Report Publication: Rise of Social Commerce

November 1, 2010
10:38 pm

Meet the new shopper. Underneath the keys of the keyboard, they are shopping in a new way. They could be beside you on the train tonight, it could be your teenager behind the closed door, or your spouse smiling as she clicks on the accept button for the PERFECT holiday gift. Each is unleashing the power of the social network.

Meet the Digital Consumer

The digital consumer is shopping with friends, sharing recommendations, and actively engaging in dialogue with brand owners on how they want to be served. But, can you listen? Can you serve the new shopper? Or are you so busy YELLING your brand message, that you will miss this opportunity to listen, engage and serve the consumer in new ways? With the rise of social commerce, you have new opportunities to anticipate, personalize and energize the shopping experience; but our finished research report documents that convention is the biggest barrier. Enterprise processes that are designed to broad-brush markets, push big-brand messages, and serve markets through conventional channels.(To access the report follow this link. rise_of_social_commerce_final)

The Four Phases

The “Great Recession” set the stage for this new era, and emerging technologies accelerated the transformation. The shopper has fundamentally changed and wants a new buying experience. Trust in big brands is low. Consumers want confidence in what they buy from their friends, and insight from their community. Pioneers are driving this change. In our qualitative interviews, on average this change consists of five people in interactive marketing, armed with an array of technologies. In 2011, this will spread into an enterprise initiative to know the digital consumer. The change will enable new ways to sense and shape demand, and build a more powerful relationship with the buyer. As a result, in 2011, 90% of companies surveyed will increase funding for social commerce initiatives by 8%. This represents net new spending by the line-of-business leader in brand marketing for a manufacturer or retailer.
This evolution of social commerce (s-commerce) harkens us back to the birth of e-commerce 10 years ago. At that time, e-commerce represented both a new channel and a new way of communicating brand promise to a shopper. The change was pervasive, and it rewrote the relationship between company and consumer. Social commerce is analogous. It is both a new channel and a new way of doing business. It is reshaping how consumers shop. It is changing customer expectations about their interactions with brands.
Three years ago, the action shifted to mobile. Again, it was both a new channel, and a new way to promote brands and redefine the customer experience. The handheld device has fundamentally changed shopping patterns; it has enabled consumers to shop anytime and anywhere. The rise in smartphone use has accelerated the pace of change. According to Nielsen, 30% of shoppers have smartphones, with predictions of 50% adoption in 2011. Of the companies interviewed in our qualitative survey, 40% were actively involved in m-commerce strategies today.
We see this evolution happening in four phases. Today, most brands are getting engaged in the first phase of social commerce, which we call Let’s Be Social, where it’s all about getting social at a minimal level. Dissatisfaction with superficial interactions will drive people to the second phase of social commerce to drive a dialogue. We call this second phase Enlightened Engagement. In the third phase, Store of the Community, shoppers give input and have the opportunity to shape products, promotions, and offers. This outside-in value chain empowers the digital shopper to own the experience and enables brand owners to better serve micro-markets. The fourth and most mature phase of the social commerce framework – where convergence will catalyze a complete redesign of the shopping experience – is a phenomenon that we call Frictionless Commerce. For more details, see the nineteen case studies that we outline in the report.

Why it Matters

We can see industry sub-segments (e.g. apparel retail, consumer packaged goods, financial services, travel and entertainment, etc.) moving at different rates and on different paths: each is using industry-specific social technologies and processes. However, while each industry has different tactics, they are all moving forward through these four distinct phases to build a closer relationship and increase brand presence with shoppers through the use of new technologies. It is a journey, not a destination; but one that we think is worth taking. Consider these facts that we uncovered in the research:

More effective couponing. Companies deploying social couponing methods got a 5% lift on paper coupons, a 25% lift on electronic coupons and a 100% lift on social coupons. The story is higher conversion with less cost.
Larger market baskets. A social commerce technology company powers both ecommerce and social commerce fan pages on Facebook. The market basket is 15% greater for the social commerce shopping experience.
Direct diagloue on new product launch. The Facebook Like button is now used by 50,000 Facebook sites. This feature enables feedback and quick assessement for new product launch, new positioning and promotions.
Improved customer service. 62% of the companies surveyed for the report have active Twitter and Facebook customer service agents engaging in direct dialogue with the shopper. For the 70% of these companies with more mature processes, this feedback is shared weekly with research and development teams.

