So it’s IPO time for the leading social commerce platform on the planet, and Facebook thinks it’s worth half of Google ($104bn vs $196bn), as much as Amazon ($101bn), and twice eBay ($52bn).  But here are three reasons why a psychologist wouldn’t invest, and why, if you are in the social commerce game, a psychologist wouldn’t put all their eggs in the blue Facebook basket.

1) Intention trumps Interest: Commerce notwithstanding, Facebook’s future will depend largely on its advertising revenue, which will depend on advertising effectiveness.  But the Facebook advertising value proposition – superior targeting based on peoples interests – pales to insignficance compared to the value proposition of search advertising based on intentions. Psychologists know that interests are lousy predictors of behaviour – intentions are far better.  Your likelihood to drink champagne tonight is very poorly correlated with how much you like champagne, but highly correlated with whether you intend to drink champagne. Which is why the intentionality of Google search ads stand head and shoulders above Facebook ads based on interest.  With GM the latest business to pull Facebook advertising, businesses get this.

2) Scarcity drives Value: Economists like to talk about the network effect – the more people use something the more valuable it becomes.  Psychologists like to talk about the opposite –  the power of scarcity – the fewer people have something, the more valuable  - and the more cool – it is perceived to be.  Diamonds are perceived as – and are – valuable precisely because they are a scarce commodity.  Facebook is perceived as cool so long as your aunt and grandparents aren’t on Facebook.  With low barriers to entry for alternatives, Facebook’s very ubiquity could trigger a mass exodus.

3) Mind Myopia: Minds are myopic, which means we tend to overvalue the importance of the ‘here and now’ and see the present an an insight into necessity, rather than an opportunity for change.  Facebook is big today, so we tend to falsely extrapolate that Facebook will be big tomorrow.  History and MySpace et al prove us wrong over and over. Our inability to look at things without the sensory data of the here-and-now means we over-invest in the present and the status quo, and not enough in the future.

So whilst a psychologist may see the value of Facebook as a social commerce super-platform, helping people buy where they connect and connect where they buy, that psychologist would be wary of investing in a $100bn valued Facebook.

Thoughts?

Somebody is going to take a look at this video and make millions.  It’s a scene from a Chinese ‘Tuángòu‘ (team-buying) raid on a paint retailer.  The concept is super-simple - a flash mob of shoppers descend on  some poor retailer and demand a bulk discount. Would you stand up to the wild team-buying leader in this video???

The social commerce opportunity is to harness the energy, spontaneity of ’Tuángòu‘ team-buying and apply it to e-commerce, or at least digitally-enhanced commerce.  Of course, online collective bargaining for shopping has a name – or had a name until the term ‘group-buying’ was reduced to a marketing wheeze from daily deal sites Groupon et al.

So here’s the concept rebranded as ‘co-buying’ and summed up an a clear and articulate infographic from smart UK start-up BuyaPowa (and supporting video). We’re big fans of this Tuángòu concept, and think collective price bargaining has a big future in social commerce – particularly in corporate purchasing departments.

Someone will make a killing out of this Chinese Tuangou concept when they get it right – what do you think?

Have you integrated social scrapbooking app Pinterest into the purchase funnel yet?

Perhaps you should.  It’s quick, easy and could be very profitable.

New research from London-based specialist e-commerce site for women Boticca selling handbags, jewellery and accessories from independent designers from 40 countries has found that Pinterest users drop 2.1x more cash with them than Facebook customers.  Overall, Boticca has 40,000 Pinterest followers across 67 brand boards, compared to 26,000 Facebook fans, and more transactions now feature Pinterest (10%) in the purchase funnel than Facebook (7%).  Pinterest may hurt their conversion rates – driving more casual browsers than buyers than Facebook – but the overall sales result is positive.  And in business, it’s all about the money – the rest is just conversation.

Of course there more There’s more to social commerce – helping people buy where they connect and connect where they buy – than driving e-commerce traffic from social media apps, but drumming up paying customers from social media posts is a good place to start and can be a simple and effective way to profit from social media. So, if you’re in the business of selling to women, especially in fashion, cookery or home sectors, the message is clear – you’d be mad not to add Pinterest buttons to product images and syndicate your product catalogue to Pinterest boards.  It’ll cost you nothing, and could drive more sales than managing a Facebook page.

Selling is not always about sales – it can also be about building your brand (your ability to extract margin by creating choice-shaping associations in the mind of the consumer).

To this end, here’s a brilliant social commerce campaign from Nike Mexico and JWT (thanks to Contagious Magazine‘s Ed White for the heads up).

Head over to the Nike Facebook page for the #makeitcount Nike+ auction (subasta), and you can bid for new Nike sneakers with miles (kilometres actually) that you’ve run and recorded to your Nike+ app.  You can only bid with miles run during each 15 day auction period.  If you’re outbid you can rebid by adding more miles (if you run them).

