Social Commerce - The Gift That Keeps On Giving
When Facebook bought Karma (one of the leading gift sites), it was pretty clear that Facebook Gifts (due to launch this week) was just around the corner - especially as the holiday shopping season starts to heat up. Socially-informed commerce in various forms and shapes has been around for quite a while, but I think we’re at another major inflection point because of the impact of hyper-personalization and the far more precise and cost-effective targeting which is now available. Keep in mind that it’s a long-established principle that, if you give a consumer too many choices, they are far more likely to buy nothing than if you give them a limited and more relevant decision set. New young companies like Local Offer Network are jumping into this particular space as well with tools that deliver the “exactly right” offers to consumers visiting a site even the first time that the visitor appears.
Given the tools and resources that Facebook increasingly has at its disposal, they can now make the gift selection and giving process far more successful for the donor and also make the recipient far more likely to be happy with the gift. Remember that the excellence of a gift lies in its appropriateness, not simply in its value. And there are other important ancillary benefits as well. One of the reasons people get divorced is that they run out of gift ideas. Ergo – better gifts – less divorces.
So there's no question that this latest foray into "f-commerce" is going to be a big focus for the Facebook team along with a couple of other "interest graph-driven" initiatives like Facebook “Collections” which is their initial salvo at Pinterest. If you want to get some idea of how interesting and accurate gift giving becomes when it's informed by detailed data about the interests and preferences and buying history of the friends and peers for whom you're trying to select a present, take a look at shopycat.com which is actually a product created by Wal-Mart Labs - but very cool nonetheless. If you are more of a metrics person, here are some numbers to keep in mind – when a “friend” refers and/or recommends that someone they know take an action on the web – the impact (as compared to a simple ad solicitation) is major: recipients are 15% more likely to download something; 8% more likely to buy something; and – most importantly – when they do buy, the average order size is 22% larger. That’s a lotta lift.
What's less obvious about the new gift-giving initiatives (the Lightbank gang also recently invested in Boomerang, another gift site) is that, from Facebook's perspective, the dollars generated from gift purchases may be nowhere near as valuable in the long run to their enterprise as the purchase decision data which will be made available through these transactions as well as the implicit and explicit “connections” which each and every gift transaction will establish between their members. You can just imagine the opportunities for follow-on sales and service and the cross-marketing possibilities that each gift will create. As I like to say, “personal data is the oil of the digital age” and Facebook increasingly owns the primary pump. And because birds of a feather flock together, other analytical tools will help correlate purchases with the buyer’s presence in defined communities and other likely behavioral groups. Data, data and more data with virtually no acquisition cost and high degrees of precision and accuracy.
So the real “news” about Gifts is that we’re continuing to see more and more indications of the next major seismic shift from the relatively simple social graph to the deeper interest graph. Because we (and Facebook in particular) have pretty much cracked the code on personal data and demographics (empowered in real-time by high-velocity computing), the next hurdle is pretty clear: “tell me what you’re interested in and what you pay attention to and I will tell you who you are”. And basically, if you’re not where your targets and customers are and a relevant part of their world, you’re nowhere. This is really where both Instagram and Pinterest loom large. As we see better and better tools to interpret and identify (and categorize) visual materials (photos and other images with videos to follow in the near future), we will see more and more emphasis on and influence of the players who are successfully aggregating these huge treasure troves of visual information. After all, a picture’s worth about a million words these days if it’s the right picture.
And finally, speaking about the future and gifts reminds me that the future isn’t a gift, it’s an achievement that we work for and earn every day. Hard work is what makes our dreams come true.
