So social commerce is a unicorn, a beautiful but imaginary idea; or that’s the headline finding of a brilliant (free) report is just out by Monetate on social commerce – with Mitch Joel and Jay Baer as contributors.

If you look at the numbers, rather than the hype, you see that social media drives just 1.55% of e-commerce traffic and has a conversion rate of less than three-quarters of one percent (.71%).  Using social media for direct response marketing sucks – with the logical conclusion is that ”social media participation is over-hyped and disproportionately resourced for ecommerce websites”.

The incontrovertible conclusion – from 500 million visits analysed – is, as Mitch Joel points out, that social media does indeed suck as direct response marketing. Social spam – offers, deals and ‘Likes’ from others – does not convert well into sales.  Just don’t. Instead, do something that does work in the direct response world – like search and email marketing.

The problem, of course, is that the report headline sets up social commerce as a straw man dressed in spam.  Any business thinking of social commerce that social commerce is (direct response) social spam has entirely misunderstood social commerce; the use of social technology to help people buy and sell is not about social spam, it is about a social service that creates value for shoppers.  Think Sam’s Club, not Social Spam. In other words, social commerce is about using social technology to create a shopping experience worth recommending

By creating value for shoppers, you – as a business, capture customer value.  It’s a quid pro quo.

Look, for example, at the burgeoning Tuangou team buying market in Asia – shoppers regularly club together to get bulk-buy discounts on items.  The vendor wins because the aggregate margin on 100 sales is greater than the margin on a single sale.  The shopper wins because they get better value (more for less).  The social commerce opportunity is to deploy social technology as a service to shoppers to help them shop smarter.

Or think how Amazon does social commerce through social recommendations – “Frequently Bought Together” or ”Customers Who Bought This Item Also Bought…). It’s social deployed as a service to help shoppers shop smarter. That, on occasion, this can drive sales directly is a bonus – the goal is to create a great shopping experience.  Apple nailed this kind of social commerce in its retail store network – which was explicitly created to create a social shopping experience so insanely great, people would come back for more, and bring their friends.  Social is something you earn, not spam.

Whilst we’re firmly of the if-you-want-loyalty-get-a-dog school of thought, Mitch Joel makes the similar point that social technology should indeed by deployed by vendors as a service – for creating customer value through relationships (that payout in enhanced loyalty).  We’re sceptical about the whole engagement/loyalty thing,  but Mitch’s point stands – social is a brand-building tool for vendors, not a direct-reponse tool.  Deploying social technology is about creating choice-shaping associations in the mind of the customer (like easy social login, social recommenders, tuangou offers…)

If social commerce is a Unicorn, there are a lot of Unicorns in China.

And forget virtual world vs. real world, in this M2M Internet of Things, the two are fused together in synthesis.

These are the two central messages of a useful special report out today by the Financial Times: The Connected Business 2013.

• The next wave of online innovation for the “network of networks” is M2M – machines connecting, communicating and collaborating with machines.
• By 2020, the Internet of Things will include 50bn connected objects, this is already creating new business models, improving business processes, and reducing costs and risks (GE predicts that M2M will remove $150bn in waste).
  • In healthcare, swallowable M2M smart modules will check internal health, whilst smart implants will monitor health (BP, drug delivery) and connect to body/brain care specialist.  M2M technology can also help with ‘compliance’ – taking right medicine regularly at the right time, with smart dispensers – typically pill cases and inhalers (WHO estimates that 1 in 10 hospital admissions are due to non-adherence/non-compliance)
  • In automotive, the EU has called for all vehicles to be fitted with M2M technology by 2015 – to request maintenance automatically, warn when components are in danger of failure and dial emergency services in the event of a serious accident, giving the vehicle’s location.
  • In retail, stores and malls now contain “Experience Stations” and other interactive POS devices, all connected up to the Internet to provide feedback and be managed remotely. Likewise smart connected vending machines can handle secure, cashless payment and check inventory levels and machine functionality.
  • In urban planning, hundreds of thousands of sensors will be embedded city infrastructure designed to create ‘Smart Cities‘ that maximise the efficiency of everything from traffic flows and emergency services to electricity consumption and energy storage. Objects as traditional as lamp posts are being given IP addresses and fitted out with M2M modules (In Northern Portugal, Cisco and Living PlanIT are prototyping a new smart city)
  • Within five years, most homes will have 200 devices linked to the internet from lightbulbs to washing machines
• The key technology involved are cheap machine-to-machine “modules” that have a sensor  (e.g. temperature, pressure or movement) and communications electronics (e.g. GSM, WiFi) that allow data to be sent and received. These modules have fallen in price by 2/3 from $65 to under $20 in the last 4 years
  • In Germany, over 100m vending machines, vehicles, smoke alarms, and other devices are sharing information automatically as part of an M2M initiative launched last year by operators including Deutsche Telekom.
• A key challenge – and opportunity – is to master the massive amounts of data produced by the M2M Internet – a single 787 flight generates half a terabyte of data – data is the fastest growing commodity on our planet.  Smart analytics will need to be predictive and adaptive - learn from experience and constantly improve.  The data challenge of M2M is more about filtering out the irrelevant than finding the golden nuggets.
• A second key challenge/opportunity is standards - devices will need a common language in order to talk to each other – right now the data tower of babel is a cacophony of  languages; ZigBee, JenNet-IP, KNX, Digital Addressable Lighting Interface, WiFi and Near-Field Communication.
• Finally, data security is the third challenge and opportunity – data theft, identify theft and hacking.  Already in London, of the 100,000+ wireless networks in London, 27% had few or no security.

