• by John Jackson , February 9, 2010

Last week, social shopping site ThisNext announced plans to buy smaller rival StyleHive; that announcement came after news from Time Inc. last month that it would buy social recommendation engine StyleFeeder as a way to incorporate ecommerce into its online fashion magazine properties.

This recent rush of consolidation points to a trend that's evident no matter where you look: Consumers have flocked to social networks as an easier way of communicating with friends and peers, getting information, building relationships and participating in community. Activities that used to take place in the physical world -- in shopping malls, over the phone, at restaurants and at neighborhood events -- have rapidly moved to places like Facebook, Twitter and countless other third-party networks like StyleHive, ThisNext and StyleFeeder.

Most brand marketers have realized this shift and have stepped into these new "common spaces" of the 21st century. They've created fan pages on Facebook, accounts on Twitter and channels on YouTube, and have replicated offline marketing tactics, like advertising, coupons and promotions to engage online fans and gain new customers.

With the exception of a few innovative brands like Mattel and Charlotte Russe, however, the majority of online businesses have yet to take the next logical step and allow this social interaction to take place at their own online stores. To continue the common-spaces analogy, imagine if a downtown store only let one customer come into the shop at a time, while the customer's friends waited on the street. The shopper could go outside every few minutes to get opinions on the outfit or finish a conversation, but had to return to the store alone to browse or make a purchase.

As strange as this sounds, it's exactly the type of situation that e-tailers put their customers in every day. In spite of all the advances made in social networking and real-time communications technology, ecommerce brands and businesses in other sectors like travel and real estate have essentially left scores of potential customers on "the street," while impeding shoppers from easily getting opinions and sharing their brand experience at the point of purchase. This creates a frustrating situation for the shopper and hampers the ability to convert that visitor into a buyer.

Luckily, change comes fast in the online world, and it looks like 2010 will be the year businesses address these obstacles to decision-making with social commerce technology.

What is social commerce?

Social commerce, also known as social or collaborative shopping, refers to the ability of two or more people to collaborate online, to share opinions and influence each other's buying decisions. The best social commerce technologies also include a real-time component, like the ability to chat and browse with others "live."

Take real estate as an example. According the National Association of Realtors, 68 percent of home buyers are couples and 87 percent work with an agent. So, an overwhelming majority of home buyers works with at least one, and in most cases, two other people throughout the decision-making process. Despite this inherently "social" aspect of home buying, the current online experience is one of isolation. The process today normally includes an agent emailing pages of links and options from an MLS (multiple listing service directory) that may or may not fit the buyer's criteria; the buyer looks through the links on her own and eliminates the ones she knows off the bat don't fit. Then she goes through the site doing some research on her own, copies the links and adds them to the list. Next, she forwards the links from work to her fiancé, who then repeats the process. Once they have their favorites chosen, they send them to the agent, who recommends certain listings she knows have inherent flaws and finally they arrive on a set of possibilities. Then, it's time to start pounding the pavement.

Social commerce tools minimize those types of hassles. A couple can browse properties together in real-time from across town during their lunch breaks, or have their Realtor join in to guide them and answer questions. The couple can then give a virtual "thumbs up" or "thumbs down," all before lunch gets cold.

Why the move to social commerce?

The benefits of social shopping are similar to those you see from friends, customer service agents and peers collaborating offline.

• Connecting the people who matter most in the purchase decision: Research demonstrates that family, friends and peers have the most influence on a person's purchase decision . Social shopping technologies give online shoppers the tools necessary to easily gather the opinions of those who matter.
• Immediate feedback: Traditionally, online shoppers either email links or print out product pages of purchases they need a second opinion on. This adds to the sales cycle, which could mean a lost sale. With collaborative shopping, buyers can get immediate feedback by inviting their peers to chat with them and browse various options.
• Longer and more enjoyable experience with the brand online, better engagement: Friends shopping online in a real-time environment are able to chat about things like the prom or a friend's recent engagement, for example, and "hang out" with the brand while browsing products. The online brand becomes part of that dialogue and deepens the interaction.
• Exposure to new products: Social shopping introduces customers to products they have passed over or never considered before, which leads to higher order sizes.
• Greater viral reach for the brand: Consumers can easily share products they like via their favorite social networks and use those networks to invite their friends to shop with them back at the retailer's site. As their personal online networks grow, brands can reach a greater number of people through their fans.

Why is 2010 the year of social commerce?

Some of the technology used in social shopping, like chat and co-browsing, has been around for years in some form or another, but retailers are only now starting to consider the technology and to deploy it. Why now?

In a tough economy, businesses are looking for more ways to deliver a competitive advantage and a strong return. According to Forrester's US Interactive Marketing Forecast, 2009 to 2014, "This year, more marketers are shifting budget from traditional to interactive media....These marketers find that interactive tools are less expensive, more measurable, and better for direct response than traditional media." In addition, with online revenues growing their share of the overall retail market, brands have the opportunity to truly differentiate at relatively low cost and minimal resources.

From the consumer's perspective, more users are becoming exposed to real-time and near real-time communication with friends and family at more places on the Web, through sites like YouTube (with YouTube RealTime), Twitter and Facebook. A telling sign of how deep these networking tools have gone came last year from Facebook, which reported that the fastest growing segment of users was women over the age of 55. Shoppers will begin to expect collaboration technology wherever they go on the Web.

Just as personalized recommendations, consumer reviews and online video were once the exception rather than the rule, one should expect to see widespread adoption of social commerce in 2010, driven by brands' recognition of their effectiveness, and a growing demand by consumers to share ideas and communicate with those they trust -- where and when they want.