existence at the moment, but my gut feeling tells none of the existing ecommerce companies or social media giants will be able to bring about such a pure social commerce business model to practice. Because their established mental models will prevent them thinking out of the box and convert them into such an ideal business model of social commerce. It will be a totally new player going to upset the industry with such a groundbreaking business model. Just like how Microsoft shocked IBM, or like how Google shocked Microsoft, or how Amazon shocked Barnes & Noble, or more recently how Facebook shocked Google by exploring the blue oceans of business innovativeness. Who will be that new player? I don’t know!

In conclusion, my definition of social commerce is “use of social interactions on the internet, to create commercially viable product ideas and facilitating the exchange process of such products”.

This definition will place social commerce at a different level than ecommerce and social media marketing (using social media for marketing a predefined product).


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