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Commerce in the Time of Social September 29, 2011

Posted by Bipul Sinha in business models, Consumer internet, social media, social networks, Uncategorized.
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The fabric that underlies the social Internet is essentially a new web where people are the nodes, connected through a social graph. This ubiquitous people to people connection with real identities has significant implications for commerce and how we transact in the real world. The reduction in information asymmetry in the marketplace and the ability to mobilize people, through the social graph messaging and data, have the potential to unleash peer to peer commerce in a way we have never seen before.

The Rediscovery of Direct Selling Businesses

Everyone has heard stories of Tupperware parties where a group of people gathered in someone’s home for product demonstration, buying and socializing. The social media is giving a new boost to this old business model by enabling the entrepreneurial hosts to invite friends and friends of friends, and gather offline to socialize and transact, using online tools such as Facebook and Twitter. The online and offline recommendation, feedback and validation

reduce the social approval anxiety and the friction in the buying decision. The social graph-enabled direct selling business model is especially interesting for highly demonstrable products such as handbags, jewelries, shoes, home accessories, etc. These products tend to be discretionary and highly correlated with emotions, impulsive buying and discovery orientation. The innovators in this space would foster entrepreneurship by enabling individuals to participate in the value creation and get the rewards.

The Overcapacity Marketplaces

The social Internet is enabling new kinds of peer to peer marketplaces where people can transact on overcapacity. The overcapacity can be in their belongings or skills. Since the articles involved in transactions tend  to be

personal in nature, the social graph acts as a lubricant to reduce the friction and cost of transaction. The living space sharing marketplaces such as Airbnb, personal car sharing marketplaces such as RelayRides, meals marketplaces from local chefs such as Gobble, etc. are some of the examples of the overcapacity marketplaces. In each of these, participants are leveraging overcapacity, be it in their homes, cars or skills utilization to create value. These marketplaces empower individuals to run their own business models and make profits accordingly. We will witness the rise of the overcapacity marketplaces as the peer to peer commerce takes off on the back of the social Internet. The unleashing of entrepreneurial imagination and the resulting innovations would help usher in an era of collaborative consumption.

Comments»

1. Sharon Hill - September 30, 2011

Following this great social commerce trend many new innovations which combine eCommerece and social media appeared , one of them is http://www.zizio.com which really create a socializing/shopping arena right on your website.

2. Jyasper « jyasper.com - October 29, 2011

[…] Lightspeed Venture Partners Blog […]

3. David - November 12, 2011

This article really remains when back in the days there were cool events when everyone get together in one place for product presentation along with some socializing.
Usually the product demonstration was just thee reason to get all people together for good party :)

4. Mike - November 27, 2011

People are buying the things that others have recommended and now when everyone have chance to express their opinion on social media everyone can become a salesman or marketing specialist for the product they have bought and they are happy about it.
There is amazing power in this but so far this social thing isn’t that widely used for selling but it’s growing each day.

5. techceo - December 15, 2011

Many entrepreneurs have realized the potential for social media in selling and jumped into it to create a fragmented market place. I believe the next wave is of companies that can bring best of all – friends and statuses from FB, information from Twitter and reviews from Yelp to create one stop shop for social commerce. Looking forward to this fast growing space.

6. Is Direct Selling The Next Driver Of Startup Commerce Companies? | TechCrunch - April 14, 2012

[…] my partner Bipul Sinha noted in a post last year, direct selling is one of the most interesting opportunities in commerce in the time of social. Direct selling is being invigorated right now, not just in Latin America, but also in the US, due […]

7. Is Direct Selling The Next Driver Of Startup Commerce Companies? | Krantenkoppen Tech - April 14, 2012

[…] my partner Bipul Sinha noted in a post last year, direct selling is one of the most interesting opportunities in commerce in the time of social. Direct selling is being invigorated right now, not just in Latin America, but also in the US, due […]

8. Is Direct Selling The Next Driver Of Startup Commerce Companies? | Arizona Technology Investor Forum - April 14, 2012

[…] my partner Bipul Sinha noted in a post last year, direct selling is one of the most interesting opportunities in commerce in the time of social. Direct selling is being invigorated right now, not just in Latin America, but also in the US, due […]

9. Is Direct Selling The Next Driver Of Startup Commerce Companies? | Molecular Biology News Stories - April 16, 2012

[…] my partner Bipul Sinha noted in a post last year, direct selling is one of the most interesting opportunities in commerce in the time of social. Direct selling is being invigorated right now, not just in Latin America, but also in the US, due […]

10. Commerce in the Time of Social « susankomoto.com - May 2, 2012

[…] Another great read on the Direct Sales model and Social Media by Bipul Sinha. Read the article in it’s entirety at Lightspeed. […]

11. Hey Party People – Shopping Parties are in Da House | Social Commerce Today - May 6, 2012

[…] Liew of Lightspeed, picked up by the ever-insightful Jason Soo and Jochen Krisch, confirming a prediction about the future of social commerce has come to pass; the rebirth of the shopping […]


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