Challenges of local social commerce

Through client work over the past year, I’ve become somewhat familiar with local social commerce. More than I had expected. I’m not really a deals-oriented kind of guy. Not much of a shopper at all, in fact.

But the propositions involved, from value to experience, are interesting. The majority of GDP is spent within 10 miles of home. Buying local is popular — and good for the planet. Deals have always lured customers into buying. Locals know what they like, and make great recommenders. Friends shop with friends, make recommendations, and trust each other’s tips. Mobile has gone local, mapping has places, and all manner of business content from reviews to coupons are ready-t0-hand and realtime.

And these are just some of the preconditions that would seem to augur well for local social mobile commerce. There are in fact also experiential and relational reasons to be hopeful.

Foursquare, Gowalla, and SCVNGR have demonstrated that (some number of) users will employ checkins for merit badges and achievements. Some will leave tips — publicly or for friends. And some will use mobile checkins to find and meet friends, broadcast location, and track local haunts.

Then there are deals. Groupon’s IPO announcement is the proof the industry needed that there’s business in online deals and coupons. Facebook has its own deals, and may succeed where in the past it failed (Beacon). Groupon has plans to socialize deal distribution; Facebook can do so already (though its implementation of deals errs on the side of low-engagement).

So why then the challenges? Because there are challenges. Checkins are facing some not-unexpected doubts from the “badges are silly” and “why bother” crowd. Deals are becoming a dime a dozen. And not all merchants think they’re a good idea. There’s no proof that deal-oriented customers become loyal customers. And the notion that everything is on sale or not for sale just threatens small businesses across the board.

Part of the problem, and this is from the retailer’s perspective, is that people don’t really relate to local businesses as brands. People relate to people — the business owners and staff, for example. But equally, others who go there. People relate to products, and to services. So in the case of reviews and tips, they mention specifics. Oftentimes, these involve experiences that are subjective, personal, and may not be easily generalized.

So there’s some difficulty in mapping the ways in which people find business, get deals, and share recommendations. They don’t fall along the same axes of value.

  • Businesses see themselves as businesses, branded and identified, and want this reflected in the “user generated” content that populates so many review and local social sites/apps.
  • Deals are a monetary discount, and so “cheapen” the product or service for the sake of driving traffic. The thinking is that a new customer hopefully returns. But the understanding among merchants is that bargain hunters proceed on to the next bargain — rather than return to pay at full price.
  • Recommendations matter, of course, in sharing experiences, advice, tips, and other valuable insights. And when made not by strangers (as on Yelp) but by friends, these recommendations often include a bit of personal insight — we know what our friends (are) like. But we want recommendations from people, and often for specific things or services, and often now and not later. So getting the information and help needed at the right time is out of synch with creating/posting the information.

Then there is the matter of motives and incentives. Users who review, checkin, leave tips and get deals for badges, points, mayorships, or what have you may not make the best recommenders. They may not even make the best brand/business ambassadors.  Why? Because they are motivated to increase their own status — not that of the business/brand or its services and products.

In fact, the use of symbolic rewards and tokens of achievement only introduces bias and distortion into the recommending/reviewing/helping industry. Gamification is a far cry from genius if it only results in disingenuity. Of course, by the time that most have figured out that some methods of accruing users and building traction fall short when their novelty has worn off, the few lucky investors will have made bank. Because the interest of the site or service is, of course, to grow users and beat the competition. Neither of which may be in the best interest of brands, users, or even investors.

Yes, there are some unique challenges in local social commerce. They pertain to the sheer number of invested parties — startup, user, and business. And that in the bifurcated world of search/find or review/consume, the different incentives and interests motivate the content creator, the deal sharer, the loyal customer, and the kind retailer.

But I suspect that we’re still only beginning to grok what works and what doesn’t. As usual, we do this by building it first and then seeing what sticks. Of course there are solutions out there that haven’t been tried, and for which we have no proof points or data. But there’s a convergence on hand of mobile, of business savvy with deals, of local loyalties, and social media competencies. And these all, together, could yet produce some compelling outcomes for all.

For a follow up post: The Silence of the Brand Associates on my tumblr blog

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  • http://steveplunkett.com @steveplunkett

    We are entering an age of “Brand Advocates” – @garyvee spoke about it in the “Thank You Economy” – it’s in the first part of the book, i think page 48, 2nd paragraph down.