Leveraging Social Media To Create Social Commerce

by Cory Treffiletti, May 21, 2008, 10:15 AM

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If you recall, way back in November of last year, I laid out my predictions for 2008. Among those predictions, of which I have to say I'm not doing too well, there was one for the "killer app" in social media -- and I want to revisit that topic because I'm still flabbergasted that no one has come up with it yet!

The beauty of social media lies in the aggregation of the everyday consumer. Most of social media is currently being used as a networking or a (as the name implies) social interaction tool. I use it for keeping in touch with old friends and my extended business network, but the opportunity lies in going far beyond social interaction. How come no one has cracked the code or determined the application of social interactions for creating commerce?

Social media represents the digital equivalent of multilevel marketing like Amway, Mary Kay and the Avon lady, as well as the consumer response to stores like Costco and BJ's Warehouse. If a group of people can find one another and leverage their extended network, they can feasibly buy products in bulk and retain savings they never would have seen on their own. It happens all the time in buying clubs, with stores like Costco going direct to the manufacturer and buying products in bulk, selling these products in bulk to the consumer with a marginal markup, saving money for the consumer and creating an immediate market for the manufacturer. But what if we went in reverse and created a marketplace where like-minded consumers could seek out one another through a social interface and band together to purchase products from the manufacturers, effectively cutting out the middle man and negotiating their own pricing?

Couldn't it be feasible for a group of 100 or more consumers looking to buy a plasma TV to band together in a virtual marketplace and purchase 100 plasma TVs at a discount directly from Samsung ? The only true issue would be fulfillment, because I know for a fact there are many ways to aggregate the payment. But 'm sure someone much smarter than me could create the marketplace for fulfillment and send those TVs to the right customers.

This model could be applied to any dry goods, and even possibly to other goods. Why couldn't farmers create social media groups to organize a virtual farmers market online? What's to stop a carpenter's union from organizing through a social media platform and setting rates for work in local markets, even tapping into services such as Yelp and Angie's List for referrals and memberships? What about shopping for health insurance by creating a formalized group that leverages independent people together for a larger group benefit?

I foresee that social media has to be used for something more than being social, or at the very least it needs to find life for socializing business and commerce. We hear lots of intelligentsia who pontificate on the "social graph" and all its applications for business, but I rarely hear anything that the common consumer can understand. To be honest, I can barely understand it myself! I want someone to come along and create a tool or a service like the one I described above, and I want it to be easy.

Social media has a built in marketing tool with the news feed in Facebook and other similar developments on other platforms, so it seems inevitable that a tool such as this would be of infinitely more value than a Super Wall or being bitten by a Vampire. Of course, I also want them to give me a small stake in the company for giving away the idea like this.

I believe in our industry and in the smart people that make it work, so it can only be a matter of time. And of course, since I'm failing on a few of my other 2008 predictions, maybe this one will come true after I give it a little kick-start. At least I can shoot for being 50% correct, right?

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