Defining Social Commerce: A Tale of Three Conversations

Everyone, especially Wall Street, is standing up to salute social commerce. Look at the IPO pipeline – LinkedIn, Groupon, Zynga, Living Social. But despite all this attention, the definition of social commerce is fuzzy at best. How do we know if these companies will win, if we can’t even agree on what it is?

When defining something social, it’s helpful to characterize it by the conversations that make up the experience. I’ve observed three elemental commerce-related conversations currently taking place: shopping, marketing and trading.

Social Shopping

When I’m thinking about buying something – especially something expensive or something that I simply care about a lot – I talk to people I trust. Social media makes this much easier to do. It lowers the barriers of effort and social appropriateness around having this conversation. Six months ago, I was looking for a camcorder (the video function on my phone just wasn’t cutting it for filming the school plays).

While I would never have taken the time to email all my friends to ask which camcorders they liked (that would just be weird), I felt totally comfortable soliciting their thoughts on Facebook. This open conversation introduced two new elements into the commerce equation: impulse and serendipity. As people chimed in and the conversation took shape, a few friends who hadn’t really been looking for camcorders became interested in and purchased the same model I bought.

Social shopping is rooted in the overall shift we’re seeing – consumers engaging in the social discovery of everything. Rather than just searching for information, consumers are increasingly turning to Facebook and Twitter to get trusted recommendations.

We already see this significantly affecting the way they’re discovering and consuming news. Moving forward, sharing trusted recommendations will only continue to grow as a huge factor in how people discover what to buy. Last year, Facebook commissioned a study by Nielsen which confirmed the obvious: trusted recommendations have a huge impact on the decision-making process. People were four times more likely to buy something when it was recommended by a friend.

It definitely worked in my case.


Social Marketing

Businesses need to talk with their customers. For millennia, this conversation occurred face-to-face in markets or in storefronts. Unfortunately, this dialogue has devolved into what is now primarily a one-way conversation: “marketing.”


Social media introduces a less-intrusive, more organic way to converse with customers rather than blasting them with emails or direct mail pieces. When done well, it reintroduces a two-way conversation between the business and its customers.

These conversations, because they occur openly, have the opportunity to fuel word-of-mouth awareness. They also have a self-correcting feedback loop. If a business fails to engage me by sending me too much stuff or stuff I ignore, messages from that business start disappearing from my Facebook newsfeed. Similarly on Twitter, great content is retweeted; noisy accounts are easily unfollowed.


This style of two-way, conversational marketing through social media (beyond just customer support) will likely take off first with small businesses. They’ve always valued the business-growing power of marketing through their existing customers for building loyalty and fueling word-of-mouth referrals. It’s why they prioritize customer service and cultivate their reputation in the local community. It’s why they join the Rotary and sponsor Little League teams.


Social media just removes a ton of friction from this process.




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