Why communities will hold the key to the next round of market revolution
When online marketplaces started challenging physical stores, there were two shifts that were simultaneously taking place. One, the typical guided tour within the physical store with “one” person helping us with the products got replaced by a “community” of previous buyers guiding us with recommendations. Two, the limited shelf-space of a physical store was replaced by a potentially infinite browser-space of the virtual marketplace.
Yet, it was not easy for online marketplaces. How do they make the community of previous buyers credible? How do they build a system that balances out the positive and negative reviews of the community and gets the recommendations more accurate? How do they present the catalogue in the most efficient way that minimises the navigation steps, yet makes it effective enough so users can make the right purchase? Is there a community element there as well in the form of what we today called as the “people similar to you” approach? How do we balance out the organic reach with the inorganic promotions?
Communities taking centre stage
Brands started realising that the best version of every consumer product is something that is inherently social. As D'Arcy Coolican puts it, “Any product that has a social component baked in has fundamental and asymmetric advantages over competing non-social products in that category: better growth loops, better engagement, better retention, and better defensibility. And because social+ companies are network and community driven, that advantage accumulates over time.”
Community of unknown buyers versus community of known recommenders
While ecommerce connected us one-way with a community of unknown buyers, “social+” companies are seeking the possibility of making a two-way connection within our own communities. From shopping and gaming to real estate, fitness, and education, brands are starting to leverage the power of communities.
What do my friends recommend? Where do my neighbours purchase from? What are my colleagues learning? What are my college alumni doing?
There is even a possibility to go one step further and incentivise this social behaviour through referrals and points.
When it’s about communities, when it’s about social, transactions are no longer just transactions, they are emotional. When Zuckerberg said in Facebook’s 2019 developer conference that groups are at the heart of the new Facebook experience, there was a reference to a market transition.
The future of online commerce is social
The 2020 report, “The Future of Commerce in India - the rise of social commerce” by Bain & Company and Sequoia India predicts that India’s social commerce sector will be two times the size of the current ecommerce market within ten years, driven by formats ranging from conversational commerce on chat platforms to video-led commerce.
From $1.5-2 billion right now, social commerce in India is expected to reach $20 billion by 2025 and $70 billion by 2030. India’s current ecommerce market is about $30 billion. The future of online commerce is clearly social.
Social networks with a location element become even more powerful for commerce.
With “near me” searches growing by the day, Google Statistics say 76 percent of people who conduct a local search on their smartphone visit a physical place within 24 hours and 28 percent of those searches result in a purchase.
Companies like Nextdoor took the power of social further by integrating that with the power of location. They put a structure to the physical “word of mouth” transactions or the challenges around them in modern-day society and developed a product that leverages neighbourhoods for not just interactions, but also for commerce.
They were able to build a successful marketplace model around neighbourhood interactions. Even at IamHere, we are leveraging the power of “social + location” to build hyperlocal communities for social collaboration, local commerce, and citizen engagement.
Location-based social innovation opens the possibility to even disrupt the development sector by connecting NGOs with volunteers and donors nearby. It widens the reach for social and commercial event organisers by connecting them with the right audience nearby. It enables job seekers to find jobs locally, content seekers to source content locally.
While the dot-com era enabled offline businesses to instantly go online through the idea of websites, the social networking era enabled the possibility of reaching consumers even when they were not searching for you. The community era is taking this one step further and not only adding credibility to a business’s reach but ensuring that the purchase behaviour is repeated.
Communities are sure holding the key to the next round of market revolution.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)