Social commerce was premised on the idea that if you have a community of engaged users on a dynamic enough platform, somehow commerce will happen.
That’s the promise inherent in F Commerce and the culprit behind the ill-conceived notion that somehow every social act is measurable as a pipeline for a sale.
Having a business model that works economically for large engaged communities is one thing. Think Facebook and targeted ads. Old school media with deep social hooks. As these numbers from Ad Age show, it certainly works.
Having an environment where goods and services change hands is another thing altogether.
Facebook, with 800+ million connected people, has remarkably little commerce, if any. Funnels of influence and lead flow, brand building and reputation peddling but seemingly transactionless. I keep asking my networks for examples of commerce on Facebook and keep coming up empty.
The why of this is not obvious.
The social twins, community and commerce, should by nature work together. They certainly do in real life on the street level. Shopping is social by design. Malls as a concept do work.
But the logic of replicating what happens in the real world invariably fails on the social web. We need to think beyond the behavior to commerce itself, and whether a store and a discrete location are still a relevant definition of retail.
Facebook imagined that the pedestrian mall existed at the intersection of personal and fan pages on the social graph. This is the old retail crowd formula that location is everything and if you put up a store where there is qualified foot traffic and brand recognition, sales just happen.
Or so was the thinking.
Community designers know innately that you can’t bolt social loops onto commerce sites and expect them to be reborn as community. Most every legacy business and many start-ups have tried with little success.
It’s clear as well that you can’t bolt commerce onto community and expect a marketplace to materialize. The human dynamic that bonds offline around a sense of place and socialization is misapplied. Thinking about online as a virtual mirror of offline never works.
This doesn’t imply that social and transactions, commerce and community are disconnected. Not at all. Just ill-imagined.
We need to move past this narrow idea of social commerce and think of the web as one economy with funnels of community and commerce around niches of interests and intent.
My friend, Mark Essel and I, have long debated the community commerce dilemma. Communities of interest, no matter how dynamic, reject overt commerce as foreign even though off community commerce between members happens frequently.
With communities of interest, the intent is engagement in a many-to-many model. The open mike, town hall idea with handshakes and deals struck in the parking lot. With marketplaces, commerce is the intent, with a one-to-one model, where socialization and referrals happen outside of the community.
Think about the social design aspect of virtual worlds. It was all about place. We moved from place to place like wanderers through a desert, knocking on niche doors. This was community as a virtual world before a social web inhabited by real people.
Facebook, and AOL before it, define themselves as virtual places. As intact platforms. Gesture and engagement, socialization and commerce, referrals and transactions are all-inclusive.
That’s the wrong turn.
The only platform on the web is the web itself. Not Facebook nor even Disqus as the connector.
There are deep communities of engagement and interest like avc.com. Deep marketplaces like Kickstarter. But the commerce around communities happens elsewhere as does the community around marketplaces.
But both happen. Focused intent to engage around discussions or focused intent to buy are facets of the whole, which spread out like threads between our connected lives. Between an online catalog for the Gap and the approval of our friends on what clothes we buy.
This idea has been crystallizing as I’m reading ‘The Intention Economy’ by Doc Searls. The principal theme of the book, underneath imagining a new future, is that the web is about me. And you. And each of us individually on one platform that we all inhabit.
Products like engag.io attempt to put a moving lens on all of our engagements as we move around the web. They follow us, not us them.
The rash of flash popup sales sites like Shoplocket, are tying transactions to shares, inventing Sharing 2.0 as inclusive of commerce.
This points towards an idea that each of us carries a personalized Point of Sale system as a commercial mirror image to our social or community core.
This bridges not just the community and commerce paradigm but the off and online one as well.
When I think of huge brands like Nike with massive fan bases, both on and offline, I would bet that in the near future their connection to their customers will be just one click away from a sale wherever the fan might be. The store will be wherever the fan is and sharing will carry an embedded transaction.
I’ve believed for some time that community existed in the connecting thread between URLs and web places. In the tissue of the web and society itself.
There is truth to that but the dynamics of the web itself as one ‘place’ is more about community and commerce being wherever we happen to be. Individuals as a gyroscope tilting one way or another and carrying our connected social loops with us.
Technologists think about this as an open sourced web. Community designers think about this unfettered individualism and communities without walls.
Same belief. Different words. Both right on.
Gestures are the body language of the web.
