Wednesday, April 2, 2014

Social Commerce - An Uneaten Pie

Ever since the advent of social networking sites, companies have been competing with each other to reach out to wider audience through fan pages. The product catalog posts by the companies served as routes to introduce new products to their customers and enable interactions across them. The number of ‘likes’ & ‘shares’ for these posts were direct indicators of their popularity in the market. Inspite of the large interest developed through such social platforms, companies regardless of size often struggled to transform it into sales. This provided a huge opportunity to new generation entrepreneurs thus resulting in evolution of a new industry i.e. Social Commerce.


Social Commerce in 2010







The most prevalent form of social commerce, until 2012, has been in the form of gift cards and network sponsored stores (like facebook sponsored stores).


Soldsie has been one of the first movers into the field of Social Commerce through facebook in 2012. It facilitated small-medium scale businesses who operate fan pages to monetize their customers comments on their posts. A merchant would simply post information about their product(s) and the prospective customer, upon seeing the post, would simply comment on it saying ‘Sold’. The customers are initially expected to register through a Soldsie facebook application. This model proved to be a great success and by the end of third quarter in 2013, Soldsie would have faciliated transactions to the scale of $11 million. 

Soldsie


Let us now look at the current features of Social Commerce industry:


a) Market size and growth rate:- Social commerce is still in its nascent stage with various companies experimenting different working models. Considering the sheer number of people who interact on daily basis with other through social networking platforms, the industry is slated for massive growth. It especially empowers small to medium size merchants to rapidly scale their marketing efforts and monetize them simultaneously. 
b) Number of players/ Scope of Rivalry:- Apart from Soldsie, other major players include chirpify and ribbon. The industry has scope to include many small companies who can make their presence felt depending on their business models in tune to local realities. 
c) Degree of product differentiation:- Based on the current evidence, the products of rivals tends to be differentiated in nature.
d) Product Innovation:- There is a huge scope for innovation within the industry, especially if the companies happen to expand to other major social networking platforms. 
e) Demand-supply condition:- Currently with fewer players in the market, the companies are currently locked into monopolistic competition albeit with lower entry barriers. This scenario will definitely change as more players enter into the market.
f) Adaptibility:- As the user interactions on social platforms change over the time, the companies need to be nimble and adapt their working models accordingly.


Currently, the major competition is between Soldsie and Chirpify. Soldsie is mainly dependent on ‘comment-commerce’ psychology of the users which compels them to go through with the transaction after having commented publicly. Soldsie currently charges its customers (i.e. merchants) 3% of their total sales above $1000. This is proving to be an attractive model for small to medium scale merchants. Soldsie has recently expanded its services to Instagram whose image driven portal capabilities make it a prime target for social commerce. 


Chirpify


Unlike Soldsie, Chirpify charges its customers with a fee of 5% of total sales and its customer base mainly include big names like Adidas, Green Day and Snoop Dogg etc. So while Solsie’s marketing efforts are concentrated on attracting more small-medium scale merchants across the world, Chirpify efforts seem to be solely concentrated on attracting big names to its platform. Chirpify currently has burgeoning presence on Twitter apart from facebook. It’s growth on Twitter can be limited in future especially since Twitter announced its own plans to enable hashtag based social commerce through tweets.


The battle for social commerce is mainly dependent on who scales faster to other major social networking sites most notably Pinterest.The companies which are able to expand to other social networks while enabling single login for their application will be in an enviable position to develop truly targeted advertising capabilities.


-Bharath

References

1) http://www.businessinsider.com/the-rise-of-social-commerce-2013-10

2) http://techcrunch.com/2013/11/25/insta-sales-soldsie-expands-from-facebook-based-e-commerce-to-include-support-for-instagram/

3)  http://digitalintelligencetoday.com/the-psychology-of-soldsies-comment-commerce-why-the-1m-cash-injection-makes-sense/

4)  http://www.mobilecommerceinsider.com/topics/mobilecommerceinsider/articles/335581-chirpify-lands-2-million-grow-gets-celebrity-names.htm

5) https://medium.com/p/477115bebfb6 - Understanding Social Commerce

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.