chris morton

1st Law of Social Commerce: Focus on Sales

On the surface, this first law of Social Commerce may seem fairly obvious, but on closer inspection there are two aims in tension:

- The aim for ‘Social’ is for people to interact and engage with each other.

- The aim for ‘Commerce’ is for people to buy.

One without the other is either a pure Social Network or a store - the key is in how the two aims are blended. To prevent product schizophrenia, one aim should lead while the other supports – but who gets centre stage?

To explain why it’s Commerce, let me illustrate the point with a story. As Lyst, we started by maximizing Social - our goal was to encourage our users to build ‘lysts’ of items they liked and to share them. While everything on the site was shoppable, we didn’t focus on sales - we didn’t even show prices on products! We assumed that if people were finding and sharing things they liked, they’d be buying them as well; however it turned out that that assumption was way off. The result of our early iterations was solid engagement but few sales.

So we took a step back and asked ourselves some deep, existential questions. We reminded ourselves that our primary goal was to help people discover and shop, and not to be a place for people to express themselves and hang out.

As a result, we rethought our product and based the next version on the premise that Social Commerce is Commerce first, Social second. In other words, it’s a Social layer on top of a Commerce engine and not the other way around. So in late 2011, we relaunched Lyst with a Commerce foundation and used Social only where it would help drive and improve the discovery and purchase process. 

As a product you should focus and optimise on one thing. In our first version, we learnt that if that one thing was Social Engagement, then that’s what we saw improving. Similarly in our second (and current) version, where our focus is on helping consumers discover and buy, we are seeing sales improve (up 1200% in the last 12 months).

This is what leads us to the first law – that the aim of Social Commerce is sales.

With that goal in mind, life becomes simpler. Actions and decisions have a clear yardstick they can be measured against, not only within Social Commerce companies like Lyst, but also for their partners.

Many businesses complain about how hard it is to measure effectiveness of Social Media campaigns. What is a retweet or a fan actually worth? With Social Commerce that question is much easier to answer – it’s fairly straightforward for partners to measure ROI.

This first law is the source from which the other laws flow – next week I’ll cover the second law: Purchase Intent in Essential.

The Laws of Social Commerce

Social Commerce – the term has been bandied about so much, what does it even mean anymore? Facebook tried it a few years ago with mixed results while Groupon were called out for claiming it as their own.

So let’s start with a definition: Social commerce lets consumers connect with their favourite brands and people so they discover and buy more things they love. In other words, it drives discovery though personalised shopping experiences that consumers manage themselves.

To use an analogy: if on Twitter the act of following people we’re interested in helps us discover more stories and news that appeal to us, then social commerce is the same principle applied to shopping.

So if that principle isn’t totally new, then why has it taken a while for it to be applied successfully to commerce? It turns out the differences between Social Media and Social Commerce are fairly nuanced – the devil’s in the detail.

Last week I gave a talk at the IHT Jewellery Summit on the Laws of Social Commerce - over the next few posts I’ll share them on this blog:

1. Focus on sales (srsly)

2. Purchase intent is essential

3. Taste graph not social graph

4. The consumer is in control

5. Data is a given but don’t take it for granted.

6. The story must be told

As it’s still a relatively young space, I also reserve the right to add to the list over time :)

Finally, if you have any insights or comments, please let me know.

Emotional Commerce

Last week I read a great blog post by Fab’s CEO, Jason Goldberg, about Emotional Commerce. In it he argues that the new wave of ecommerce innovation is moving away from ‘Commodity Commerce’ - namely shopping based on wide selection, price and speed as championed by Amazon and Walmart - towards more emotional, discovery-driven ecommerce experiences.

It reminded me what Hiroshi Mikitani, the Rakuten founder, says in his recent book Marketplace 3.0: “The internet is not a vending machine.” To him, the customer experience should be emotionally-driven and engaging.

Both of these sentiments capture one of our guiding principles at Lyst: Fashion is by it’s very natural emotional - our style is irrevocably tied to our sense of self and how we express it - so it’s clear that the act of selling fashion online should be equally emotional.

When I first came across Sarah Tavel’s brilliant 10 Laws of Ecommerce a few months after starting Lyst in 2010, I was unsettled by Rule #4: Your goal: cheap, fast and free. That didn’t seem to fit with how we thought people bought fashion. Sure, those things are great for Commodity Commerce, but for fashion the emotional connection is missing – and that’s the most important part. If your customers fall in love with something you sell, they will often compromise on ‘cheap, fast, and free’ to get it. And if we’re honest with ourselves, most of us are very good at post-rationalising emotionally based decisions (Jonathan Haidt has a nice explanation of why we make these sorts of decisions towards the end of the chapter here).

Sarah’s rule #8 is another interesting one: WWAD (What Would Amazon Do)? At Lyst, Amazon is one of the companies we most look up to – we ask ourselves WWAD all the time. But it’s only half the story. If commerce is a car, Amazon’s focus is on building an awesome engine, one that’s tuned perfectly, goes a million miles an hour and is jaw-droppingly fuel efficient. But what about the rest of the car?