The equivalent of the power of a glance. The roll of an eye. The shrug of a shoulder. The accents to talking and the rhythm to our words.
Facebook understood this early. They built a platform that encapsulated gestures as expressions through liking and sharing. Pure utterances of ‘yes’ around objects, mostly photos. Or cheerleading causes.
Brilliant actually. But their promise was bigger.
They understood the power of gestures as a dataset of engagement itself. As a variant of language.
The act of liking across the sweep of your interests was a funnel for personal information. The data fed the implicit social inference engine that personalized your news feed, hand delivered you ads and recommended people you should meet.
I buy into this idea of an implicitly road-mapped future completely– but it’s gone very stale.
Maybe there’s just too much noise but I think the problem goes deeper. Facebook’s taxonomy of gestures were too light and the data too devoid of context to really matter. The brevity of the expression isn’t the issue, it’s the limitation and core inflexibility of the gestures themselves.
The act of being liked today, to me, feels like a generational secret handshake from the past. Facebook is showing cracks and hints of mortality as the gestures themselves are trivialized and outdated.
My friend William Mougayar (@wmougayar), CEO of Engagio wrote a post this week on gestures as the lighter end of the hierarchy of engagement syntax on the web. It’s a great read. He sees the Facebook Like and a 1000-comment thread as the opposite ends of the engagement scale.
This is true certainly, but what’s true today for gestures may well be different tomorrow. Gestures as the body language of the social web are being reinvented as a key part of language with import, not just exclamations of core emotions.
Our canvas of gestures today, mostly Likes, thumbs up and emoticons, as cute as they are, are just too simple for the complexity of emotions and thoughts we need to express. New gestures are needed.
At a basic level, Disqus’s new Beta software is a step in this direction. The removal of ‘likes’, replacing them with ‘voting up’ comments within a conversation string, addresses this head on. It brings context to the gesture and makes the individual utterance part of a community action to vote rather than simply a back slap. It seems to be working.
Broader, more strategic strokes are looming in at least three areas.
1. Sharing 2.0
Mark Slater, CEO of Getabl talks about ‘Sharing 1.0” as the commoditizing of sharing as a gesture. When it becomes ubiquitous and simply a reflex, it is trivialized. Both less viral and less data viable. This is reality today.
My sense is that Sharing 2.0, will roll action and transactions into shares and links. Gestures, like shared links, will become social objects with transactions embedded. This could be the missing (transactional) link to the idea of social commerce.
It’s easy to imagine a shared commercial object, like an article of clothing from an apparel brand, being transactable wherever it is clicked. A shared gesture as commercial object redefining the idea of what channel means for retail. The store will simply be wherever the object is shared.
2. Gestures as shorthand for a language of engagement
Limited input devices, like mobile, will no longer restrict either the richness of the data captured or the value of the output.
I believe that within a few years, a natural Morse code will surface as a mobile syntax of the future. Just because the input is micro-sized doesn’t mean the conversation or engagement should be lessened.
The idea of big data pools driving implicitly driven lifestyles from a population using mobile devices feels imaginable and concrete.
3. Horizontal networks will stop masquerading as contextual communities
The old truism in marketing is that whenever you go from a general to a specific you usually fail. Those of us who have engineered brand and product line extensions know this to be true.
The dearth of context on the horizontal social graph, the thinness of gesturing as a language and the transactionless nature of Facebook specifically, have pushed the emergence of niche communities of interests and marketplaces like Etsy, Ravelry, even Wattpad. More are coming.
My belief is that as mobile-base gestures are devised, communities that are mobile first, that exist wherever you are will begin to develop.
This is all about technology catching up with human behavior.
In real life, gestures are key to communications.
Great communicators, sales people and performers are as much artists of presentation as of content. Watching a movie without sound or people on the street in a different country tells this story well.
The crux of this stems from the reality that the web is about people. Not people online in some virtual world. Just people with extended behaviors from everyday life.
The more the on and offline borders blur, the more true this becomes. And the more there is a pent up need for companies and apps to crack the gesturing code.
This is not an idea in search of a market. I think very much a market in need of an means of expression.
Some truths bear repeating and this is certainly one. A number of events over the past week inspired me to write this post.
First some context.
Discovering the value chain between customer and company is what successful business people do every day. They fill endless whiteboards, figuring out who they are, what their customers value and how to deepen this connection.
