A recent article by Techcrunch revealed that Facebook Shares are worth nearly three times as much as Tweets when it comes to social commerce. After using both Facebook and Twitter for more than a year, we at Zuupy do not find the statistics surprising, considering that Facebook has the significant advantage of leveraging on our real-life social graph to empower our purchases while Twitter merely relies on our interest graph. Alas, for Twitter, we are still more likely to trust a friend than an industrial expert or celebrity.

One implication of these findings is that Tweets will be perceived as less valuable as social currency. The reason is pretty obvious: the Twitter experience is horrid. First, for professional networking, Twitter generally comprises a body of self-serving broadcasters who are constantly pushing out content of their own and increase their follower count without any intention whatsoever to engage with their followers. Second, the text-only, 140-character nature of Twitter lost its novelty after a while, and, despite recent attempts to support multimedia from Twitter.com itself, it is still a slow and cumbersome process to consume content on Twitter. Even the infamous one-liner updates achieved via Facebook Likes monetize better than Tweets.

The lesson for us is clear: focus on Facebook first, and then explore Twitter. Google recently announced its social search feature, which, although more focused on Twitter than Facebook (Facebook profiles are not crawlable after all), underscores the importance of the social graph in empowering search results. In general, especially with consumers, “Facebook is the people you went to high school with. Twitter is the people you wish you went to high school with.”

Also, with recent studies showing that Facebook social commerce is really about deals and not engagement, the lesson for us is perhaps to focus on Facebook and deals simultaneously. Indeed, the launch of our latest competitor, CrowdBunny, provides testament to the opportunities available in the area of Facebook group buying. We have launched a couple of months before them, and we are just excited to see some validation in terms of competitors entering the space. We see social commerce as focusing on Facebook and group deals in the near future, as evidenced by our Facebook group buying solution. What do you think social commerce will look like in the near future?

One of the most popular definitions of social commerce is that it is about consumers helping one another make better buying decisions (see a rather comprehensive list of definitions here). This definition seems to suggest that social commerce is a social movement based on altruism and common benefit. The question to ask is whether the explosive growth of social commerce is even driven by this so-called digital altruism or actually fueled by selfish consumers using social media as a facilitative technology to get what they want.

One of the clearest examples of “selfish” social commerce is group-buying websites, like Groupon. While Groupon itself may not be considered social, it is no secret that deals are often spread via social integrations on the Groupon website, allowing consumers to share deals on Facebook and Twitter. This form of sharing is merely self-serving, since deals are only unlocked if enough people commit to the deal. Conversely, collaborative social commerce services (or “altruistic” social commerce), like Polyvore and ShopSocial.ly, are centered on community-style interactions that present no immediate direct benefit to the contributor.

It is vital to distinguish between the two forms of social commerce, as lumping them together under one umbrella may paint an inaccurate picture of what precisely is growing explosively. Though other forms of social commerce are successful in their right, the group-buying model seems to be the most successful. The possible lesson for all is that consumers care for themselves first and foremost, thus ecommerce must be persistently focused on helping consumers realize their own selfish agendas. Social sharing, communities, and fan pages would only work on a big scale if there is an immediate huge benefit to consumers.

The concept of leveraging on existing customers and advocates to drive online retail sales has been explored extensively in the application of recommendation/cross-selling algorithms, social media sharing tools, onsite consumer reviews, and wish-lists as well as recent innovations, such as the Facebook’s Like button. With cross-selling specifically, shoppers can gain access to starting points or suggested items for consideration, removing some cognitive costs and mental barriers-to-buy. Introducing the “social” aspect into cross-selling provides a credible basis for the cross-sell and thus creates trust, in that the source of endorsement is people within the shoppers’ social circle.

Prior to the introduction of open social network APIs (application programming interfaces), to leverage on an existing customer base’s personal identities to drive sales has been difficult, involving painful registration processes and additional headaches about remembering yet another username and password. However, Facebook’s introduction of its Open Graph API has now enabled online retailers and content publishers on the web to socialize their offerings with simple integrations, which, on the consumer’s end, means one-click functionalities (the Like button being the most prominent).

At Zuupy, we have been exploring the possibilities of taking portable social identities to the next level with deep two-way integration with Facebook, social cross-selling features, and facilitating product and brand conversations that drive conversions. Social cross-selling is the overarching objective of what we do – a new paradigm that centers on creating conversations to optimize the sales funnel and accelerate sales cycles, instead of the traditional social media paradigm of using conversations to create “engagement” or “brand awareness.” Below are some suggestions on how you can leverage Facebook’s new API to create dramatically-enhanced shopping experiences using instant personalization:

1. Leverage on product recommendations
Putting social media sharing buttons on a product page and then hoping for healthy, sustainable word-of-mouth marketing activity to happen is negligent at best. With Facebook’s Open Graph API, the opportunity to capture these product recommendations, as well as the valuable comments and advice attached to the recommendations, and display them on the storefront is increasingly obvious. Archiving user-generated content for mass consumption is one of the easiest ways to provide social proof; besides, the more content is accumulated on the retail store, the more SEO and research/purchase planning value said retail store holds.

