S-Commerce, where the E meets the social network.

A funny thing is happening to all of those builders of cool social networks. It’s the same thing that happened in the pre-dot com bust days. After their cool sites were built and they were all sittin’ around drinkin’ a microbrew, they all got the “South Park” look in their eyes and in unison said, “How do we make money”?

Again, in unison they said 2 things. “Well first we’ll make money off of advertisers and then, when we get so much traffic we can barely function, someone will buy us’.  I got news for you, a 1000 visitors a day, let alone a week, ain’t gonna gitter done.

So lets flash back to the South Park image again as they all look around after seeing that their traffic aint hittin the millions. “Now what”?

Well here’s an idea. Since consumer visits to social sites are growing at an exponential rate,  and since they’re becoming more comfortable with the model and more comfortable with the tools, controls and widgets of these sites, wouldn’t it make sense as a marketer to take advantage of this niche community? The answer is yes. But what about the owner/operator of the site what do they do?

So’s here how it goes down. Lets say I have this  social network for the lovers of all things llama. Why can’t I blend the transactional and social aspects of this group  by involving consumers in promoting and selling their offerings as they pertain to…”All things Llama”?

As these social sites become more and more “social”, and people find themselves spending more time on these sites, they become impervious to traditional media; That media being Tv, Radio, Newspapers and magazines. And what happens is that now all of a sudden your social network of peers and “friends” can now influence a buying decision. Because you trust them and they, you. Statistics show people join a social networking site to receive four benefits, 1) to meet people (78%); 2) to find entertainment (47%); 3) to learn something new (38%); and  4) influence others (23%) I tend to disagree with the 4th, but that just maybe a residual effect of a marketers desire to influence the social perception of their product.

Whats interesting to note though is that members of social networks have a higher disposable income than the general population – 20% more – and spend more of it online. So if they do and going back to our llama group analogy, we now present Joe, who is selling the most healthy llama snack ever made.  You trust him because Joe is a llama lover like you. Wouldn’t you buy your llama snacks from Joe? Of course you would!

You now have seen the benefit of selling to your peeps. S-Commerce.

But the question will  and does arise, how does a marketer get to Joe? How is Joe influenced to buy the best llama snacks?  For starters maybe Joe went to a branded micro-site devoted to llamas and their snacks, saw that they were offereing a free trial, and jumps on it. Or maybe Joe read a review online somewhere about the latest in llama feed and someone mentioned Killer llama Snacks. Joe could have been in a llama forum where he saw a skyscraper? Perhaps he could have been on a competeing site and saw an add for the latest llama snack? See how many ways you can get to him?

Of course Joe might be a heavy blog reader and reads a couple of killer llama blogs everyday where he reads some posts by the author or readers about an amazing new llama snack. Better yet, Joe loves Youtube, so combining his love for llamas and video, Joe does a search and finds a cool 30 second spot on the llamas at the san diego zoo that are big and strong thanks to the killer llama snack.

So by combining all elements of branding, and marketing, and advertising along with the power of a social network. And the trust that only a niche group could have for someone within the group, S-Commerce can thrive. The best part about it is that if your product makes it into the group. No selling is required.

Furthermore, you’re probabally asking, how does the owner/operator make money? Well since he owns the niche site, wouldn’t it behoove the maker of the killer llama snack to come to the owners and see if they can cut some type of marketing deal to push their product? You betcha. So now the only advertisers on the social site are relavant to the niche aspect of the site. Everyone wins…

Lastly, taking this to the next level then would be a company like lemonade.com Where they literally provide you with the stand and all you have to do is supply the products. Just make sure they(the products) are relevant to your group and you are good to go! It would also help if you were actually part of the group. Trying to win over the group as a  passing member of this group is a hard sell and could result in an instant loss of street cred. So tread lightly, stay long, grow some roots and sell some product. Can you name another seamless example of e-commerce in play in a social networking setting?

Lemonade.com deserves to succeed

I’ll tell you why. Last week I checked out their site and was impressed by their product, their site and their plan of action. What I didn’t like was the business model. It wasn’t solely based on affiliate marketing but enough of it was to throw it in that direction. I wasn’t so much railing on their business model as I was the whole notion of affiliate marketing in general as a business model. I just have never been wild about having to rely on other peoples traffic for the success of my product or business.

Well after saying as much, about an hour later or so I received the following email from Thomas Zawacki the Co-founder and CEO of Lemonade.com:

I read your blog and appreciate your opinion. Like you, I have been in the internet marketing industry for a long time. I agree with you that relying on an affiliate program as your sole source of income is a very difficult business to be in. That is exactly why we have built the Lemonade Social Commerce Server to be able to receive data feeds from a variety of revenue generating opportunities. Currently, we have integrated revenue from commissions from sales (affiliate deals), cost per acquisition offers (CPA deals), cost per click ads (CPC) and cost per thousand online advertising offers (CPM deals). The Lemonade Social Commerce Server also has the flexibility to add auction based revenue streams (e.g., Ebay) and revenue a user might get from selling their own products. All coming soon. In addition to aggregating revenue streams in our flexible back-end, the user experience must allow for three things to happen: 1) easy to join and set up the application (e.g., widget or Lemonade Stand); 2) easy for the consumer find what they want and interact with; and 3) the Lemonade Stand owner must make a significant amount of money per month to make it worth while – this is a combination of impression levels, click-through rates, conversion rates, etc.It takes under 3 minutes to set up a Lemonade Stand. Lemonade Stands live at http://www.lemonade.com and/or as a widget/application on Facebook, Blogger, and other key distribution points. This means that there is a built in amount of traffic to the stands that our users can monetize. Lemonade Stand owners can then make money via four different revenue streams, commissions from sales, CPA deals, CPC or CPM ads. This aggregated revenue is what makes it worth it to the user, not solely the returns from affiliate deals.Thank you for validating our model. We hope millions of people have fun setting up their Lemonade Stands, enjoy the social community aspects of http://www.lemonade.com, and make a bit of money along the way to pay their cell phone bills, donate to a good cause, or buy that gift for the holidays that their loved one really wants.


So riddle me this. Here is the CEO of a company, taking time out from his busy daily schedule to actually reply with thought, meaning and honesty on a) why I was partially right and b) why I might be wrong. And yet, he feels that it is worth his while to respond.

This tells me a few things. First, here is someone that knows what the viral effect of blogs can have on a company. Second, rather than getting defensive, he decides to point out why he thinks their product will bet better. So now, instead of me saying, “boy what a jerk”, he gets, “Boy, what a class act”!

I don’t know if his widget will set Web 2.0 on it’s ear, but if I were to teach how to be the CEO of a company, what he did would certainly be a lesson.  he took the time to address a blog that mentioned his company, spun it in his favor and didn’t burn a bridge in the process. He made an ally.  So what if he only responds to one a day, or whatever. The fact is, he took time out, to handle a little guerilla marketing on his own. A little hand to hand, if you will. Good Job TZ.