The Social Commerce Fantasy

“We’re a social commerce startup. We’re trying to bridge the gap between people’s social streams and retail; it’s going to be huge.”

It was January 2012, and this was the pitch I received from a small group of engineers, friends and seasoned execs who had transformed their next-generation e-commerce platform into a CMS for building storefronts on Facebook tabs. They had just become PCI-compliant and were finally able to process transactions at scale. They had big clients like Target, Levi’s and Nike and millions in Bay Area venture. I jumped at the opportunity to join them.

Years earlier I had helped lead a major redesign of a very early iteration of the adidas e-commerce store and had fallen in love with the challenge of online retail. Compared to other digital marketing disciplines, it was tangible, results were immediate and measured in actual dollars, and iteration and optimization were the name of the game. I had also cut my teeth first on MySpace and then Facebook while working at Razorfish on the Coors Light account. Social commerce felt like alchemy, a fusion of two passions, and an obvious digital code to crack.

In February 2012, Facebook filed its S1 to go public; it didn’t ring the bell until May 18. At that time, we were solely focused on the desktop experience, paid advertising was nascent and not yet widespread, and organic reach was still plentiful.

Ah, the good old days.

But, as you’d imagine, using organic posts to get people to click to a tab app, explore and then buy was difficult to optimize and scale. The Holy Grail was to build full buying experiences within the post itself.

Believe it or not, with Facebook’s permission, we had been running expandable Flash – you remember, Flash posts where you could buy directly within the stream. It was fun and exciting, but it wouldn’t last. Soon after the IPO, Facebook decided allowing third-party Flash in the newsfeed was probably a bad idea and forbade it.

The idea of social commerce was completely compelling. It still is. We spend so much time in our feeds. We certainly discover products there, so why shouldn’t we buy there too?

“The likelihood that Facebook will ever [become] a key sales-driving tool for retailers is unfortunately far-fetched.” – Sucharita Mulpuru, Forrester Analyst, Will Facebook Ever Drive eCommerce

Desktop e-commerce is a relatively mature discipline. While total U.S. e-commerce sales are still less than 10 percent of total U.S. retail, with players like Amazon and eBay, it’s obviously a massive market. And the ecosystem of paid search, email, CMS platforms, analytics and optimization tools is well-established and, generally, it works. To drive e-commerce success today, an ecosystem must support these basic truths, as desktop e-commerce does:

  1. The cost to consistently drive traffic to the shopping experience must be considerably less than the revenue that traffic generates.
  2. If you have the tools and insights to optimize the ad spend to drive down costs while maintaining revenue, even better.
  3. You must have a shopping experience toolset or CMS that is easy to set up, customize and manage. Ideally it’s built for merchandisers and is flexible enough to support many page templates, including category and product detail pages.
  4. The shopping experience must be responsive and be great (good enough?) for mobile phone users.
  5. If it can expand to include rich imagery, video, detailed product information and reviews, and cross- and up-sell, even better.
  6. The ecosystem must integrate with multiple messaging systems, including email, social and, ideally, notifications or SMS.
  7. You must have robust analytics across advertising, the shopping experience and transactions.

I believe these are table stakes when creating a digital retail ecosystem that can drive real value for merchants. During our focus on social commerce from 2012-2014, Facebook and then Twitter didn’t have these key ingredients and the small group of startups dedicated to cracking this code have all now disappeared or pivoted away.

Despite the fact that Facebook announced brand page storefronts last week, I still don’t believe it has what it needs to realize the dream of social commerce.

Besides missing the robust retailer tools noted above, there are a few other challenges facing social commerce that I think must be addressed explicitly:

  1. E-ommerce marketers have two mature customer acquisition methods that continue to work very well today – search and email. Social is eating the world, but reports of the death of these guys are greatly exaggerated. Retailers eagerly want social to be another new massive source of repeatable revenue, but it just isn’t yet.
  2. People are not on social to buy. While we’re always open to product discovery, even in our most social environments-bars, for example, are packed with advertising-buying is usually left to true retail contexts.
  3. More than 80 percent of all Facebook and Twitter users are on a smartphone, and checkout is atrocious there. No matter what people tell you about how huge Instagram and mobile commerce are, they’re tiny compared to desktop and tablet.
  4. Mobile payment is an enormous problem. When buying with a simple Apple ID finger scan reaches scale, so will social commerce.
  5. Community managers and social ad buyers will not be managing storefronts; it will take a while to convince merchandisers that it’s worth the effort for them to learn social media tools.

Sigh.

But there are a few small bright spots for those with the means to invest the time and dollars.

  1. Flash sales (limited time), especially of special products at low-to mid-price points, can do very well. An exclusive launch of a limited run product can drive buzz and sales on social.
  2. Liquidation of sale items can work too and might be a good approach for your social commerce efforts.
  3. Niche products can be targeted at very specific audiences by location or fandom, for example. Using the power of social ad targeting can sometimes drive commerce success.
  4. With lookalike and conversion pixels, Facebook and Twitter advertising can be optimized and scaled to drive direct response outcomes. I’m not sure if Facebook’s native storefronts will include these signals, but if you have a mobile e-com experience, add your pixels and get your best social ad buyer cranking.

So last week we took another baby-step forward in the long, slow search for the unicorn that is social commerce. The forest is dense, and we can’t yet see her.

Facebook and Twitter have really smart people working on this challenge, and I hope they’re able to accelerate our progress, but I have to admit I still doubt that social as it stands today will ever be a significant direct driver of consumer commerce.

*Homepage image via Shutterstock.

 

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