Social commerce is a subset of electronic commerce that involves social media, online media that supports social interaction, and user contributions to assist online buying and selling of products and services. More succinctly, social commerce is the use of social network(s) in the context of e-commerce transactions.
Social commerce aims to assist companies firstly in engaging customers with their brands according to the customers' social behaviors, secondly, it provides an incentive for customers to return to their website, thirdly, it provides customers with a platform to talk about their brand on their website, and last but not least, it provides all the information customers need to research, compare, and ultimately choose you over your competitor.
Today, the range of social commerce has been expanded to include social media tools and content used in the context of e-commerce, especially in the fashion industry. Examples of social commerce include customer ratings and reviews, user recommendations and referrals, social shopping tools (sharing the act of shopping online), forums and communities, social media optimization, social applications and social advertising. Technologies such as Augmented Reality have also been integrated with social commerce, allowing shoppers to visualize apparel items on themselves and solicit feedback through social media tools.
The term was first introduced by Yahoo! in November 2005, describing a set of online collaborative shopping tools such as shared pick lists, user ratings and other user-generated content-sharing of online product information and advice, while the concept of social commerce was developed by David Beisel to denote user-generated advertorial content on e-commerce sites, and by Steve Rubel to include collaborative e-commerce tools that enable shoppers "to get advice from trusted individuals, find goods and services and then purchase them". The social networks that spread this advice have been found to increase the customer's trust in one retailer over another.
Some academics have sought to distinguish "social commerce" from "social shopping", with the former being referred to as collaborative networks of online vendors; the latter, the collaborative activity of online shoppers. Social commerce can be measured by any of the principle ways to measure social media, like ROI, changes to online reputation and reach.
The main features of social commerce were discussed at the 2011 BankInter Foundation for Innovation conference on Social Technologies and were concluded as 'the 6 C's of Social Technologies', referencing the original 3 Cs of e-commerce and adding 3 new Cs to update for an era of social sharing.
1. Content – The basic need to engage with customers, prospects and stakeholders through valuable published content on the web. Early examples of this were the brochure sites for organizations and this has matured into a vast and growing body of material being published in real time onto the web. Google is the organization that has been at the forefront of indexing and making findable content on the web.
2. Community – Treating the audience as a community with the objective of building sustainable relationships by providing tangible value. Early incarnations of Community were mobilized through registration and engaged via email programs, this evolved into online forums, chat-rooms and membership groups where users were able to interact with each other, an early example being Yahoo! Groups. Social Networks are the latest incarnation of community and of the many networks Facebook is the leading organization providing the platform for interpersonal interactions.
3. Commerce – Being able to fulfill customers' needs via a transactional web presence, typically online retailers, banks, insurance companies, travel sales sites provide the most useful business-to-consumer services. Business-to-business sites range from online storage and hosting to product sourcing and fulfillment services. Amazon emerged in the 1990s and has gone on to dominate the B2C commerce space extending its services beyond traditional retail commerce.
4. Context – The online world can track real-world events, and this is primarily being enabled by mobile devices. An online bill payment via Google Checkout or a check-in at a physical location via Facebook or Foursquare links a real-world event to an online data entity such as a business or a place. This is a vital element to Social Commerce where the data is now available to organizations wishing to provide products and services to consumers.
5. Connection – The new online networks are defining and documenting the relationships between people – these relationships may originate in the physical world or online and may manifest in the other as a result of a connection in the first. LinkedIn, Facebook, Twitter are prime examples of online networks – Professional, Social and Casual. The relationships, the scope of those relationships and the interactions between individuals are a basis for the actions of Social Commerce.
6. Conversation – The Cluetrain Manifesto noted that all markets are conversations – this may now be reversed for Social Commerce to say that all conversations are markets. A conversation between two parties will likely surface a need that could be fulfilled, thus providing a potential market for supplier organizations. The challenge is for suppliers to be able to tap into those conversations and map those into the range of products and services that they supply. Simple examples of such 'conversations that indicate demand' are where people place objects of desire on their Pinterest board or a 'Like' of an item inside Facebook.
Using this structure, organizations wishing to transcend the notions of 'Social Media' (defined as the interaction pathways) and move to true 'Social Commerce' must aim to leverage 'Context, Connection and Conversation'. (Source: Wikipedia)