“If you’re not paying for the product, you are the product” is a truism that Yahoo! wants to monetize with its $1.1bn cash purchase of Tumblr blogging platform.

With 108m bloggers generating 13 billion page views per month on the NSFW-oriented (Not Suitable For Work – read – adult content) Tumblr, Yahoo! is hoping to turn eyeballs into advertising revenue (perhaps using its other recent purchase Summly to curate and summarise Tumblr topics).

Will it work where Yahoo! has failed in the past (think Geocities, del.icio.us, Flickr..)?

The challenge is simple - convert Tumblr into profitable advertising space.  But the solution is less evident.

Tumblr generated just $12m in revenue in 2012 – valuing the company in the real world at $36m – not $1bn. If plastering pixel-spam on Tumblr dashboards and posts was a really good idea, wouldn’t Tumblr have done it already? Facebook has held off haemorrhaging users by not turning Instagram into advertising space (yet), and Google has gone on record promising not to pollute Glass-vision with ads. Perhaps Yahoo! has something different up its sleeve – more than old-style interruptive advertising imported online? But given the ‘adult’ nature of much Tumblr content, how many big advertisers would want to take the PR risk advertising alongside explicit content?

So what if Yahoo! pivots Tumblr away from advertising and towards commerce?  We’re not talking the roaring trade that Tumblr could do in selling ‘adult toys’ and ‘adult content’ – but a bigger social commerce opportunity… Here are three ideas;

1. Since so many Tumblr blogs are themed (most fetishes appear to be covered), could Yahoo! allow bloggers to post a ‘shop’ button on the blog’s menu, that picks up the ball that Google shopping recently dropped with a decent price comparison/top picks).  A revenue share with Tumblr users – a la YouTube – could work? Think Google Shopping 2.0
2. Building on the themed nature of Tumblr blogs, the blogging network would make a ideal platform for a new generation of group-buy commerce – allowing like-minded people to come together and get great prices if they buy in bulk. Think Groupon 2.0
3. The simplicity of Tumblr would make it ideal as a next-generation e-commerce platform, making it easy to sell their stuff to communities of people passionate about a subject.  Tumblr has a real opportunity to tie this content + commerce knot, and become a leading e-commerce solution.  Think Etsy 2.0

Why? Because, on a 10 point reputation scale, 1 point difference is worth $500m for large corporations*.

Here’s the deck from a recent course we ran on brand reputation management and social media.  How to use social media to manage your reputation – what people say about you (or your brand) when you leave the room.  Unlike other courses, we hope you’ll enjoy the fact that the solution has nothing to do with creating social spam and polluting peoples news feeds.

There are smarter ways to manage your reputation in social media…  Enjoy, download – and feedback welcome.

* Black, E., T. Carnes, and V. Richardson (2000). ‘The market value of corporate reputation,’ Corporate Reputation Review, 3(1), 31-42.

Here’s a list of key statistics on the Post-PC era, put them together in preparation for a keynote at SYZYGY‘s conference later this month on digital innovation.  In the spirit of sharing, we thought you’d find them useful.  Bottom line, for digital innovation in or out of the social sphere, focus efforts on creating Post-PC experiences. Need convincing? – Check out these stats.

The Post-PC era is a market trend involving a decline in the sales of traditional desktop and notebook personal computers in favour of post-PC smart connected devices such as tablets, smartphones and sensor-based gadgets. Post-PC devices are characterised by connectivity and portability, natural interfaces and sensor inputs, and often make use of cloud technology.