We love it, the social commerce campaign reinforces the Nike brand user image of competitive sports people, reinforces the Nike brand campaign #makeitcount (and the audacious attempt to brand and own ‘energy’ with the new Nike+ fuelband), and reinforces the brand itself that’s built on selling performance not shoes.

As we’ve suggested before – selling is not only about sales – and selling with social media, social commerce, can be as much about branding (that pays for itself – self-funding branding) as it is shifting stock. Could you run an auction in social media designed to build your image?

Today’s article is sponsored by Milyoni: The Leader in Social Entertainment

Omaha Steaks is bucking the trend toward Facebook store abandonment and has opened a store to offer fans access to exclusive merchandise, a move that is considered a no-brainer by company senior vice-president Todd Simon.

“I think not having a Facebook store would be kind of like saying we don’t have to have a retail store,” stated Simon in a recent Adweek article. “We sort of held back really getting into this until the technology was there that allowed us to develop a shopping experience around the social platform and really create a social experience as opposed to just trying to rubber stamp out what we’d already been doing in other channels,” he added. The store, tabbed as “Fan Exclusives,” offers specially-priced merchandise, as well as items that can only be found on Facebook.

Other ways the company attempts to lure fans to purchase products is through badging and points. Users can earn a Steak Lover badge for shopping in the store, a Steak Advocate badge when friends click a shared link that directs to the store or the First Time Buyer badge for an initial purchase said Adweek. And for every $10 worth of merchandise purchased, customers receive 1 point that equals to $1, which they can apply toward their next purchase.

This approach bodes well for three reasons:

• Exclusivity – One way to get fans shopping on Facebook is through the use of exclusivity. Give fans something they can’t get elsewhere and they will buy. But, the offer has to be compelling enough to incite a response; otherwise, sales won’t happen.
• Incentives – Incentives, such as Omaha Steaks use of rewards points, inspires loyalty and keeps customers coming back.
• Status – Gamification techniques such as badging appeal to some people because they serve as a status symbol. A basic human need is to “stand out,” to be recognized as having attained some type of special status. Concepts like badging help people achieve “social” status.

Simon’s understanding that shopping on Facebook requires a different way of thinking is key to the company’s potential for success, as is his willingness to wait until the dust had settled on previous, less successful attempts by other large brands.

Of equal importance to Simon, according to his statement, is having the right technology. For its store, the company chose social commerce platform provider ShopIgniter. The store is Facebook-inclusive in that the purchase transaction happens inside Facebook rather than pushing customers to Omahasteaks.com. It also makes use of the extended real estate now afforded through the new Timeline format.

There is one point of concern, however.

Adweek says that Omaha Steaks is “looking at its Facebook store as another commerce channel” rather than how it relates to its existing e-commerce site. For example, comments and reviews do not cross-populate between Facebook and the e-commerce site, and while users can register on Omahasteaks.com with their Facebook account, a user’s shopping cart on the e-commerce site will not be linked to the one on the Facebook store.

Rather than view social media as a “channel,” it’s much better to see is as a “layer.” Integrating the two sites to enable social sharing between both the .com and Facebook, something Facebook’s Open Graph certainly facilitates, makes sense.

But, rather than rain on Omaha Steaks’ parade, I’ll refrain from judgment until some numbers are reported. The use of exclusive merchandise, combined with incentives in the form of rewards points and gamification techniques such as a badging are certainly steps in the right direction.

Great post by venture capitalist MD Jeremy Liew of Lightspeed, picked up by the ever-insightful Jason Soo and Jochen Krisch, confirming a prediction about the future of social commerce has come to pass; the rebirth of the shopping party.

Yep, it’s Avon parties reconfigured, re-branded and teched-up for the party generation.  Forget Tupperware, we’re talking fashion and jewellery – direct sales style – from the likes of Mark, Thirty One Gifts, Stella and Dot,  Gigi Hill, Miche Bags and of course Chloe and Isabel with their recent $8.5m round of investment.  The goal is to make direct sales hip, fashionable and to profit from technology – iPads as sales aids and interactive catalogues, iPhones that take credit card payments, plus really simple CRM and inventory management.  And not forgetting to profit from the sales skills of all those smart young pro-moms taking a career break for their sprogs. You get the picture.  It help explains why Coty’s uninvited $10bn bid for the 126 Grand Dame of direct sales Avon.

A priori, we like the Shopping Party model – especially for a demographic that likes parties and shopping. In a previous pre-social media life, we were (and still are) very bullish about traditional word of mouth marketing, and we even wrote a book about it.  And one of the smartest word of mouth companies at the time was the Australian Word of Mouth Company, made up of buzz agents who’d throw parties to demo – and sell – new products. Simple and smart.

So what do you think of Shopping Parties? Will technology and rebranding re-launch an old model, taking the best of keep-what-you-want-return-the-rest subscription commerce (the other ‘It girl’ in digital retail right now) – and make it social by turning the subscriber base into a field force of sales agents ready and primed work? What do you think?