Pre the real-time web, this process was predominantly company centric. The center of the marketing bullseye was the company or product, with circles of distribution, partnerships and campaigns pushing the customer touch points out to the store or marketplace or channel.
This was a loud world of exported interrupt messages. It was difficult and expensive to manage.
The game has changed; so have the rules. The customer, empowered by the breadth of purchasing choices and the power of personal referrals, is at the center of the commercial world and the marketing bullseye. Winning, of course, is still measured the same way, but the path to get there is strikingly new and uncharted.
I’m frequently in discussions around social media and commerce and regardless of context, the crux is always connected to this power shift. Once you acknowledge that the nexus of power has jumped from the company to the customer, all the permutations and the logistical noise around social tools fall into place. Referral-based selling, community dynamics, customer support morphed into sales, and social commerce all stem back to this core shift of control and value.
Realistically, does the customer control the company and dictate pricing?
Not overtly of course but pragmatically and directionally, most certainly. With unlimited access to products though an endless array of channels, the customer has the choice to buy wherever and from whomever they want, to tell their friends to buy or not, and publish their impressions and recommendations to the world. Social nets are the amplifiers for both customer satisfaction and discontent.
If you want to build and grow your business, whether you are a start-up or a global brand, you need to pay attention and pay homage to your customer as key. You need to hand them the microphone. And you need to listen hard.
The benefits embracing this are significant when they work. The best example of doing this right from a customer centric support perspective is Apple.
One of the jokes in the blogs is that Apple makes crappy products but has the best support on the planet. I disagree but it makes a point.
I think Apple makes life changing products but their support in store, on the phone on and online is part of the product experience and unchallenged as the best. We like to buy their products, line up to buy new ones at premium prices. Stopping at the Apple store to resolve an issue and shop is part of life. Apple customers are their marketers, their sales force and their brand ambassadors.
One of the rules of marketing is that you can never stop communicating the most important facts. The realities of a customer-centric world prove this well.
A few examples.
A comment string on AVC.com about the new Gary Vaynerchuk book the other day found me in debate with Phil Sugar, a sharp marketing and business veteran who was quite vehement that companies who cared about their customers always provided a call in number with a human being to talk to.
Yes, it’s great to call the company, not so much if it’s a call center in Asia with an hour wait time and untrained employees. This is not about phones. Nor social tools to communicate. We don’t need to call the company; we need support and a system that respects the consumer pre and post sales.
You need an ecosystem of product and support that starts with a customer-centric premise. With this as the golden rule, not only do product and support exist on the same continuum, but also customer support and the customers themselves become the sales force for the company at their Apple-style best.
Phil and I were agreeing at the core but from different vantage points.
Donna White, a top tier and category-defining executive recruiter on the same comment string, reported that at a tech pitch event in Los Angeles she attended, there were a handful of startups whose disruptive strategy was by “being user/customer-centric”. Who would have thought that viewing the world as customer driven was disruptive? Proves that what you thought everyone understood simply isn’t and still new in many places.
And the next day at Media Summit 2011 in New York , media execs from Verizon, Starz and HBO on a panel argued about whether the pendulum of control in TV today was swinging toward content owners or distribution.
I asked whether the customer wasn’t in control? Whether the population growing up with webTV not cable, who never had a landline and just want to buy and watch what they want whenever they want to didn’t hold the true baton of power?
Their answers were “Yes, but…”. Big media certainly loves their fans and provides them a social playground of Twitter feeds and Facebook pages. But their model is stuck in the past and they can’t see past it. Social, for them, is a campaign, an ameliorator and a pacifier. Eventually this lack of a customer centric strategy will backfire.
The publication of Gary Vaynerchuk’s new book “The Thank You Economy” corresponds perfectly with this idea. Not only is his book a manifesto of the seismic shift—amongst other things–towards a customer-centric society, but Gary himself, his story and his business success is a living, breathing exemplar of this idea.
Business is complex. Understanding the social web is inspiring but dauntingly interconnected and overwhelming at times. And building a communications platform for your customers is non trivial.
But if you push the complexity aside, rise above the tactics and objections and start with the value chain of customer not company as key, things fall into place.
How you communicate. How you sell. How you determine pricing and support. Think customer first and you have a point of view to make decisions against .
There’s no guarantee for business success. Building community. Empowering your customer. All this is hard. Even when everything is perfect, there is luck and magic that can’t be planned for nor bought nor bet on.