PC Decline

• Global desktop PC share of smart connected device market (PC + tablet + smartphone) declines in 2012 to 12.4% (148M shipments) SOURCE IDC http://www.idc.com/getdoc.jsp?containerId=prUS24037713#.UVLrQirKde0
• Global notebook PC share of smart connected device market (PC + tablet + smartphone) declines in 2012 to 16.8%  (202M shipments) SOURCE IDC http://www.idc.com/getdoc.jsp?containerId=prUS24037713#.UVLrQirKde0
• Global PC shipments were overtaken smartphone and tablet shipments in Q4 2010 SOURCE KBPC (Dec 2012) http://www.slideshare.net/kleinerperkins/2012-kpcb-internet-trends-yearend-update
• Global installed base of PCs will fall behind smartphone and tablets in Q2 2013 SOURCE KBPC (Dec 2012)  http://www.slideshare.net/kleinerperkins/2012-kpcb-internet-trends-yearend-update
• By 2013, global tablet sales will exceed desktop PC sales (142,1M vs 190.91M shipments) SOURCE IDC (Mar 2013) http://www.idc.com/getdoc.jsp?containerId=prUS24037713#.UVLrQirKde0
• By 2014 global tablet sales will exceed desktop PC sales (210.8M vs 236.3M shipments) SOURCE IDC (Mar 2013) http://www.idc.com/getdoc.jsp?containerId=prUS24037713#.UVLrQirKde0
• In Q1 2013, global PC shipments dropped 11.2% (year on year) to 79.2 million units SOURCE Gartner (Apr 2013) http://www.gartner.com/newsroom/id/2420816
• In 2013, Facebook was receiving fewer PC visitors than mobile visitors SOURCE The Verge (Jan 2013) http://www.theverge.com/2013/1/30/3933912/facebook-q4-2012-earnings
• Android and iOS devices outsell Windows devices in 2012 (45% vs. 35% – Global Market Share OS Shipments) SOURCE KBPC (Dec 2012) http://www.slideshare.net/kleinerperkins/2012-kpcb-internet-trends-yearend-update
• In India, mobile internet traffic has already surpassed desktop traffic (May 2012)  SOURCE KBPC (Dec 2012) http://www.slideshare.net/kleinerperkins/2012-kpcb-internet-trends-yearend-update
• Hybrid PC/tablet Microsoft Surface is plagued by low sales and high return rates SOURCE CNET (Jan 2013) http://news.cnet.com/8301-10805_3-57566759-75/microsoft-surface-sales-well-below-shipments-says-isuppli/

Smartphone Rise

• Smartphones are spreading faster than any technology in human history (5% to 40% in four years) SOURCE MIT (May 2012) - http://www.technologyreview.com/news/427787/are-smart-phones-spreading-faster-than-any-technology-in-human-history/
  
• In 2012, smartphones represented 60.1% (722.4%) of the smart connected device market (PC + tablet + smartphone), and is forecast to rise to 67% (1,516M units) by 2017 SOURCE IDC (Mar 2013) http://www.idc.com/getdoc.jsp?containerId=prUS24037713#.UVLrQirKde0
• By early 2012 in Germany, mobile penetration had already exceeded PC penetration SOURCE Google (Mar 2013) - www.thinkwithgoogle.com/insights/uploads/940736.pdf/download/
• By early 2012 in Germany,  43% of smartphone owners were already multitasking with their handset whilst watching TV SOURCE Google (Mar 2013) - www.thinkwithgoogle.com/insights/uploads/940736.pdf/download/
• Smartphone subscriptions in Germany rose 19% (Q4 2012 year on year) to 23% of all mobile subscriptions SOURCE KBPC (Dec 2012) http://www.slideshare.net/kleinerperkins/2012-kpcb-internet-trends-yearend-update
• It took landline telephones about 45 years to get from 5 percent to 50 percent penetration among U.S. households, and mobile phones took around seven years to reach a similar proportion of consumers. Smartphones have gone from 5 percent to 40 percent in about four years SOURCE MIT (May 2012) - http://www.technologyreview.com/news/427787/are-smart-phones-spreading-faster-than-any-technology-in-human-history/
• On US shopping day, Black Friday 2012, mobile and tablet shopping accounted for 24% of all US online shopping, up from 6% two years ago SOURCE KBPC (Dec 2012)  http://www.slideshare.net/kleinerperkins/2012-kpcb-internet-trends-yearend-update
• According to Cannacord, Apple generated 57 percent of the smartphone handset industry’s profits during the first quarter 2013, leaving 43 percent to Samsung SOURCE CNET (May 2013) http://news.cnet.com/8301-13579_3-57582991-37/apple-samsung-again-take-all-of-handset-industry-profits/
• Android (70%) and iOS (21%) combined for 91.1% of the global OS Market in 4Q12  SOURCE IDC http://www.idc.com/getdoc.jsp?containerId=prUS23946013#.UVIJchzvuPs
• More people buy Android devices than iOS (70% vs 21% Q412), but iOS accounts for over 61% of mobile web traffic (Safari for iOS)   SOURCE Wired (Apr 2013)

