A couple weeks ago, Amazon launched a new feature that lets users tap into their Facebook network. Users can find recommendations from friends, see upcoming birthdays and their friends' wishlists, find gift ideas based on Facebook profiles or get purchase ideas from profiles based on friends with similar interests. This has the potential to be very powerful, and might in fact be indicative of how social media will drive e-commerce going forward.
"Numerous studies have shown that a friend's recommendations have the most weight with shoppers, and the Amazon Facebook connection places the users friends right inside the buying cycle," notes HypeBot's Bruce Houghton.
The Amazon/Facebook integration itself is huge, simply because Amazon is an e-commerce giant. You might say it's THE e-commerce giant, but the implications of Facebook and social media in general on e-commerce will be broader than the enormous, but still limited network of Facebook users. Facebook may not always reign supreme in social media, but for now, it's the poster child with its half a billion users and counting. Amazon's integration will show the masses what is possible, and others will follow suit.
Recommendations can indeed be very powerful, but social media will continue to drive e-commerce for other reasons as well. "Social commerce is moving beyond just recommendations and reviews," says Jeff Bennett, CEO of Swaptree.com. "With the web now enabling social connections through Facebook, Twitter and other sites, a new movement of collaborative consumption is forming and is fostering personal connections in a way that has not previously occurred with traditional point and click transactions."
Facebook ironically (given all of the privacy concerns voiced throughout the media this year) may add a trust factor to e-commerce sites. "According to Facebook, three times more visitors will login to their Facebook account on an e-commerce site than would create an account/register. That’s significant," says SeeWhy Founder Charles Nicholls. "Visitors don't like creating accounts everywhere. They forget how to login and don't like sharing personal details unless they are willing to trust the site."
In the future, Facebook's own role in all of this may increase dramatically through advertising. It's already playing a huge role on Facebook's site. The more users share, the better Facebook can target ads to them. Facebook's ads already target you based on your activity, like what's in your profile. The "open graph" which lets you "like" stuff all over the web will only continue to fuel this.
One day, while the company will not acknowledge this, they could send these highly targeted ads to you all over the web with an AdSense-like platform. Facebook, to the best of my knowledge, has not indicated that they intend to do this, but it seems like such an obvious move. If user's are already logging into other sites using their Facebook accounts, bringing other Facebook information to them, why wouldn't they consider doing this? Such a scenario would obviously compete with Google's AdSense, and it's no secret that the competition between these two companies is already heating up. Whether Facebook goes that route or not, the competition is there.
Google has a lot of data about you too. In fact, the Wall Street Journal just published an article looking at a document the company compiled in 2008, which mentions some interesting things about what Google could do with some of that data.
The increased competition between Google and Facebook will also likely drive online purchasing. Leena Rao at TechCrunch speculates that Google Checkout could get a huge injection of usage from several elements, such as Google's newfound interest in social gaming (one of the major areas where the company appears to be going after Facebook). Another (while still theoretical at this point) concept she mentions would have Google letting businesses and customers engage in direct transactions from Place Pages, which Google has also been putting an increased amount of focus on lately.
It doesn't seem incredibly far-fetched does it? And let's not forget the Places API, which lets developers tap into Google's Places data for their own apps. On top of all of that, Google is reportedly acquiring Jambool, which owns Social Gold, a social payment product. Social Gold lets developers put payments into their apps.
It seems like the competition between Facebook and Google might be a big win for e-commerce as a whole. Kim-Mai Cutler at VentureBeat thinks a deep Amazon/Facebook partnership could "help corner Google in the e-commerce market." The e-commerce angle to this whole battle might be one that is widely overlooked. We're not talking just virtual goods here. We're talking the sales of merchandise.
Some consumers will continue to express concerns about privacy with regards to how businesses tap into their Faceboook or other social data, but that discussion really won't be much different than the basic discussion around Facebook's Open Graph as a whole. Facebook doesn't get your buying history. Sites don't get your Facebook info. Facebook provides your Facebook info while you're on other sites. That can add a lot of convenience to your shopping experience. That can help businesses drive sales.