Is Social Commerce a viable promotion strategy?
Posted by Joseph Ruiz
What is social commerce?
According to Wikipedia social commerce is use of social networks in context of e-commerce.
Heidi Cohen has a more encompassing definition. "Social commerce is a nascent market that encompasses a broad array of options including group buying, social shopping, mobile apps, retailers adding social features, and shopping integrated into social media."
Changing face of commerce
Local, social, mobile, no matter how you define it business is changing. There is growing competition for hyper-local markets. The Social buying experience is changing dramatically.
Using a combination of deep price discounts, crowd sourcing and user generated content new players are entering this emerging market with a variety of business models.
Though still relatively small, several key players have demonstrated the ability to deliver sizable audiences and revenue.
Who are some of the major players and what are their tactics?
Yelp uses crowd sourcing and user generated content.
Groupon uses deep price discounts.
Living Social, an Amazon company, also utilizes price discounts to attract consumers.
Facebook, Google and others are quickly entering the market.
What are key factors for retailers and small businesses considering this tactic?
According to a recent New York Times article some key factors were:
- The number of potential customers in your area that don't already know about you
- The amount of excess capacity
- Ability to handle a surge of volume
Heidi Cohen suggests 10 reasons retailers are adding social commerce to their mix.
But are these tactics effective?
There are
studies that suggest deep pricing discounts erode brand value. Approximately one third of Groupon retailers lost money and indicated they would not participate in future offerings.
Each business will need to determine their success metrics.
In addition to financial return on investment calculations you will also want to think about how these promotions might affect your brand.
What do you think? Have you considered social commerce programs? Is so were they successful?
Here is an
interesting article from McKinsey. Their research indicates consumer are interested in more than price.
Join us for a Twitter Chat on this topic using the hashtag #usguyschat on Monday May 9, 2011 at 3:00 EDT.
Following is a list of the chat questions.
- Have you implemented a social commerce program like Groupon or Living Social? Can you share some details of what you launched?
- What are some important factors to weigh when considering a social commerce program? Could you provide insight into your approach?
- Does social commerce put the brand at risk? If yes How? If no, why not? Can you give examples?
- Currently social commerce relies on deep discounts, are there alternatives to price? Can you give specific examples and share your experience?
- Can social commerce help create loyal customers? Is there a more critical opportunity?
- How would you measure the success of a social commerce program?
- What are your takeaways that you would share with us today?