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Easy Guide to the Meaning of Social Commerce

By Michael Dehomme Subscribe to RSS | December 1st 2011 | Views:
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In a nutshell, social commerce is the method of using interactive, user-generated dialogue to promote and sell products or services online.

This would include user forums, reviews, customer ratings, recommendations, referrals, social advertising, social shopping tools and other ways to facilitate user engagement, such as applications that allow people to easily jump from their Facebook page to a website where they can checkout online.

The following guide will give you an understanding of the key terms, concepts and benefits involved in social commerce, to show you why it is an important tool for any business.

Background

The term social commerce was first introduced in November 2005 by Yahoo! to describe a range of convenient online collaborative shopping tools that facilitate user-generated content-sharing of product information and advice.

Two of the main innovators to develop the social commerce concept were David Beisel who focussed on user-generated ad content on e-commerce sites and Steve Rubel who further expanded this activity to include collaborative e-commerce tools that enable shoppers "to get advice from trusted individuals, find goods and services and then purchase them".

Today, social commerce encompasses a wide range of social media tools and content to encourage e-commerce. Marketers are increasingly realising that social networks boost consumer confidence in brands, so this industry is growing at a rate of knots.

Key Terms Related to Social Commerce

Social commerce entails a collaborative network of vendors who use online media to promote user interaction and contributions. Statistics are showing that social shopping via the Internet is steadily outpacing the traditional way people choose the products and services they want to buy.

Benefits and Types of Social Shopping

This term boils down to shoppers promoting products and services to their friends – this is nothing new, except now there are numerous clever platforms and tools that allow people to engage and communicate with each other online.

The benefits of social shopping websites for retailers are that they generate revenue not only from advertising and click throughs, but also by opening a direct window to what users think about products and services.

There are five main methods used to promote social shopping:

• Shopping communities – these sites bring like-minded people together to discuss, share and then use this information to buy. As their popularity increases, users are being provided with enhanced online tools to streamline their experience, such as creating custom shopping lists that they can share.

• Recommendation engines – this functionality enables shoppers to provide product advice and feedback to fellow shoppers. People are also increasingly engaging in recommendation sites that allow them to have conversations with each other.

• Social shopping marketplaces – these online destinations bring sellers and buyers together directly, such as eBay. They are the virtual equivalent of a market bazaar, where sellers are able to display their wares and users can ask questions or even at times bargain for a lower price.

• Group shopping sites – these platforms encourage groups of people to buy together online to get attractively discounted wholesale prices. Another form of this, used for catalogue-based ecommerce sites, would be where shoppers are able to form ad-hoc collaborative shopping groups and one person then shops for many people using real-time communication with each other and the retailer.

• Social Media Optimisation – by adding Twitter, Facebook, Blogs etc to your website, people are encouraged to share information and feedback.

Conclusion

Social commerce makes use of one of the most natural activities of society – the sharing of how we think and feel about things – to drive e-commerce (online sales). To facilitate this, tools and platforms are increasingly being developed to better help both shoppers and retailers to get their message across.

With the current figure of consumers buying online at around 54% and rising in the UK alone, social commerce is a force that all retailers and service providers need to take notice of and learn harness. But it’s also crucial to go about it in the right way – as a business owner, always ensure you understand your target audience and have a clear strategy. My next article titled ‘Top Tips on Developing Your Business Using Social Commerce’ will give you some advice on achieving this.

Finally, it’s important to re-iterate that social commerce carries a powerful ‘word of mouth’ punch – when consumers read reviews or feedback on products or services by other consumers just like themselves, they are far more likely to trust it than the cleverly sculpted marketing that companies display. If done correctly, this means you can boost confidence in your brand at a greatly reduced price than a traditional advertising campaign.

Michael Dehomme - About Author:
Michael Dehomme is a marketing consultant and social commerce trainer.

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