Yes, for many social will be defined as social media: an arm of marketing with a new way of communicating a message to a community. The focus will be on message refinement and public relations. They will miss the greater opportunity. The curtain is raising for YOU to meet and better serve the digital consumer. Join me in ushering in this new era. Read the report and sign up in the ranks of the Social Commerce pioneers.
This is my first report at Altimeter Group. Two new ones will follow within two months (An Update on S&OP Technologies and the Evolution of Downstream Data.) So, let me know what you think. How did you like this report? What helped you? What would you like to see me change?

Warning: Sidestep the Narrative of the Misguided Goldiggers

August 10, 2026 4:58 pm

Ten years ago, I started writing a book titled Stories of the Misguided Gold Diggers. The book was a collection of stories from two decades of stories of technology leaders perpetuating the myth of integrated end-to-end supply chain planning.

I dusted off the manuscript on Saturday. I think that we have a new chapter. Companies focused on putting Artificial Intelligence (AI) on top of existing architectures are putting AI Stupid on steroids.

The Myth of End-to-End Planning

July 31, 2026 9:14 pm

Supply chain planning, supply management, supply chain execution, network design, and transportation/logistics management operate in silos. Not much has changed over four decades. The connections flow back through transactional systems: order-to-cash and procure-to-pay. There is a myth that companies can buy an end-to-end supply chain management solution. This is largely a myth. Here we explain.

Lead Time: A Broken Gossamer

July 16, 2026 6:38 pm

If you are struggling with supply chain planning, dancing in the light of shiny objects, and scratching your head, please read on. My goal is to help you.

Please do not AI Stupid. What do I mean? AI Stupid is putting agents and agentics on top of existing architectures believing that making them faster and hands free add value. To me, this is fools play.

I love AI. I am excited about new technologies. To this end, I want to shine a light on how new technologies can help address the black holes and inconsistencies in today’s supply chain, which largely stem from the limitations of the first generation of supply chain planning and execution technologies. In this blog, I give you three places to start.

Do You Need a Supply Chain Coach?

July 9, 2026 5:27 pm

Supply chain is where the rubber hits the road. For a public company, over 40% of market capitalization is tied to the trade-offs between growth, operating margin, inventory management, and Return on Capital Employed.

The road for supply chain improvement is fraught with issues. Here we share some and offer some advice.

Is your Supply Chain AI Ready?

June 11, 2026 2:39 pm

A simple quiz to assess an organization’s AI readiness.

The pace of change is fast and furious. Every day, technology advances faster than we can digest. A great challenge to have.

Determining whether a supply chain is “AI-ready” is less about technology and more about the gray matter between the ears of supply chain leaders. Leadership, alignment, and clarity of goals matter.

Too few companies are clear on the definition of supply chain excellence. Measuring and rewarding functional metrics reduces the firm’s value. Putting agentics on top of today’s processes can make bad practices run faster, reducing value.

The toughest job for the supply chain leader is challenging existing supply chain paradigms that were defined by the limitations of decades of supply chain technologies. As the curtain lifts on the potential of new forms of technology, process redefinition is our opportunity, but only if we are clear on what drives value. (Here, I link to the Supply Chains to Admire reports to help you define value. The next report will be published on June 23rd, along with my Dynamic Benchmarking Product, to help you define value in the face of your AI readiness. More information about the launch is at the bottom of this blog.)

Case Study: A Scrappy Demand Management Approach

June 9, 2026 5:37 pm

This study of Franklin Sports shines a light on the work that needs to be done at the sales account level to challenge a retail forecast, and also highlights the importance of a new technique for a forecast engine — reinforcement learning.

Artificial intelligence comes in many forms — large language models, generative AI, machine learning, unstructured text mining, deep learning, neural networks, reinforcement learning, agents, and agentics. While the industry is wigging out about agentics, I think reinforcement learning is a great step forward in the journey of Artificial Intelligence.

Supply Chain Shaman