2. Encourage social purchase sharing
Attaching buyer identities to specific products is powerful, because a purchase is unequivocal in conveying social endorsement: the buyer has actually paid money for the product. Furthermore, the purchaser is more likely to have first-hand knowledge about the product than a non-purchaser. In a way, purchase sharing holds greater substance than mere product recommendations or Likes. The limitations of social purchase sharing are two-fold: privacy and the critical mass issue. Most consumers are unlikely to want to share their purchases, and, even if they do, possibly none of the people in our social circle (the people whose references we trust) happens to have shopped in a given online store, resulting in a dearth of data. However, with social media norms going mainstream, it is expected that consumers will be more open to sharing their purchases and shopping destinations, which in turn would attract their friends to said destinations to make and share their own purchases.

3. Enable solicited social reviews
Ratings and reviews are first-generation social commerce tools that are used to provide social proof and credibility for a certain product or online store. The opportunity offered by Facebook’s Open Graph API is to infuse greater trust, targeting, and contextual relevance into the process: allowing reviews to be requested for from someone known and trusted, instead of showing random reviews from anonymous writers whose knowledge, background, and motive are likely to be questionable. Requesting a review from within one’s social graph also solves the contextual relevance and targeting issue. Unsolicited product reviews are likely to be seen as obtrusive or abrupt, especially on social networks where the prevailing purpose is to socialize.

Of course, these social cross-selling suggestions should be applied in the context of ordinary cross-selling good practices. With social media going mainstream and becoming increasingly open, online retailers can expect that the opportunities to socialize the storefront to increase over time. Notable merchants are already taking bold steps in socializing their stores (here and here), so what are the rest of us waiting for?

Social colonization is a term coined by Jeremiah Owyang to describe the gradual yet increasingly-ubiquitous socialization of the web, supported by technologies like Facebook’s Open Graph API and OpenID. Jeremiah predicted that, essentially, social will be the web itself in the near future, and our social graph – or the cumulative network of people connected to us – will be an integral part of our web experiences. A simple observation of our own web experiences today would conform to this picture, but the social web is not without its skeptics. Marcelo Calbucci has argued that products limited to or based primarily on the social graph will not work, and I have also previously explored some possible pitfalls of social recommendations.

I believe that there is immense value in exploiting the social graph of consumers to create instant familiarity and significantly increase engagement, but it is crucial to understand its limitations in order to mitigate them. Here are some of its disadvantages worth noting:

As the social graph becomes increasingly commonplace, its value becomes increasingly diluted. While slapping on a friend’s name on content might have helped to increase engagement in the past, consumers are gradually immune to such friend bait due in part to the sheer volume of activities coming from within the social graph. Social used to be the best thing since sliced bread because it pandered to the needs of the exhibitionistic as well as the voyeuristic, creating a mutually-reinforcing, perpetually-growing supply-demand cycle. It was personal, and it allowed us to learn a lot about the people close to us using very little effort. However, it also allowed people to actively share with very little effort, resulting in a low signal-to-noise ratio and diluting the average endorsement effect of each activity shared. It is, after all, human nature to equate rarity to value.

Conversely, our social graphs are sometimes just too small to be useful. Mobilizing the social graph for active sharing, i.e. chronicling who read what documents and bought what items, may be intriguing to consumers, if not helpful, but the social graph may prove to be less useful for passive sharing. Passive sharing basically involves the recipient of information requesting information from her social graph: “What outfit should I get for tomorrow’s concert?” The more niche or specific the nature of the information queried (e.g. “Who is the best divorce lawyer in Singapore?”), the less likely are our constrained social graphs going to have answers. Broadening the definition of “social graph” is not helpful either; the further we move away from our inner, trusted social circle, the less trusted are its people.

There is also evidence suggesting that we are placing less trust in our friends and peers over time. One possible reason for this trend is that the definition of “friend” may have undergone systematic bastardization over time via the liberal use of the term by social media to describe people who are somehow connected to us, no matter how superficially (remember when the term “friends” referred to people with whom we share our best and worst moments, not random Twitter followers?). Another possible reason is that we are indeed placing less trust in our friends and peers less because of suspected puppeteering and mobilization of our friends as vehicles to push marketing messages by social media marketers. The unique value proposition of social graph-based services is that they tap on pre-existing links of trust to drive action, thus any evidence of a decline in peer influence would render said services fundamentally irrelevant over time.

