Editor's Note: this article originally appeared on the X.commerce blog
Each day we hear growing speculation about the so-called mobile commerce revolution that’s just starting to take shape. Some think NFC payments will be the next big thing in retail. Others believe text-based payments will open up the mobile payment experience for the billions of mobile device holders around the world. And thousands of new apps are created each year with a new twist on using your mobile device to pay for everyday things.
To some extent, these concepts and more will shape the future of mobile commerce. However, pundits are forgetting what might happen if you combine the most commonly used platforms in the world—mobile devices and social networks—and infuse quick payment technology within them.
If Those Two Powerful Phenomena Merge, Will We Discover a New Payments Utopia?
It seems as if we've been in the stone age of social commerce for years now. Facebook has been around for almost a decade, and before that we had Friendster and Myspace. From my perspective, most don't realize how close we actually are to merging social and commercial actions. How many times have you read a Facebook update from a friend, for instance, saying something like "I just saw ____ and it was the best movie I've ever seen." Or what about the posts that show off a new car or recently purchased clothing? Those posts, in a small way, are the beginnings of social commerce. By sharing things such as a new purchase or a cool new movie, you are influencing your friends’ commercial interests. Today, people are partaking in social commerce without actually knowing it.
The question is, what will happen when they know they are doing it and they help you make a similar purchase? And more interestingly, what happens when it originates from a mobile device?
Facebook and Twitter, together making up more than a billion socially connected web users, have positioned themselves well for the possible next phase of commerce. Facebook, for instance, recently reported now having 955 million monthly active users and 552 million daily active users. It also said it had 543 million active mobile users, who are much more engaged than its PC users. Even more interestingly, it also stated:
Over 11 million businesses already have pages on Facebook. Over 7 million of these pages are actively used each and every month.
In addition, hundreds of thousands of small businesses advertise with us. By making it easier to create a business page and run ads, we believe we can increase the number of small and local businesses who use our tools.
It would be foolish to sweep that statement under the rug. With over 11 million businesses already active on Facebook, it's clear how close a social commerce revolution is to becoming reality. It’s safe to say that there are now more small and medium businesses (SMBs) “on Facebook” than advertise in all US print Yellow Pages directories combined.
What happens when those 11 million businesses (and growing) start to understand how to leverage Facebook, social sharing, and mobile technologies to drive in-store sales?
The promise of social (and mobile) commerce is simply to be the fastest and safest way to buy anything online and while shopping on your mobile device. Although mobile commerce is great, most solutions seem to leave a key ingredient out of the equation. A number of startups are focusing on building applications that allow people to pay with their mobile phone, yet they seem to be forgetting that the whole idea is to make it quicker and easier to complete a purchase. In most cases today, the actual purchase remains just as difficult as traditional e-commerce, and it doesn't solve any sort of problem—it actually creates new ones.
How Facebook Could Transform the Mobile Commerce Market
As stated above, Facebook already knows your identity; in fact, it has the identity of almost 1 billion people around the world. And, if you are like most users, you are always signed in, which presents Facebook with an opportunity to offer a more seamless (Amazon-like) one-click payment experience inside or outside its walled garden. With its 950 million users, Facebook sits in the strongest position to offer the commercial identity for quick purchases. Combine a user ID with a mobile device ID and connect a secure payment credential, and now you have one quick checkout—online or offline.
Online, merchants already have the ability to create a storefront on Facebook, but most say Facebook commerce hasn’t taken off because very few people know about these stores or find them very valuable. For retailers, the general sentiment is that a Facebook storefront is just another place that needs to be maintained and is not optimized for sales like their online stores.
It also turns out that simply replicating a web storefront on Facebook isn’t compelling for consumers, particularly when the brand’s fully functioning and pretty convenient website is only one click away. Moreover, brands have been leery of driving commerce traffic to Facebook rather than to their own sites, where they can better control the experience and manage consumers through a purchase conversion funnel.
If Basic Storefronts Are Not the Promise of Social Commerce, Could Sharing Be?
If you have been closely following the moves the Facebook has been making lately, the social commerce pieces look like they are falling into place. It seems Facebook figured out that the promise of social commerce is about push, not pull. Storefronts pull users away from what they are doing and require them to go and look at a products on a certain web page. Push allows them to receive notifications on their mobile devices when something is purchased by a friend and is now available to them right at that moment. Mobile notifications harness the power of social commerce like nothing seen before.
For instance, more commerce-oriented actions are popping up within the generic social networking experience. With Graphite, retailers can use Facebook’s Custom Open Graph to place unique buttons on their site that allow consumers to express their interest in products. So, instead of a generic “Like” button, retailers can include customized buttons for things like: Want, Love, Own, LOL, Gimme, Need, Ask a Friend, or I Can’t Wait to Wear.
While Inside Facebook has pointed out how the Want button would be useful for indicating purchasing intent and subsequently enabling more targeted ads against Wants, other details give a clue as to what kinds of purchases Facebook could enable, such as sharing wants and purchases on your Timeline. And when a user clicks these buttons, they fall right into the user's friends' news feeds.
Now imagine if instant and automatic transactions were coded into those sorts of buttons, allowing the user to transact with a securely stored payment credential on a third-party server in just one click from his or her mobile device.
Another part of the social commerce promise involves sharing deals and coupons. New Facebook apps are making traditional couponing significantly more social—not like group buying/mass discounts (à la Groupon) but more social in the general sense, creatively helping brands spread their offers wider while maintaining their profit margins. Apps integrated within the Open Graph allow users to share their coupons with other users, and advertisers can create their own coupons via a white-label service, which they can subsequently target to specific users—so, like a Sponsored Story, the coupons can run in a user’s Timeline and act as another form of marketing for a brand.
Again, imagine browsing on your mobile and finding in your feed something interesting a friend just recommended, which you were then able to immediately purchase using a securely stored payment credential with one click and a text confirmation. Yes, you are looking at the future of social commerce. You can see the logical next step of not just adding the coupon directly to a loyalty card, as you can already do, but allowing users to instantly buy them in the process.
Traditional shopping isn't the only possible payment experience to be found through Facebook commerce. Donations present huge potential in allowing people to expand their giving with a simple click. This could be about charitable donations, but they could also be about group donations for purchases or events. Donations and social giving present such a massive opportunity that Facebook acquired the social gifting service Karma in May.
Why is this move so important? Over 100 million people accessed Facebook solely from mobile in June, a massive 23% increase over the 83 million mobile-only users in March. This means more and more people are ditching Facebook on their computers, where it can show up to seven ads per page, and instead accessing Facebook through their phones and tablets, where it shows only the occasional Sponsored Stories ad. Make no mistake: advertising revenue will not be enough to power Facebook growth over the next handful of years. Mobile is where the growth must come from. Since it’s more difficult to rely on advertising on such a small screen, payments and commerce are the next logical step. In fact, Peter Volgel predicted that Facebook’s revenue from Payments will double every year for the next five years.
If you are developing a mobile payment platform, it only makes sense to consider the imminent power of social sharing and how it will enhance the commerce experience for people around the world.