Social Commerce | being practical

While Groupon has redefined local business and is in news for its fastest billion dollar revenue + its $700 Mn IPO, from a long term perspective I think Foursquare is a far better bet than Groupon.

Some of the many criticisms of Groupon –

Socially unconnected users
Concerns on validity of Business Model, just 3 years and now a IPO
Merchant side issues – 75% discount on products
Not much metrics available for merchants, no user contact information
Are new consumers acquired or are they deal seekers only
No technology barrier, 100s of Groupon clones have hit across the Globe
Though not many players are as large as Groupon, LivingSocial; Merchants have a choice
Intensive feet on street business with huge sales force.
Groupon Now – merchants are able to create own deals through Groupon

Take case of Foursquare – they could possibly over throw Groupon.

My contention is that any platform and service that can empower merchants to run business and acquire consumers (new/repeat) will be able to overthrow Groupon in long run. While Groupon clearly demonstrates that local deals work, Foursquare has the technology & product to take it to the next level and give a tough competition to Groupon where it hurts most – at supply side (Merchants or Local Business Owners).

The biggest ‘cry’ we hear against Groupon is merchants complaining – its only the existing customers who use Groupon coupons for deals, and new consumers are not acquired/retained.

On the other hand, Foursquare –

As a product, consumers checkin at all locations and businesses (small, local & large)
Foursquare need to move beyond check-ins for two reasons
> In sometime real consumers (not technology savvy early adopters) will not find value in badges & points.
> Foursquare will need to have a monetization model that works!

Foursquare has valuable insights about users for the merchants – people who have checked in. They just need to quickly enable self-serve platform for business owners with a global sales footprint.

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Foursquare can just topple off Groupon and with its solution for merchants that covers every pain they have with Daily Deals services like Groupon, Living Social and 1000 others only for one reason – Business owners know who are new/repeat customers

They can enable deals for individually and for specific type of customers
> Consumers who check-in for first time
> Repeat & Regular customers
> Consumers who have not checked-in since last 30 days
Decide what deal goes live when based on user interest, inventory available, and so on

More than that, they can –

Decide how much discount they should offer. To whom.
Take private feedbacks from customers on service
Push deals to customers on special occasions like birthdays & more
Pass on details about business Facebook & Twitter presence to customers – so that they can stay connected.
Analytics – who checks in, cost of acquisition of new customers, competition overview in same location

And most importantly – Foursquare should give ability to businesses to generate coupons, pass on to consumers in vicinity or existing customers which users can redeem immediately.

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In short – daily deals websites exploits local merchants. Foursquare can empower them!

The pitfall – Foursquare does not have a global sales footprint to enable this. Though technology savvy merchants back in US might adopt it, the business would scale when 1000s of merchants across the world are able to enable it. But again, thanks to the 8 Mn+ users – Foursquare already knows which businesses are popular and when they should start.

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If I had a million dollars and choice to invest in Groupon or Foursquare – i would surely bet on Foursquare!

My Prediction – Groupon or some player who has intention to venture big in local deals space will eventually acquire Foursquare or a majority stake.

Social Commerce is Simple. Here is how you solve it in 24 hours!

The Context of this post: Have been hearing & participating in some awesome conversations lately about Social Commerce. Someone explained me this – Transactional eCommerce is Big. Social media is where all users are today, it is already very Big.

So, Social + eCommerce = Social Commerce = Very very big!

Hence there is lot of interest today in products and platforms that are trying to bridge the gap. Analysts are predicting that its the next big thing and stating it is reaching its inflection point.

Completely agree with all that. But Social Commerce is simple, here is how you solve it.

Social commerce is Simple

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Oooops, btw did I tell you that more than $50 Million has been invested till date to solve this Social Commerce problem that merchants can do it themselves in less than 24 hours!

The following text is not included in above presentation.

Some key insights for players in Social Commerce:

Existing ecosystem of eCommerce and Social Media is sufficient for building a Social Commerce without intermediation of players who do not add any value.

It will be difficult for a:

Existing social player to exploit potential of social commerce by introducing a new ecommerce service
(Facebook or Twitter trying to build a Amazon)
Existing ecommerce player to exploit potential of social commerce by introducing a new social service.
(Amazon trying to build a Facebook or Twitter)

Most current players who are trying to build solutions are concentrating on building their own ecosystem of users & products – which is not impossible but extremely challenging. Reason being – such players do not own the products or the users (users that have more tight social connections as on Facebook & Twitter)

Unless a third situation happens – someone builds a valuable middle layer that provides affinity to both – social & commerce. As an platform in this case you need to provide enough value to users (either users from Social Media or users from eCommerce).

One such promising player is FourSquare. They add a new value of – “checking in” to its users that are socially connected. Their current efforts are concentrated on getting these Social Connections to checkin to venues – which is demonstrated by its 6Mn+ users.

For purpose of this presentation I have kept other Social Models out –

Foursquare: Because its reach is still 1% compared to Facebook’s 600 Million users.
Groupon: It is a commerce player, but not social player. Groupon is not user engagement – view Fred Wilson’s comments here: http://t.co/p78buu0

Drop me a mail, Available for Coffee and endless Product Management Conversations on weekends 🙂