Our friends are not likely to be the most reliable source of information. Even if we trust our friends, there is still the issue of reliability that impairs how useful our social graph can really be. Reliability and trust are two different concepts, as I have explained here. There is a strong selection bias within our social graph, as we primarily only associate with people who are like us or whom we like. There are many activities from which we can benefit a whole lot more by infusing some diversity, such as, say, finding solutions to a mathematical problem and sourcing for holiday ideas. Eventually, as the excitement surrounding social colonization subsides, so will our artificially-inflated expectations of the social graph, as we will increasingly turn to the combined wisdom of friendsourcing and crowdsourcing.

What do you think of social colonization and the social graph? Do you buy the concept of instant personalization using the social graph as frequently touted by Facebook’s CEO Mark Zuckerberg? Do leave a comment below; I would really like to hear what you think.

It is often claimed that ratings and reviews are increasingly losing appeal among online retailers in favor of more trendy, state-of-the-art ecommerce applications that tap on the “social graph” to deliver “instant personalization.” Trust is often cited as one of the primary reasons that ratings and reviews are becoming less relevant – there is limited value in anecdotes and numerical ratings from anonymous reviewers, whose authenticity cannot be verified. Furthermore, just like customer testimonials, consumer reviews are almost always cherry-picked to favor positive reviews. Ratings and reviews vendors, such as Bazaarvoice and PowerReviews, allow online retailers to moderate user-generated content as they wish.

However, even if we eliminate the trust issue, they suffer from another important drawback: reliability. At the risk of unduly dwelling into semantics, there is a subtle but important distinction between trust and reliability. The former relates to honesty and integrity (“Do you mean what you say?”), while the latter relates to usefulness and value (“Even if you mean what you say, do you know what you are talking about?”).

Consider the following arguments against the reliability of ratings and reviews:

By design, reviewers are chosen from an unrepresentative sample, resulting in selection bias. Ordinarily, there is no incentive to write reviews; the process is cumbersome, the effort required is onerous, and there is no instant gratification or reward. The only people who would normally write reviews are those motivated by emotional or irrational reactions so extreme that they warrant a public sharing of experiences. Consumers are more motivated to share their opinions on things that they find extremely good or bad, and they avoid broadcasting banal and uninteresting trivia. For a consumer doing purchase planning, however, this polar distribution of reviews is unhelpful because mediocre reviews (which are also important information) are underrepresented. Worst of all, the remaining sample of reviews is often not a product of objectivity, rationality, and good consumer sense.

The typical consumer is not unaffected by the bandwagon effect. Herd instinct is a prevalent, subconscious trait. It gives people a sense of certainty and safety to know that whatever they do or say has some sort of alignment with prevalent practice. Thus, if consumers are given the liberty to view what others have said in their ratings and reviews (which they are), they are likely to be swayed by others, despite originally having divergent views, especially if others are perceived to be more well-reasoned or convincing in their views (i.e. authority bias). This is a common crowdsourcing pitfall: we are heavily influenced by the behavior of the crowd. Even if we usually avoid the majority view, we cannot be sure that we are not subconsciously or deliberately acting against the majority’s behavior in an attempt to artificially differentiate ourselves.

Consumers suffer from choice-supportive bias and post-purchase rationalization. Consumers are prone to justifying purchase decisions even though they may realize that the decisions were poor. This behavior is not surprising, since acknowledging the imprudence or redundancy of a purchase implies that one is an incompetent and/or irrational shopper. Such post-purchase rationalization is further magnified if the purchase was in fact well-researched, expensive, or stubbornly made against the advice of others. People often want to think that sunk cost – especially if it is great – has some sort of benefit or intangible reward. Some examples include pursuing expensive degrees, going on mediocre premium holidays, and buying overpriced clothes.

Reviewers may be in a position of conflict of interest. Online retailers commonly solicit reviews from their customers to help kick-start or encourage content creation on their websites. Keeping in mind the original lack of incentive to write reviews, online retailers remedy the situation by offering discounts, coupons, and special offers to entice participation (a practice adopted from how businesses conduct focus groups perhaps). As a result, reviewers are bestowed with the moral obligation to say favorable things using thesaurus-level, meticulously-manicured language. The resultant artificial form of communication is likely to be abhorred by consumers looking for genuine data points to guide their purchase decision-making process.

At its root, the concept of ratings and reviews has fundamental structural issues, due in part to technological limitations and commercial reasons. Ratings and reviews are an integral, consumerist component of the purchase decision-making process; their purpose is to provide consumers with adequate, trusted, and reliable information. They have not been the perfect solution but have perhaps been the best we have so far. Now, with the prevalence of portable social identities, mobile internet, and broadband internet, perhaps it is timely to adopt a new paradigm, a new strategy that incorporates a more targeted, meaningful “social” element to drive consumerism.

Of course, new social commerce solutions are not foolproof. However, given the vast potential of social commerce, it is ultimately not a poor decision to explore how it can possibly transform consumer experience, multiply sales, and build brand loyalty.

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