Rise of social commerce – Influencing how people spend for shopping online


Foreword by By Kevin Lee, Co-Founder and CEO, of We-Care.com (@WeCare) & didit.com (@DiditMarketing) “Marketers are discovering that social commerce helps overcome some of the biggest marketing challenges, awareness, education and trust/influence. Consumers trust their friends and when friends are engaged with a brand or business that makes an impact across the social graph. As an added benefit, social commerce and social communications regarding shopping behavior has been shown to be highly correlated with SEO performance. That makes a great social media marketing strategy all the more important.”

If you often meet up at the mall with your friends and share secrets about bargains, then you’ve been doing social commerce. Doing this online requires the confluence of three huge worlds – social media, online shopping and mobile apps. It’s still a work in progress, and experts have their own insights on the same.

Actionable marketing expert Heidi Cohen calls it “the evolution and maturation of social media meets shopping.” Heidi touches on some of the most critical aspects of social commerce, including that it creates social media content, enables peer recommendations, offers group buying opportunities, and is helping develop shopping opportunities directly on social media platforms. She etched out at least 19 types of definition for “what is social commerce”.


We’ll come back to these points in more detail, but let’s first get more insights from the experts, and find out how this evolution came to be and where it stands now.

David Berkowitz, 360i (@360i), weighs in on how marketers see it – “In the broad sense, social commerce is how marketers leverage social media to influence consumers’ shopping behavior.”

Julie Barile of Fairway Market (@FairwayMarket), says social commerce goes to the core of what brings people together as a social group – “The initial group of consumers may or may not know each other dependent on the forum (Facebook vs. Yelp vs. a party at someone’s house), however it’s their shared interest that ties them together.”
Social Commerce Evolution and Statistics

The first known use of the term “social commerce” in the proper context was made on the Yahoo! Search Blog back in 2005. They had just come up with the “Shoposphere” where you could find interesting products arranged thematically into pick lists by other shoppers.


Fast forward eight years ahead, and Ecommerce is now a vast ocean of 1.03 billion online shoppers who have pushed global sales to $1.2 trillion as on emarketer. Now factor in survey results on mediabistro shows that 74 percent of consumers rely on social networks to guide purchase decisions, and 55 percent share their purchases on social networks. In fact, 75 percent of consumers said that watching user-generated video reviews helped them make a purchase decision, either for or against making a purchase.


Also important in this context is the rise of mega-social networks such as Facebook and Twitter, because this wouldn’t be such a big deal had it not been for the incredibly long arms of these social networks. As per the latest Facebook Q2 Report, Facebook has 1.15 billion active monthly users and more than a million active advertisers. The sheer force of these numbers was bound to throw up some kind of shopping ecosystem.

Twitter likewise had announced this March about 200 million active users posting 400 million tweets every day, and one-third-follow follow at least one brand. This is highly relevant because 67 percent of Twitter users are more likely to buy from brands they follow. Thanks to Mediabistro again for their data!  Twitter handles 24 billion search queries a month, which is more than Yahoo and Bing combined.

Pinterest and Instagram put the “multi” into social media, and it shows up in how their members respond to engagement. Pinterest, which is a baby at 70 million users, actually beats Facebook when it comes to ecommerce sharing. Recently ReadWrite.com reported that 41 percent of the flow of shared information about retail sites ends up on Pinterest, while Facebook gets 37 percent.

Similarly, Instagram announced 150 million users just a week back. Not only this, L2ThinkThank also reported that Instagram gives brands 25 percent more engagement than Facebook or Twitter.

7 social commerce startup founders shares their insights on how they are driving in better sales

Greg Stallkamp, founder and CEO, Lakeshore Express ( @LakeshoreExpres) says that “while the overwhelming majority of our sales are conducted via e-commerce (at least 95%), what is even more surprising is that the main driver of our sales come via Facebook, LinkedIn and Twitter.”

He adds that “Our social media presence contributes to the majority of our sales, as our business is dependent upon “word of mouth” advertising. Thanks to social media, word of mouth referrals in the 21st century are much easier to share.”