But I can’t imagine any successful business starting today that doesn’t embrace this reality of a customer-centric world. Nor any successful company looking for expansion that doesn’t surface their customers themselves as the key to growth. Putting the value on what you provide to your customers and letting them speak for themselves, is no guarantee, but the best bet on the future of your company that you can make.
2010 was a great year. Not perfect nor easy, but really inspiring and productive.
These are my top takeaways from last year…in life and in business…and what I’ll carry into 2011.
1. Stretch your vision, think big…but sweat every detail. Execution is everything.
Strategy and vision are what starts the ball rolling but execution is where genius finds root and creates the new future. And it happens every single day for the life of your company.
2. Everything is iterative in business and life.
There is no perfection, no absolute, no end point. Internalizing that and still driving for perfection is a key factor to balancing working like a demon with maniacal focus but with manageable stress.
3. Inventing something new is not essential to create value and win big. Tilting the spectrum to look at basic commerce and connections in unique, social, creative and aggressive ways is.
Look hard at Gilt Groupe and Groupon. At their core, they have not created a new genre. Far from it. But with brilliant brand marketing for Gilt and executional excellence on a simple social idea for Groupon, these companies have redefined the ageless concepts of email database marketing and brand integrity.
They are both creative execution on a core idea with a personal brand twist at its best.
4. Technology is no longer a genre or a business type. Simply the plumbing for everything we do. This is especially true if you or your business have embraced the social web, which, of course, you must.
We all live at the intersection of the web and the real world. In fact, the real world ‘is’ that intersection. Successful ideas or products or companies have to empower in some way, not just provide technological plugs. Technology like social savvy are tools, not the end game in themselves.
Apple exemplified this for the world and used technology to empower new human capabilities. But every company whether you make collective check-in services for connected TV, raw juices, organic winery tours in Sicily, or artisanal salsa in Brooklyn is now in the same place…and on a level playing field. The same upside and same challenges to harness technology to create value and a community applies to all equally now.
5. Scarcity is dead as a business model. Ubiquity is the norm. Brand value is essential.
Pre the global and real-time and social web, creating scarcity was a core component of business value. Exclusiveness. Control of supply and demand. Information packaging and control. All of this is now gone as a value scale. Information and markets and access are everywhere. Omnipresence and ubiquity are the new norms.
And in this world where everything is available to everyone all the time, brand value and social connections are more key than ever before. This is the beginning of a new social marketing ecosystem that is just being defined.
6. Do what you love…which is usually what you are good at. This almost always works out. If it doesn’t, something is wrong.
And while this may have been true always, it is much moreso in an iterative social business environment where the honesty and passion of how you communicate is as important as what. You can only really excel at what you truly believe in. The rules have changed and core connections with work and yourself seem more visceral then ever.
I thank my clients for the privilege of working with them and creatively solving some unique business opportunities. We pondered pieces of each of these six ideas and made them unique to their businesses.
And a special thanks to my friends and new blog friendships from a host of online communities, especially, my daily conversation with the community at AVC.com.
Happy New Year! It’s going to be a good one.
As Naked Wines CEO Rowan Gormley puts it…”Some businesses just couldn’t exist without social media.”
Certainly Naked Wines is one of those. It’s a refreshingly disruptive idea for the online wine business, creating a community empowered value chain from the vineyard to consumer. The results are large discounts, next day convenience and a true partnership with the winemakers.
Most social commerce solutions today are global brands or e-businesses layering in a social component, usually through Facebook to add traffic to an established business model. Interesting, but a bolt-on and rarely social at their core. Naked is decidedly different.
Naked Wines DNA is social by design
Naked Wines uses social media as an intrinsic design element to create something new and unique to the needs of wine buyers. There are Facebook fans and Twitter followers aplenty, but this is not an add-on to the big social networks. It’s an open web community with a referral-based economy and customer funded investments in their own supply chain of mostly artisanal vineyards. Socialization is tied to the commerce model itself, not an extension of Facebook ‘Likes’.
What wine consumers want, and what Naked Wines seems to have tapped into, is a community that is based on personal referrals, a social relationship with the producers themselves, resulting in significant discounts and a sense of control. They’ve skirted the legacy wine distribution and ratings system hierarchy by creating their own customer-driven system.
