Vurdere Insights

Social Commerce: what, why and how it could be even better.  

By: Koen Hoogendoorn, Business & Legal Analyst at Vurdere | September, 2021.

Social commerce, social selling and social shopping: they may sound like popular buzzwords just to get clicks or to appear as knowledgeable about the world of eCommerce. However, these concepts are increasingly important for your chances to be successful in the fastest growing industry sector of the world: eCommerce. This article explains what social commerce is, how it is necessary to build a network of customers and how it can boost your sales and organic web traffic.

Black Friday

Social Commerce

Social commerce first saw the light of day somewhere in 2005 when social media networking sites started to gain popularity. Social commerce is focused on the electronic commerce sector (e-commerce). In traditional e-commerce, consumers go to the website of the e-commerce where they would like to buy something, and then interact there (buy products, leave reviews, contact customer service). With social commerce, online communities are involved that support user interactions and user-generated content. Studies show that social commerce is rapidly increasing, with $5 billion in sales in 2013, and more than $20 billion in 2019 (the numbers of 2020 are still unknown, which was the biggest ecommerce year ever with physical retail stores being closed due to COVID-19 thus leading to customers being forced to buy their products online).

The Power of Word of Mouth

Social commerce is currently mainly used through social media platforms, such as Instagram. Here, companies reach out to an Instagram influencer (someone who has a large and engaging following and frequently posts content on Instagram) to market a product of their company. This has been really successful, since the followers of this influencer have developed a certain level of trust in this influencer, therefore they are more prone to follow whatever they recommend. This is a marketing principle that is as old as society: word of mouth. In 2021, this is electronic word-of-mouth. This means that comments by peers (or somebody who is perceived as a peer, such as an influencer that you have been following for a long time) are trusted more than traditional sources of information (such as commercials on television, or paid ads on Google). This is also why fake-news works so well these days, because people trust someone they know on Twitter more than the newspapers.  

The key thing is, that the network in which it is spread is more valuable than the information itself. So, the influencer (somebody you have been following for a long time, and therefore have the feeling that you personally know them) spreading the information (for instance a recommendation to buy a certain product) on Instagram (a service you use every day and therefore trust) weighs more than whether or not you actually really want the product. You will still like the product, because of the recommendation. You may not necessarily buy it, but you might recommend it to someone you know.  

This is very interesting for marketeers, since this completely changes how companies should market their products. It often is more valuable to pay one influencer with a specific audience (for instance men who care a lot about their body and looks) to market a product (fitness supplements) than it would be to market that same product on national television or in magazines.  

The Possible Problem of Social Commerce

Social commerce and selling are therefore an inevitable truth, it is how humans are designed: we trust our peers more than these corporate entities trying to sell us something. However, there is still room for improvement. As described, currently social commerce is focused on paying social influencers a fee to let them promote a product on social media. However, for the sake of transparency, social media companies have started to obligate influencers to state that they are being paid by a company to make that post (this is an advertisement paid by Company XYZ). This could decrease the word-of-mouth effect, since customers would not strictly view the influencer as a peer anymore, but as an extension of a corporate entity.  

The Solution

This is where social commerce can, and will, be revolutionized. The concept of electronic word-of-mouth should be played out in the best way possible: make word-of-mouth really about peers recommending each other products. Peers are people who are most like you, for instance your friends and the people you follow on social media. When a good friend recommends you a book, or that cool guy from the coffeeshop you bump into every once in a while, you will be more prone to check it out due to the word-of-mouth effect.  

Social+ eCommerce™

With social media being corporatized, it is time to bring social commerce back to the people: to your peers. A review-system that prioritizes the reviews of your friends (or of that cool guy or girl from the coffeeshop you run into every other week) and therefore picks out the reviews that are most relevant to YOU. This will have the word-of-mouth effect, without the sense of being sold something by someone who is paid by corporations.  

We, Vurdere, are that review system: Social+ eCommerce™. We have developed a software service that can be installed by our team on your eCommerce website. This will transfer all your old reviews to the new system, which is linked to social media. Therefore, a customer will see the reviews that are most relevant to them: based on likes, who they follow and who they are friends with.  

Click here if you want to know more about us and our review-system based on the same algorithms that the biggest social media companies uses.  

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