Session 4: Social Commerce


– Why social networks are important to commerce

– Why merchants (should) care

– Who’s leading and lagging

– What communities are ready to be commerce enabled and how will that happen

Facebook, LinkedIn and even polarizing political pundit Glenn Beck as drivers of social commerce were explored in the first session of Day 2.

“Social commerce, I think, is defined by two things,” said Market Platform Dynamics CEO Karen Webster. “Connecting people where they buy…  I think letting people buy where they connect is really about commerce on Facebook.”

She cited a Forrester Research report revealing that Americans now spend twice the amount of time on Facebook as they do on the top 500 eTail sites.

“One in every 11 human beings is on Facebook,” she continued. “The average user spends approximately 15 hours per month on Facebook per month – one out every six minutes online. And the average user visits the site 40 times per month. It’s cannibalizing time spent other places on the Web.”

Still, Webster noted that quantifying the “virality” of a Facebook community is a challenge.

“Just having Facebook and bunch of technologies does not a social commerce platform make,” she said. “It’s not about channeling to drive commerce. That’s the silver bullet that needs to be cracked.”

The key is if “liking” a merchant’s Facebook page translates into sales, Webster continued.

“It starts with the idea of having a plausible promise – an offer that’s good enough for the group and individuals to want and a threshold that’s actually reasonable enough to achieve it,” she said. “That would reduce the risk for the individual and the group, so the risk for me and my friends to take action is minimized.”

The strength of the social bond is the key driver of traffic, Webster noted. Like at Tupperware parties from decades past, friends don’t want to disappoint the host by not participating.

She also discussed Market Platform Dynamic’s (MPD) own social commerce lab on Facebook, which sold consumer electronics to sports and cooking items. It achieved conversions ranging up to 22.3 percent on a modest ad budget of $50 a day. Webster said she was surprised that many bought from a brand they had never heard of and that they did not have to drastically discount the items in order to drive sales. MPD’s own social commerce lab was able to ignite viral sharing, as evidenced by the fact at least 50 percent of traffic for most offers came from inside Facebook (e.g. not from ads).

Looking at social commerce in a B2B online environment was LinkedIn Sr. Product Manager Eric Kowalchyk. He revealed that LinkedIn today has more than 100 million members, with at least one new user joining the network each second. LinkedIn receives over 60 million unique visits a month, and 50 percent of members now come from outside the United States. 

Responsible for LinkedIn’s monetization platform and converting free to paid users, Kowalchyk stated his belief that social commerce and B2B is one of the largest untapped opportunities available today. However, he felt the current definition of social commerce needs to be reworked.

“Social commerce is an exchange of value influenced by people,” he said. “It implies value is created only through a directly monetized transaction. I don’t think that is correct. It’s all about understanding big data and relationships.”

He said that social commerce is also about understanding human behavior, pointing to Foursquare’s success in driving user engagement and being able to provide important user demographics for merchants.

For LinkedIn, Kowalchyk explained that accepting a simple connection request or writing a recommendation for a colleague, for instance, are two free user behaviors that are available “and could some way influence each others’ purchase behavior.” On Facebook, he said that more than 30 billion pieces of content (Web links, news, photos, etc) are shared each month.

“We are living, breathing data machines,” he said. “We produce more data that we could store. Data gives companies a competitive advantage.”

He cited Amazon’s user product recommendation system, saying that 30 percent of sales were driven by this data-based program. 

Yet he expressed his surprise that companies still had very few staff members dedicated to social commerce efforts. Social commerce B2B still has yet to fully ignite in that the people involved in social commerce at different organizations don’t know each other, Kowalchyk notes in the clip below:


Proving that an entire community can be a powerful driver of commerce was Keith Ferry, president of Glenn Beck’s eCommerce site, Markdown. Beck has 10 million radio listeners and the third most popular show on FOX News, according to Ferry. He and his team, who launched Markdown in late May 2011, offer one to two voucher deals a week.

“We touch a loyal audience in a lot of ways, but the one audience we weren’t touching was an eCommerce audience,” he said. “We have that power. How do we tap into that? That’s where Markdown came from.”

In the clip below, Ferry tells the story of the time Beck forgot his wife’s wedding dress to illustrate the level of engagement the political pundit has with his followers:


Though he expressed admiration for daily deals site pioneers Groupon and LivingSocial, Ferry emphasized that Markdown wasn’t trying to mimic its predecessors.

“We have a big middle America demographic – the people most affected by the economy today. We thought a flash discount site was a perfect fit for an audience looking to extend the value of their dollar,” he said.

Thus instead of offering teeth-whitening or spa packages, Markdown focuses on the specific interests of Glenn Beck’s audience. A recent NASCAR promotion on Markdown even outperformed similar deals that ran on Groupon and LivingSocial, Ferry said.

He also explained that Markdown works with merchants who can’t afford to do a 50/50 revenue deal with other daily deals site. He said that in some cases Markdown may only take 10 percent when partnering with merchants who have been struggling to get back on their feet during these difficult economic times.

Also presenting was Nancy Gordon, COO of digital commerce service SWIFT EXCHANGE. She addressed the $50 billion in “buried treasure” in rewards currency and how it could ignite commerce.

“This currency is sitting in people’s wallets but hard for them to spend,” she said. “It’s not a part of the everyday cycle. Every program has nuances, so how do you create an environment that provides consumers with flexibility but not one where brands are forced into unprofitable behavior?”

As a solution, she pointed to how American Express and now Chase have enabled cardholders to redeem rewards points on Amazon, a site where people regularly shop. (Read more)

She also spoke to the lack of standardization in terms of how the sector is regulated.

“It’s a $50 billion industry,” she said. “The solar and toy industries are both $50 billion. This is a big industry that’s gone unnoticed.”

While the card industry is a two-sided platform, Gordon said the rewards industry is a three-sided platform comprising issuers, consumers and merchants. A lingering  challenge is getting all these parties connected both on the horizontal and vertical level.

“You have the ability to bring together participants for the betterment of everybody,” she said. “You don’t need to add money to this ecosystem. You just need to redistribute it so it’s financially sound. It’s modular, it’s scalable, and it is three-dimensional. The pot of gold is sitting in front of us. We just need a way for users to extract from it.”

Finally, Jeff Sullivan (Managing Director, Europe for TrialPay) spoke to advertising techniques for social commerce ventures. A key strategy, TriaPay has found, is to present consumers with relevant promotions before, during and after transactions. A pre-transaction ad might prompt gamers to use their virtual currency winnings to make an offline purchase, such as for movie tickets. In-transaction promotion might include a banner ad for a restaurant gift certificate while the user is in the middle of checkout for airline tickets. One post-transaction offline promotion TrialPay ran for Gap on sites like Fandango generated $1 million in transactionally targeted sales for Gap in 24 hours.


This article is part of the Innovation Rumble at Harvard Round 2 Briefing Room. See the rest of this briefing room



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.

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