Robert Crawford (@Robbiewow), co-founder of Klinq (@GoKlinq) says that “currently, when we hear the term social commerce or social media, we think of e-commerce in the “traditional” sense – sites like Amazon, Ebay, Craigslist and hundreds of others that allow us to browse items and “share” them with our friends.” Similarly, he also says the “traditional form of social commerce is just an easy form of word of mouth – sharing a product through platforms like Facebook or Twitter to inform our networks about something we like.”

Howard Orloff (@CrowdFundSites) notes that “There was a time you went to the mall with a friend or two for their opinion. People feared shopping online would be lonely or antisocial, turns out you now bring everyone you know to the “mall” for their experience and opinions.”


Josh Yang (@joshyang), Product Management @thredUP  was talking about the future of social commerce in a Quora discussion. Josh says that “analysts project the social commerce market to be $14B in 3.5 years, which will account for 5 percent of the total U.S. e-commerce market.”

Matthew Carroll (@Fall_Harder) also says in another Quora discussion that “social is hands down one of the most significant influencers of the next wave of E-Commerce – that is driving the current wave of E-Commerce 2.0. Social (primarily Facebook) transformed web behavior (in the aggregate) from receivers of information (i.e. reading a news article) to interactive engagement (commenting or sharing – anything that basically promotes a user action).”

Avital Yachin (@atyachin), founder & CEO of Pounce, co-founder of Delver, and ex.GM for social commerce at Sears Holdings – Avital says in a Quora discussion that the biggest challenge for social commerce is in the intersection between “social” and “commerce.”

Alen Malkoc (@alenmalkoc) – Alex is the founder of social commerce startups Chitown Deals (@chideals) and Half Off Depot (@halfoffdepot) that were acquired by Dealster (@dealster). He says that though this model is lucrative, the real challenge lies in the sustenance of the same. There are two main issues that he faced. One was that the customers faced a fatigue and that is due to factors such as diminishing demand and value that is often perceived as above average. For advertisers/sellers this is often a pain and not a sustainable customer acquisition model. Though it kicks off the last minute sales (hotels etc) but also needs more fostering and refinement.

Types of social commerce

The word may have been coined in 2005, but the concept has been applied in various ways for quite some time now and we now have several different types of social commerce that are very well developed and flourishing as business models on the Internet. Lauren Indvik on Mashable had made a very comprehensive classification of social commerce a few months back. Let’s take a closer look at each of these acknowledged branches of social commerce.

Online Marketplaces and Auction Sites

Amazon and eBay broke the mould in the mid-90s by trashing the whole concept of customers buying goods from traditional sellers with shops, whether online or brick-and-mortar. This was now an online community marketplace, where everyone could sell and anyone could buy directly from anyone else.

Amazon chalked up $15.7 billion in Q2 2013 sales, while ecommercebytes.com says that eBay racked up $18.3 billion excluding vehicles. The incredible success if these two 800-pound gorillas in creating ecommerce communities has inspired millions of other communities and sites that now facilitate direct buying and selling between members.


Again, the next in line comes Etsy who have been considered as a force to be reckoned within social commerce by Pinterest. With over 800,000 online shops and 15 million one-of-a-kind items, Etsy is indeed reimagining commerce! A little different in their approach, TaskRabbit is also not too behind. TheVerge had recently come up with an update on TaskRabbit most recent $13 million in funding and hence bringing out the new kind of revolution with peer-to-peer marketplaces. Getaround, with more than 10,000 car owners in the U.S. and a lucrative $13.9 million backing from renowned investors is taking car rentals to a height we could never think of before .

This progression is a good illustration of how commerce evolved into ecommerce and is now evolving into social commerce at a rapid clip.

Social Network Shops and Shopping Apps

Most people now associate “social” with social networks, and s-commerce, as it is called, is the next logical progression. The trick for Facebook, Twitter, Pinterest, Instagram, Tumblr and other social heavyweights is to plug in the commerce with social and make it social commerce by allowing customers to shop directly on the network itself.


