The Premature Death of "Social Ecommerce"
Once upon a time not that long ago, inserting the "social aspect" to the fast-growing industry of online shopping was considered a no-brainer. Integrate the likes of Facebook and Twitter functions to product pages on ecommerce outlets, and the words of the mouth from one's friends and families, increasingly merging into one biggest online networking presence, will as a collective provide the necessary persuasion to get potential online shoppers to click on those "check-out" buttons. After all, just as people take friends to go with them on trips to brick-and-mortar retail outlets, they also should for their online counterparts.
That logic is very much sound today as when it was when it was first conceived. But the supposedly seamless cooperation of SNS and online shopping did not emerge as intended. Many an ecommerce firm out there has flirted with the idea of installing plug-ins or social applications within their platforms to tap SNS presence of their users to increase sales, none more adamantly than what the author himself had experienced back in Rakuten. But it seems that the recent years has seen gradual abandonment of such efforts, with ecommerce reviews reverting to ones centered on those by anonymous strangers.
Results from a recent Gallup poll almost fully justify such strategy of the online shopping sites. When asked about their purchases online, 62% of Americans noted that what they saw in SNS had no effect whatsoever on their final decisions to buy. Those who mentioned "significant effect," in contrast, came out to be a mere 5%. Against all the hype, the age of "social ecommerce," before it even started, is over. SNS firms to tap into ecommerce (China's Tencent comes to mind) or vice versa (Tencent's competitor in the Chinese cybersapce, Alibaba, for instance) are destined to be separate efforts rather than value-added.
There are several very real implications of this result. The first is completely devastating for SNS firms. For years, SNS firms with no real revenue general capacities other than ad sales have bouyed their respective values through vague potential of monetizing user data as something that reliably predict future behavior. Both ads and the analyses of behavior are worth the costs for third-party clients IF real profits can be gained out of them through future sales. But if users do not behave in ways that they would on SNS, then the data, the ads, and the SNS companies themselves, are overstated in value.
The second, in related way, is how social networking, as a concept, is changing from a pure effort to connect people more efficiently and systematically, to something that is increasingly resembling lofty and often falsified presentation of artificial-looking facades. Examining just at Facebook, people nowdays see much more devotion to ads and sponsored pages, and comparatively less emphasis on Wall-to-Wall conversations, bonding in set school/professional networks, and organization of offline social events (as was the case in the early days of the website).
The massive presence of professional businesses, both on Facebook and Twitter, is quickly crowding out personal conversations that provide most insight about user behavior. Instead, such personal online interactions are fleeing to a more diverse set of smaller SNS, ranging from Instagram to Snapchat. The reversal of expected "snowballing" effect of social networking convergence is making what is left of valuable user data much more expensive to collect and difficult to utilize and analyze even when collected. Ecommerce firms should be aware of such lack of financial viability for gathering social information.
Lastly and maybe most interestingly, the failure of social networking to sway consumer opinions speak volumes about the level of trust Internet users have toward different sources of user-generated information they find online. Perhaps it would not be too irrational to extrapolate that many people may find the views of their social networking buddies to be too subjective, too tainted with commercial influences, and too biased for their own use. Instead, the brutal honesty that can come with anonymity carries with it a much more believable feel of trustworthiness.
So, ultimately, the death of "social ecommerce" has much more impact on the "social" part rather than the "ecommerce" part. People will continue to buy online out of convenience and speed. But how people will decide what and where to buy online will continue to evolve and diversify. Knowing this trend, ecommerce firms will find it less and less worthwhile to gather consumer behavior data from SNS venues. Instead, they would get more bang out their bucks by shifting focuses back to relatively low-cost and self-maintained review functionality integrated with their own websites.
That logic is very much sound today as when it was when it was first conceived. But the supposedly seamless cooperation of SNS and online shopping did not emerge as intended. Many an ecommerce firm out there has flirted with the idea of installing plug-ins or social applications within their platforms to tap SNS presence of their users to increase sales, none more adamantly than what the author himself had experienced back in Rakuten. But it seems that the recent years has seen gradual abandonment of such efforts, with ecommerce reviews reverting to ones centered on those by anonymous strangers.
Results from a recent Gallup poll almost fully justify such strategy of the online shopping sites. When asked about their purchases online, 62% of Americans noted that what they saw in SNS had no effect whatsoever on their final decisions to buy. Those who mentioned "significant effect," in contrast, came out to be a mere 5%. Against all the hype, the age of "social ecommerce," before it even started, is over. SNS firms to tap into ecommerce (China's Tencent comes to mind) or vice versa (Tencent's competitor in the Chinese cybersapce, Alibaba, for instance) are destined to be separate efforts rather than value-added.
There are several very real implications of this result. The first is completely devastating for SNS firms. For years, SNS firms with no real revenue general capacities other than ad sales have bouyed their respective values through vague potential of monetizing user data as something that reliably predict future behavior. Both ads and the analyses of behavior are worth the costs for third-party clients IF real profits can be gained out of them through future sales. But if users do not behave in ways that they would on SNS, then the data, the ads, and the SNS companies themselves, are overstated in value.
The second, in related way, is how social networking, as a concept, is changing from a pure effort to connect people more efficiently and systematically, to something that is increasingly resembling lofty and often falsified presentation of artificial-looking facades. Examining just at Facebook, people nowdays see much more devotion to ads and sponsored pages, and comparatively less emphasis on Wall-to-Wall conversations, bonding in set school/professional networks, and organization of offline social events (as was the case in the early days of the website).
The massive presence of professional businesses, both on Facebook and Twitter, is quickly crowding out personal conversations that provide most insight about user behavior. Instead, such personal online interactions are fleeing to a more diverse set of smaller SNS, ranging from Instagram to Snapchat. The reversal of expected "snowballing" effect of social networking convergence is making what is left of valuable user data much more expensive to collect and difficult to utilize and analyze even when collected. Ecommerce firms should be aware of such lack of financial viability for gathering social information.
Lastly and maybe most interestingly, the failure of social networking to sway consumer opinions speak volumes about the level of trust Internet users have toward different sources of user-generated information they find online. Perhaps it would not be too irrational to extrapolate that many people may find the views of their social networking buddies to be too subjective, too tainted with commercial influences, and too biased for their own use. Instead, the brutal honesty that can come with anonymity carries with it a much more believable feel of trustworthiness.
So, ultimately, the death of "social ecommerce" has much more impact on the "social" part rather than the "ecommerce" part. People will continue to buy online out of convenience and speed. But how people will decide what and where to buy online will continue to evolve and diversify. Knowing this trend, ecommerce firms will find it less and less worthwhile to gather consumer behavior data from SNS venues. Instead, they would get more bang out their bucks by shifting focuses back to relatively low-cost and self-maintained review functionality integrated with their own websites.
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