Relationship Commerce Model #1: the Social Media Player

It's the newest emerging retail channel. It's the combination of business models across the internet space. It's the latest and sexiest e-commerce phenomenon. Call it what you will. It's proper name is relationship commerce. This is the first blog post in a series of three where I discuss the concept of relationship commerce and whether or not it has legs in the market.

The first statistic you need to digest is that 28% of all e-commerce purchasing decisions are influenced by Social Media. If you take the $135B in retail e-commerce sales in 2009, that means that nearly $40B came from social media. Truly, social media is a powerful channel to drive traffic to retail web stores.

But it can be more than that; it can also be the actual store.

There are two notable player-types that I've seen in relationship commerce: (1) the social media player and (2) the solution provider. The social media player that most of us are probably familiar with is Facebook Marketplace, a great application that let's you view what your Facebook friends are selling. You can think of it as a more focused version of Craigslist - except this way, you are always buying from someone you know.

When Facebook Marketplace re-launched in March 2009, powered by Oodle, the synergy seemed obvious. The average high school or college-aged individual has 300 friends, and it made total sense that people would be interested in products these friends are selling - kind of like an online garage sale. Uptake of Facebook Marketplace has been relatively slow thus far, but the combination of Facebook growth, e-commerce growth, and social media growth position the application for substantial future growth.

This also paves the way for other social media sites to market products. Imagine LinkedIn applications for marketing B2B services to your contacts.

In any case, social media sites were just the first step for relationship commerce. It was only a matter of time before VCs and e-commerce platforms started throwing money into solutions. And this is where it gets interesting. How can retailers capitalize on this trend via technology solutions in the market? This is what we'll discuss in later postings. Read on tomorrow for article #2 pertaining to solution providers.