Most online wine clubs are based on discounts and remainder sales. Naked Wines is different. It starts with the concept of community that bridges both consumer and winemaker. The community chooses the wines, invests in the winemakers and sets the discount sales price. All with a bias towards the artisanal winemaker.
It started with a decision do something completely different
Per Rowan, CEO of Naked Wines, back in 2008, a group of 12 friends left Virgin Wines in the UK to do something brand new in the wine business. They had three guiding principals which are still the keys to decision-making today:
- Create a virtuous circle, where customers helped winemakers who in return helped the customers
- Be “Naked”–Be completely transparent (beyond the point of comfort) to the customers and the winemakers.
- Have the fastest cheapest delivery in the UK (£4.99 for next day)
The Naked Wines concept
The service is remarkably simple as a general concept.
Invest in independent wine makers and get preferential treatment. Commit to buy early and get better prices. Then wrap these two age-old concepts in a social community, with complete transparency and you start to get Naked’s social commerce model.
How it works
Angels are ‘investors’ and the core of the model. It’s a really simple process. They ‘invest’ only £20 a month. In exchange, they get a 33% discount off list price plus next day delivery. Angels also choose the wines that get sold—through tastings, something seen or heard about and as part of a ratings group.
Kind of like a democratic inventory control by club members and very close to a pure referral-based model. You don’t have to be an Angel to purchase from Naked, but discounts are not as steep.
Angels today invest between £600k and £800k a month. This supports the winemakers that sell wine through Naked. The funds are multipurpose–from a salary for the winemaker to purchasing grapes and barrels to covering the winery and dry goods costs. The Angel fund is the currency for the model and acts as a community bank for the entire chain of supply and demand.
Wine economics are messy and ripe for a change
Approximately 30% of the cost of a bottle is for making the wine. As much for taxes and the remaining big chunk for marketing and distribution. By pre-buying the wine before production, 25% to 65% of the cost is removed. This is where the margin for the business and the discounts or the customers comes from.
The winemaker is bankrolled to produce the wine, guaranteed a per bottle price, profitable at a lower cost and motivated to socialize with the buyers on the site to stimulate sales. At it’s best, wine is made and sold at a profit with little or no risk.
A smart twist is that the winemaker can sell the same product through traditional markets. The higher price by comparison with Naked’s price, further accentuates the value of Naked’s community model. Clever marketing at its best.
Community basics
Naked Wines website intertwines community and commerce. Social referral systems and reviews, ‘those who liked that, liked this’, access to the winemakers, and an open discussion on quality, likes and appraisals. Where else do you see a return policy that says…if you don’t like it, just return it. And if you have less than five bottles of the order left, just give it away at no charge. Wallmart this isn’t!
Marketing to date has been almost entirely “STL” or Share the Love. No cost viral loops through word-of-mouth, Facebook and Twitter.
Check out their online community. I would join for certain if I lived in the UK.
Some business metrics
Rowan shared some general numbers with me. Since launch, just less than two years they’ve recruited 100,000 new customers in the UK. They are on track to do about 1.7 million orders bringing in £9m sales in 2010. Their goal is triple in size in three years. Really impressive stats.
Many web apps would be happy to simply have 100,000 active users, not to mention paying customers in that time frame.
I really like this model. Bold. Unique. Socially powered at its core. Born out of a love of wine, a belief in the small winemaker and a leap to give the community control. A simple idea but not trivial to pull off. It’s never easy to take a big principal and make it executionally natural and easy-to-use. Naked Wines is on to something here and the economics speak for themselves.
Wrapping up
Naked’s business model becomes more efficient and more profitable as it scales. To meet their goal of tripling in size means supercharging the viral loop. Funding advertising I bet as well. And increasing the pool of vineyards and Angels multiple fold.
The challenge for Naked will be getting larger and still being community driven. Scale is the unchartered territory of all community commerce plays and no-one knows how big a community can get and still function. But they certainly have lots of room to grow.
My completely unverified crystal ball says that niche geographical communities or a franchise model with central warehouses and next day deliveries are coming in other areas and countries. There is no shortage of areas that would relish having community-driven commerce around artisanal wines.
If I’m right…and who knows…I hope that NYC is next.
I love big ideas that deliver value, disrupt the status quo and put power and choice in the hands of the consumer. And I really love the idea of ordering discounted wines from artisanal vineyards recommended by friends that show up with no fuss on my doorstep, the next day.
