While 92% of us place greater faith in the recommendations of those we know than in traditional advertising, social networking has skipped over retail.
You're standing in front of the mirror in the change room, having just wiggled into a pair of skinny jeans. But this is not a decision you can make alone, and so you pull out your iPhone, snap a photo and text it to a friend with a question: "Whaddya think?"
We've all sought advice or referrals from family and friends before handing over our cash. In fact, 92% of us place greater faith in the recommendations of those we know than in traditional advertising, according to Nielsen. Call it "social shopping"—though, by today's standards, it is social only in the most rudimentary sense. That's because, while social networking has changed the way we do almost everything, it seems to have skipped retail altogether.
The problem, as mobile analyst Benedict Evans recently put it, is that there's no Facebook for products. Sure, you can search for and buy a huge variety of items online via Amazon (which Evans likens to the Google for products). But there's no single platform where consumers can solicit advice, compare notes, make purchases and then show them off. When so much attention is aggregated around social platforms, there is a vast chasm between them and traditional e-commerce that is yet to be filled.
Take Pinterest. The social network has become a catalogue of consumer desire, where its 100 million active users "pin" and share images of recipes, clothes, vacation ideas and so on. Roughly 95% of its audience uses the network to research and plan purchases. Yet it has only recently added a "buy" button that links images of products to the stores that sell them, turning pent-up desire into actual commerce.
But making it easier for consumers to buy the stuff they see on social media is just social shopping's last mile. At root, the problem is one of demand generation. As Evans notes, a small number of consumers will search for the obscure thing they want, while other categories—the new iPhone, bestselling books, luxury brands—will draw people on their own power. The trouble is the massive, mushy middle—everyday products that everyone buys and are largely undifferentiated. How will brands grab attention when consumers have access to just about everything?
One option is for a brand to be its own social destination. Consider Dollar Shave Club, which recently sold to Unilever for $1 billion (U.S.). It offers subscriptions for discount razors and grew largely thanks to promotional videos that consumers shared en masse. It's joined by mattress companies Casper and Leesa, and Canadian clothing brand Frank + Oak, all of which rose to prominence by having their customers do their marketing for them.
That approach will only work for a small number of singular brands, however. Most will have to deal with platforms that aggregate products from a variety of retailers, just as Facebook did for news and other media. One of them is ProductHunt, whose community of users votes on various products. The most popular ones surface, driving traffic and sales to retailer sites.
These are just the first tentative steps toward a new retail model, where social becomes the default way for people to shop for anything beyond staples. The idea is to create a virtuous circle: Consumer discovers new product, gets input from friends, buys it, then influences others to do the same, all from within one platform. For those who can't adapt, the circle may turn out to be a vicious one.