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Rise of Social Commerce

“We have the most powerful distribution mechanism that has been created in a generation,” Mark Zuckerberg, Founder Facebook at the launch of the 2006 Connect Platform
It is called the socialgraph: the complex interconnection of social relationships. It is a new type of network.  One that has the power to redefine the shopping experience allowing companies to anticipate, personalize and energize the shopping experience in new ways.  Tapping the potential of this technology shift will make the vision of customer-centric value chains today’s new reality.

The Wild, Wild West

Many new technologies are converging simultaneously.  It resembles the wild, wild west.  For many companies, so many things are happening simultaneously, that it is hard to chose how to get started.  In the words of one respondent, “I feel like a hamster on a treadmill.  It is hard to get off the treadmill to stop to think what combination of tactics will add the MOST value.”  It includes:

  • Geospatial.  Geospatial data combined with point of sale data to deliver a tailored response to the shopper when they are in the store.  The data enables insight on not only what you bought, but where you were when you bought the item.  And, what your shopping behavior was prior to the purchase.  This is redefining couponing.  Examples include Groupon a new social couponing company, Get Satisfaction a new rewards program for purchases, Shopkick that rewards you for going into a store, coupons tendered through your Garmin device in your car, and specialized shopping baskets in the stores to tender special offers.
  • Gaming.  Social gaming to enhance the shopping experience, but also unleashing a new opportunity to learn more about a consumer through their gaming behavior.
  • Mobile Applications. In 2011, 50% of the populations in modern trade countries will have smart phones.  Mobile applications in combination with 2-D bar codes can personalize the shopping experience in new ways.
  • 2-D Bar Codes.  Direct personalization of the shopping experience through 2-D barcodes to the shelf to either differentiate the product, communicate how to better use the product or connect with gaming to energize the shopping experience.
  • Virtual Currency.  Virtual currency linking the socialgraph, the gaming experiences and the new social commerce sites together. It is a new way of seeing what shoppers really value.  Check out the selling of Facebook credits at your Target or 7/11 stores.
  • Shopping with Friends. Consumers trust their friends.  They want to shop with their friends.  The Socialgraph enables this new type of shopping experience on Facebook or in a bricks and mortar experience.
  • Facebook as a Channel.  As the conversation is enhanced by commerce, companeis are adding storefronts to their Facebook pages.  Community recommendations by friends turns into shopping with friends for enthusiast purchases–hobbies,  cosmetics, toys–enhancing the customer experience.

Results from the Research

It has been fun to study.  Five months of research culminated last week at Altimeter Group’s sold out event: The Rise of Social Commerce.  In an attempt to understand the dawning of this new channel, I drove the research, developed the agenda and delivered the keynote (check it out at  I will publish the final report next week.
So you might ask, why is a supply chain gal like Lora Cecere interested in understanding the early days of Social Commerce?  The reason is simple. It is a exciting new world of possibilities. It is a both a new channel and a new way of doing business. It is reshaping value chains.  More than ever, retailers are now manufacturers and consumer products manufacturers can now sell directly to loyal shoppers.  The power is shifting to the shopper.  The digital consumer now has the power of the value chain in the palm of their hand, but more importantly, it allows a company to have a direct dialogue with a consumer in a more meaningful way.
I interviewed 53 companies, and as I did the interviews, I could see that they were at very different stages of development.  The progression of understanding follows four stages:

  • Let’s be Social.  In this stage, the organization is social for social’s sake.  The deployment of the technologies are primarily in marketing and the strategies are very brand-centered; and consequently, not very effective.
  • Enlightened Engagement.  As social maturity evolves, companies have new opportunities for direct dialogue.  It enables dialogue and customer service, new product launch, and community development.
  • Store of the Community.  Direct involvement of the community in product assortment, category definition, and demand shaping activities.
  • Frictionless Commerce. The redefinition of the shopping experience based on mobile, social and ecommerce capabilities that culminate in a TRUE cross-channel experience.

In the interviews, 20% of companies were actively working on social commerce strategies in 2010, but 83% have it on their agenda for 2011.  It is NET new spending driven by the line of business leaders.  Only 22% of companies have IT leading the charge.  However, only 5% of companies have active involvement by the supply chain leaders.  My goal is to help supply chain leaders capitalize on this opportunity.

Why should the Supply Chain Leader care?

While marketing colleagues are optimizing the tactics above, and defining new ways to use social to shape demand, promote awareness and energize the shopping experience, it unveils new opportunities for the supply chain team that I find that they are largely unaware of.

  •  Redefinition of customer service.  Organizations really don’t have customer service.  If you ask what does your customer service department do, you will find that most take orders.  There may be another department that receives customer complaints.  But, the ability to listen and learn from shoppers and enhance the shopping experience through the integration of social technologies–twitter feeds, Facebook fan comments, private networks, syndication of review data–allows a 360 degree view of the digital consumer for the first time.  The ability of the organization to think outside in and engage the shopper in a meaningful dialogue.  it unveils the opportunity to listen, to have a meaningful response and to learn.  For me, this is exciting.
  • New ways to sell to loyal shoppers.  The concept of anticipation of needs through the social graph is also fascinating to me.  Let me give you a personal example.  I am going to be a grandmother.  I am so excited to be a grandmother, but only my social connections know the full extent of my excitement.  For the first time in 20 years, I am a shopper for all things baby. I am also a quilter, a knitter, and an avid crafter.  Imagine how a smart company could use this information to anticipate and deliver some exciting offers to me to shape demand.  The socialgraph enables unique insight on changes in lifestyle, community sharing, and tailored offers.
  • Channel proliferation.  We have talked cross-channel for years; however, in my shopping experience, Nordstrom comes the closest to having a true cross-channel experience.  For most companies, the e-commerce and bricks and mortar channels are separate and distinct.  But now we have channel proliferation with M-commerce through mobile and social commerce through Facebook.  This channel proliferation will force companies to rethink their supply chains.  It will give rise to a new wave of  supply chain execution applications.  A new bar will need to be reached for inventory accuracy the need for a more real-time signal of inventory in the extended supply chain.  Removing data latency on inventory movement will become a new corporate focus.
  • A new need for new type of supply chain transparency.  When we communicate all the way to the shelf with the shopper, a new level of supply chain transparency is needed–especially on manufacturing and quality data– to convey the brand promise for health and wellness, food safety, organic, etc.  This driver will redefine manufacturing execution systems and force the integration of bill of material, process quality data, and specification information in a new way.  It will also tie manufacturing execution systems to supply visibility.  Supply chain execution will no longer JUST be about order fulfillment.


It is happening.  It is exciting, and can redefine value chains.  Unfortunately, for 95% of companies that I interviewed, it is ONLY happening in marketing.  Here is my plea.  Please rethink your supply chain strategies for 2011 to welcome the digital consumer.  We have talked about the need for shopper-centric supply chains for a decade.  Don’t pass up the opportunity to be a pioneer in making the dream a new reality.

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