Wall Street Journal on Social Commerce's Tipping Point

A Wall Street Journal article by Scott Morrison is being widely re-tweeted around the Net “Facebook sees social commerce reaching tipping point”. It’s subscription only, but the article has been widely reposted (e.g. here), and we’ve archived it below for your convenience.  Top takeaways:

• The 500m member social networking site, Facebook, is engaging in growing number of partnerships with online retailers, as social commerce becomes socially acceptable
• Ethan Beard, who runs Facebook’s developer developer network, believes social commerce is “big and disruptive” and that it has reached an inflection point/Tipping Point and will surge over the next 12 months, growing the $133 billion US e-commerce market
• In August, U.S. Internet users spent 41.1 billion minutes on Facebook, surpassing Google Inc.’s 39.8 billion minutes for the first time
• “Facebook will be a top-three channel for all retailers within two or three years” says Scott Wingo, Chief Executive of ChannelAdvisor Corp
• E-commerce incumbents such as eBay and Amazon will profit from Facebook-powered social commerce too through the deployment of Facebook’s social plugins (Amazon), and PayPal (eBay) which is widely used on Facebook stores
• Since the first f-commerce store appeared a year ago (1-800-Flowers.com powered by Alvenda), some 30,000 merchants have set up shop on Facebook using Pavyment, just one of many f-commerce solution providers
• A recent survey of 135 top retailers and consumer goods manufacturers by research firm Altimeter Group found 86% of respondents are preparing to launch some sort of social commerce strategy by 2011.
• A first step in social commerce is to deploy Facebook social plugins on e-stores; children’s e-tailer Tea Collection used the Like button social plugin to allow users to vote on favorite items (traffic grew 300%, revenue rose 1000%)

So what to think about all the media hype around Facebook-powered social commerce at the moment?

First, we’d recommend caution against any irrational exuberance around the idea of f-commerce as a silver bullet for e-commerce innovation.  We’re big fans of  f-commerce, but think it’s still largely unproven and likely to work best when be integrated into an overall e-commerce strategy.  Simply setting up a store on Facebook will not do, and will mean managing yet another channel.

Our feeling is that Facebook is a great e-commerce sandbox for experimenting with innovative live, event and social shopping solutions – like group buy, private buying clubs, VIP stores, and tryvertising stores at low cost, and low risk. Find out what works, and then port it to the e-commerce mothership.  We also believe f-commerce is also a great solution for brands without a direct-to-consumer channel to get to know (and reward) their loyal customers and brand fans better.

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Article: Retrieved 28 Sep, 2010, from http://online.wsj.com/article/BT-CO-20100928-711062.html

Facebook sees social commerce reaching tipping point

By Scott Morrison,

Social networking site engaging in growing number of partnerships with online retailers.

Social commerce is becoming socially acceptable.

Over the past year, an explosion of stores on Facebook Inc. and the site’s growing number of partnerships with Internet retailers has propelled social commerce to an inflection point, says Ethan Beard, who runs the Web giant’s developer network. Over the next 12 months, Beard expects social shopping activity to surge as merchants look to leverage the site’s 500 million users.

“Social commerce will be big and disruptive,” Beard said in an interview with Dow Jones Newswires, referring to the use of social media tools and content–such as user profiles, customer ratings and reviews, user recommendations and wish lists–to make online shopping a more social experience.

The degree to which social shopping will impact established online retailers, such as Amazon.com Inc. and eBay Inc., is a subject of debate. In August, U.S. Internet users spent 41.1 billion minutes on Facebook, surpassing Google Inc.’s 39.8 billion minutes for the first time, according to comScore Inc.

“It’s inevitable that e-commerce and Facebook will overlap or collide,” said Scott Wingo, Chief Executive of ChannelAdvisor Corp., a software maker that helps merchants sell goods on Amazon and eBay.”Facebook will be a top-three channel for all retailers within two or three years.”

Beard said the U.S. e-commerce market, worth $133 billion last year, will continue to expand, providing ample opportunity for all competitors.

He argued that Facebook’s push into social commerce will benefit established online retailers that choose to partner with it. For example, Amazon already lets customers sign in through their Facebook accounts, enabling the retailer to make recommendations based on people’s profiles or remind shoppers of their friends’ birthdays.

Amazon declined to comment about Facebook when reached.

An eBay spokeswoman said the company will benefit from the growth of shopping via Facebook because its PayPal payments service is now used on the social network.

Google did not respond to a request for comment.

About a year ago, 1-800-Flowers.com Inc. opened the first Facebook store. Facebook won’t disclose how many companies have opened stores since then, but Payvment Inc., a third-party software provider, says it has helped more than 30,000 merchants establish sales channels on the site.

A recent survey of 135 top retailers and consumer goods manufacturers by research firm Altimeter Group found 86% of respondents are preparing to launch some sort of social commerce strategy by 2011.

For now, Facebook is letting retailers and third-party software makers take the lead in figuring out how to best meld social networking and online retail. Beard says brand name retailers like Levi Strauss & Co. are embedding Facebook’s increasingly ubiquitous “Like” button into their sites. That allows them to tap into Facebook’s huge vault of user information.

Children’s clothing retailer Tea Collection used Facebook’s Like button this summer to let shoppers vote on their favorite items, with the winning piece going on sale the next day. The retailer said the promotion enabled people to share their favorite items with Facebook friends, helping drive up visits to its Web site by an average of 300%. Revenue rose tenfold.

San Francisco-based Payvment helps small merchants set up storefronts on their Facebook fan pages, while Minneapolis-based Alvenda Inc. has bet on a model that lets big companies pitch products and services to people via their Facebook news feeds.

Last month, Alvenda helped Delta Air Lines Inc. became the first airline to let customers book flights on the social network, a move Alvenda chief Wade Gerten says prompted scores of inquiries from airlines around the world looking to jump into social commerce.