Social commerce only works when it goes native

Fred Wilson shares a powerful insight about social media and e-commerce – or social commerce, as its often known:

When users start in a social system that is divorced from the e-commerce platform, I believe the conversion rates are significantly lower, often by an order of magnitude or more. This, to me, suggests that the overhead of multiple systems reduces the effectiveness of the experience for users and is suboptimal.

Fred’s perspective is born from his experience of working with lots of ecommerce and social start ups.

His post goes further than saying that social needs to be part of an e-commerce system to add something, saying that as a bolt-on or afterthought to the design of an e-commerce system, social media can significantly lower conversion rates:

When you look at conversion rates in e-commerce broadly what you see again and again is that the more friction and overhead there is between discovery and transaction, the lower the conversion rate. Something as simple as logging into a commerce platform to complete a transaction can lower converstion rates by an order of magnitude.

The implications I draw are:

  • Social media platforms and ecommerce work well together when they can be part of the same user jounrey.
  • Fewer social platforms, used more meaningfully, will yield better conversion rates.
  • Could this hold true for early stages in the the Consumer Decision Journey or funnel models – well thought through, “native” use of social media will result in more people who are in consideration mode, moving through to evaluation, to purchase and beyond?