Tablet Rise

• In 2012, the tablet device category growth rate was 80% with an estimated 128 million tablets were shipped worldwide – Deloitte - http://www.deloitte.com/assets/Dcom-UnitedKingdom/Local%20Assets/Documents/Industries/TMT/uk-tmt-media-consumer-scatter-cushion-device.pdf
• 48% of children wanted an iPad for Christmas 2012 SOURCE KBPC (Dec 2012) - http://www.slideshare.net/kleinerperkins/2012-kpcb-internet-trends-yearend-update
• 2013 - http://www.gartner.com/newsroom/id/2420816
• Tablet shipments grew 78.4% year-on-year in 2012 to hit 128 million units and are forecast to surpass the shipments of both desktops and portable PCs in the next 24 months IDC March 2013 - http://www.idc.com/getdoc.jsp?containerId=prUS24037713#.UVLrQirKde0
• On US shopping day, Black Friday 2012, mobile and tablet shopping accounted for 24% of all US online shopping, up from 6% two years ago SOURCE KBPC (Dec 2012)  http://www.slideshare.net/kleinerperkins/2012-kpcb-internet-trends-yearend-update

Other

• Mobile visitors have a 9.56% higher bounce rate than desktop visitors SOURCE Shareaholic (Oct 2012)  http://blog.shareaholic.com/2012/10/mobile-website-traffic-2012/
• 48% of large company CEOs (revenue > $250m) do not have a digital strategy SOURCE Gartner (Apr 2013)  http://www.gartner.com/newsroom/id/2415615
• Smartphone subscriptions in Germany rose 19% (Q4 2012 year on year) to 23% of all mobile subscriptions, SOUCE KBPC (Dec 2012) - http://www.slideshare.net/kleinerperkins/2012-kpcb-internet-trends-yearend-update
• Shipments of ebook readers by year-end fell to an estimated 14.9 million units in 2012, down a steep 36 percent from the 23.2 million units in 2011 SOURCE  iSuppli (Dec 2012) http://www.isuppli.com/Home-and-Consumer-Electronics/MarketWatch/Pages/Ebook-Readers-Device-to-Go-the-Way-of-Dinosaurs.aspx

Worldwide Devices Shipments by Segment (Thousands of Units)

SOURCE Gartner http://www.gartner.com/newsroom/id/2408515

Worldwide Devices Shipments by Operating System (Thousands of Units)

SOURCE Gartner http://www.gartner.com/newsroom/id/2408515

Smart Connected Device Market by Product Category, Shipments, Market Share, 2012-1016 (units in millions)

Tesco has launched a new social commerce site for wine, Tesco Wine Co-buys.

Using Buyapowa social commerce software, consumers can club together to buy wine in bulk at discounted prices. What we particularly like is that it appears to be demand led; customers are able to choose wines they want to buy together in bulk – and set a maximum price they’d be willing to pay.  The more people that sign up, the heavier the discount – with the person who recruits the most co-buyers – via social sharing – getting a case of wine for free.  Sweet.

In the PR blurb, Tesco director of digital and social Tom Daniell says: “This channel really puts customers in control – from determining the final price they pay, to telling us the products they’d like to see featured.” Now you know. But the point is well made.  This is social commerce for the empowered customer.

We think Buyapowa is one of the few social commerce software companies that really ‘gets’ social commerce. First, it’s about commerce – i.e. shopping, not conversations, And second, it’s social, and that does not mean social spam from retailers or their customers, but shopping together as a social activity. Buyapowa gets this, and its software delivers by helping people shop together to get value.   And that is what the Tesco brand is about – value.

But if the new site is to be a success, Tesco is going to have to brand Tesco Wine Co-buys better – it really should look more like this or this, and it needs to offer value in more ways than just savings – access, appreciation and advice – will be key.

Right now – the ‘site’ straddles two sites – with users having to flip between Tesco.com and Buyapowa.com site to participate.  Apart from burgundies turning blue and tahomas turning to helvetica, it’s unclear what’s happening where. If we were involved, we’d be recommending Tesco consider using their wine club, currently hidden on the site, with a fresh new feel (again – look at NakedWines – they get it) as a vehicle for this initiative.  The idea is good enough to warrant this.

Whatever Tesco decides, they’ll need to avoid making this initiative look like a temporary promotion – and steer well clear of Groupon-style promotional cues – we’ve been there before and it didn’t work. Instead it should be looking at the new generation of e-commerce wine site like NakedWines 0r ClubW, which just raised $3.1M. But if Tesco decides to develop social commerce for wine, it has the muscle to trail blaze, and grow the site into a major e-commerce wine destination.