For example, Shopify offers numerous apps that help ecommerce websites integrate social sharing and networking. Just last week PRWeb reported that Beetailer claims their Facebook stores have added up to 20 percent in incremental sales to their business. You can see more such tools from Fliptabify, Socialify and Wishpot too.

If again, you want to use platforms like Tumblr in order to drive in more sales, feel free to check out the Tumblr ecommerce widget from Shopify.

Daily Deals and Group Buying

It’s simple and extremely beneficial for both consumers and merchants. A community of members gets merchants to offer huge group buying discounts. Daily deals on these offers make them more appealing and time-limited.


The 800-pound gorillas in this space are LivingSocial and Groupon, who pioneered the concept and attracted hordes of members. This is yet another “mutation” of ecommerce gone social. Groupon apps have racked up more than 50 million downloads, which goes to show how big a hole in the market the company has filled in the last five years.

Another fact which underscores the huge demand is the launch of Google Offers. The importance of mobile (yet another progression) for this particular form of social commerce is demonstrated by the success of startups such as Scoutmob, which sends location-aware coupons to members.

User Review Sites

Amazon and Yelp are the pioneering names in this branch, the newest in line being JustBoughtIt. Consumers buy a product or frequent an establishment based on product reviews and ratings posted by other users in the community.


It works very well, and good reviews can bring a rush of customers while bad reviews will bury your business for keeps. Either way, it perfectly demonstrates how social recommendations influence consumers.

User-Curated Pick Lists

The Yahoo Shoposphere was one of the first platforms for this form of social commerce that allows users to create themed lists of products and services to help others shop.


Now you have startups like Lyst, Fancy and most recent in line Styloko, refining the concept and making it easy for people to shop without having to make decisions.


It’s been around for some time now, but went mainstream very recently. Projects on Indiegogo and Kickstarter, the two heavyweights in this field, get their communities involved in raising funds and in the creative process. In return, backers get rewards such as free units of the item being produced. Not to forget the old but very strong player Threadless too who very affirmatively claims to raise $8,774,411 for over 1200 artists worldwide on their website homepage itself!


There’s plenty of innovation still to come in terms of how far a business can tap into the crowd. For example, Modcloth is stocking vintage and retro fashion goods based on votes cast by members. Nike actually allows customers to design their own shoes.

It’s safe to say that social commerce has jumped out of the internet and has wiggled its way into everything from financing to manufacturing.

Social Shopping Sites

These are purely shopping sites that allow members to engage each other and share information through chat and forums. It’s literally the online version of mall shopping! The importance of this dedicated branch of social commerce is underlined by the success of a number of players, one being Fab, Inc., which launched in June 2011 with 175,000 members, and is now way past the 10 million member mark.


Listia has again exchanged over 5,000,000 items with the topmost on leaderboard having around 36,262 auctions enlisted. Not to forget NYTimes awestrucking news on Fashism having 40,000 online and around 50,000 mobile app users withing one year of launch. Meghan Burkham recently posted that Motilo, the social shopping site launched in 2011, has taken a different approach. They have released a new version Motilo 2.0 recently to understand high standards of social shopping!

Future of Social Commerce

Social commerce is still in its infancy, and there’s always a startup lurking around the corner in each of these branches, looking to disrupt and blow up the whole model with something terribly innovative. It makes it that much more competitive because everybody from online retailers to the social networks and mobile app developers are involved.

Facebook, Twitter, Pinterest, Tumblr and Instagram are engaged in a race to see who can come up with the perfect integration between social networks and ecommerce sites.

The possibilities for marketers are endless, given the technological advances that now allow for data mining and big data analysis to sift through the sea of data on social networks. As for the social networks, if they ever manage to fully integrate shopping and leverage the full buying power of millions of members for group buying, well… let’s just say that would be hard to beat.

On the supplier side, companies like Nike are transforming manufacturing by letting in shoppers into their production arena to design their own shoes. ModCloth is stocking items based on votes cast by users. It’s fair to say that everything is now social, and social commerce is the main part of the puzzle.



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4 Responses to Rise of social commerce – Influencing how people spend for shopping online

  1. Heidi Cohen says:

    Thank you for including me in your roundup. Happy marketing, Heidi Cohen

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