You still need to feel that fizz of excitement when you sit in the seat and put your hands on the wheel. In part it comes from the car’s brand and in part it comes from the design of the interior – the UX/UI. It’s all about that feeling. As Jason says in his post, for Fab it’s about exciting merchandise, amazing shopping experiences and brand.

The bottom line is that for verticals centered on Emotional Commerce, like fashion, one without the other is a broken car, but when put together amazing things happen.

Of course Emotional Commerce isn’t anything new – in the physical world it’s how fashion and design has been sold for hundreds of years. Even online, it’s not such a recent phenomenon - eBay was one of its pioneers. They understood the implicit entertainment value of asking shoppers to compete for products and the social value of allowing shoppers and merchants to interact with each other. That said, while the eBay model was certainly innovative online, the real-world auction model is one of the oldest forms of commerce we have.

In 2009, Jeremey Liew of Lightspeed VC also touched on this in a blog post where he attributed the early success of Gilt and other flash sales sites to both low prices (Commodity Commerce) and the game mechanics of daily sales with limited timeframes (Emotional Commerce). But again, the flash sales model was forged in the physical, offline world before it was brought online.

So when I think of the new wave of Emotional Commerce, I think of models that are totally native to the online world - ones that don’t and can’t exist in the physical world. Along with exciting merchandise, amazing shopping experiences and brand, I’d place the following principles at the centre of the new wave of Emotional Commerce:

Personalisation. Our taste and style are very personal to us – they are innately tied to our sense of self - so we need shopping experiences that are equally personal. A fashion shopper who gets her own shopping experience, tailored to her own style, discovers more of the things she loves – things that help her express who she is and how she feels.

What’s more, through personalisation she also feels she is a getting a unique, special experience that’s made just for her.

In the real world, physical stores cannot rearrange their entire inventory whenever one of its customers comes through the door, but online I believe you absolutely can and should.

Communication. Shopping in emotionally centred verticals, like fashion, is innately social. We talk to friends to share what we’ve bought or seek opinions. We often talk with people at boutiques, to understand products and brands better. Through social media, we also now talk with brands – through the dialogue we learn more about them and what they stand for. Emotional Commerce should make this sort of multi-party communication simple and encourage it.

As Jeff Bezos says in his most recent (and 1997) Amazon shareholder letter, it’s still Day 1.

Irony

whitneymcn:

The industries that are having the greatest difficulty understanding, and adapting to, an era where the discovery and curation of great content are increasingly important are those that were themselves built on the discovery and curation of great content.

Objects of Desire

There was a great article about Lyst on Fashion’s Collective, here’s the link with full text below:

In fashion, we are inherently visual. Case in point: it’s the tweets that link to photos that get the most clicks because they provide the aesthetic fix we crave. The fashion industry has long understood this, creating beautiful pieces that flatter the body and please the eye. Even going beyond the tactile nature of a garment, everything from fashion advertising to in-store seeks to use visual cues to create an experience and capture a moment, always with the intent of driving sales.

In this industry, the most appreciated and celebrated individuals and brands are those who have a defined point of view. Whether it’s from the designer behind the collection, the fashion editor writing about it, the blogger commenting on it or the celebrity wearing it, the greater fashion audience finds guidance and inspiration in a point of view. We can’t all be Suzy Menkes after all, but we can certainly adhere to her opinions. Similarly, we’re not all Tim Gunn, but we can follow his style rules. We can’t all dress like our insanely cool best friend, but we can act on his or her influence.

Now, there’s a platform that satisfies our visual appetite as well as our urge to see what others are craving. Lyst is a platform that has been gaining traction since I first met them at Firenze4Ever in June. Essentially, Lyst is almost like a visualized Twitter newsfeed for fashion. Users can follow the people, brands and institutions that they love and create their own personal lists for others to follow. And what’s the best part? Products are shoppable and Lyst can even send you a notification when a product goes on sale.

Appropriately rolled out just before Fashion Week, Lyst launched a feature called “Runway Tracking” that allows users to add the runway looks that they love most to their lists. In turn, Lyst notifies them when those pieces become available for purchase anywhere in the world.

For individuals, the excitement of virtual browsing, and getting inspired by a variety of fashion that’s personally curated by you, is definitely the hook. Feeling personally validated when others follow you is the line. The ability to purchase and be notified of sales is the sinker.

For brands, creating your own list can be a way to showcase your collection range and be present in a burgeoning arena where hundreds of thousands of users in your target audience spend time. It can be a chance to facilitate a sale.(In the first six months alone, Lyst has generated millions in sales for its partners). But it can also be a way to tout your brand’s lifestyle. Think about appointing stylists to create virtual Lysts that appeal to the different ways your pieces can be worn? It might not be for every brand, but it could certainly be a way to reach a wider audience.

Want to know who has Lysts? Oscar de la Renta has one. So does Barneys. And Alexander Wang. Bloggers like Disney Roller Girl are there. Why aren’t you?