Business commentators like to develop short hand labels to describe a range of commercial activities and customer behaviours. The growth of social media has provided many opportunities to extend the use of these labels further.

Social commerce or s-commerce is the use of social networks and social media tools to support and encourage e-commerce transactions by enabling consumers to obtain advice from trusted individuals, find goods and services and then purchase them. The social networks that spread this advice have the function of increasing the customer’s trust in one retailer over another. Examples of social commerce include customer ratings and reviews, user recommendations and referrals, social shopping tools (sharing the act of shopping online), forums and communities, social media optimization and social advertising. Shopping has always been a social activity right back to the days when people bartered rather than paid for goods. It wasn’t until the arrival of e-commerce that the social aspect of shopping was removed. For most consumers the social element is fundamental – shopping it is a leisure activity, so being able to reintroduce this aspect into the online purchasing process is a powerful tool for retailers.

Social media optimization refers to the use of social media outlets and communities to generate publicity to increase the awareness of a product, brand or event. Social media optimization includes using RSS feeds, social news and bookmarking sites, as well as social media sites, such as Twitter, and video and blogging sites.

Facebook commerce or f-commerce refers to the buying and selling of goods or services either through Facebook directly or through Facebook Open Graph.

Mark Zuckerberg, founder of Facebook, said “Social actions are powerful because they act as trusted referrals and reinforce the fact that people influence people. It’s no longer just about messages that are broadcast out by companies, but increasingly about information that is shared between friends.”

According to HubSpot State of Inbound Marketing Report, more than one third of marketers say Facebook is “critical” or “important” to their business, which is an increase of 83% in two years. In addition, 67% of B2C (business-to-consumer) and 41% of B2B 9business-to-business) companies that use Facebook for marketing have acquired a customer through this channel.  In 2011, British label Burberry, offered Facebook fans the chance to purchase the brand’s newest fragrance via the social network. Consumers were able to click on the Burberry Body tab on the brand’s Facebook page to buy the fragrance.

Selling items via Facebook has a number of benefits,” said Ron Schott, senior analyst at Spring Creek Group, Seattle. “First, brands have the opportunity to target their offerings at a very specific audience. They know the makeup of their fan community and can gauge the likelihood of purchase. Beyond that, selling items via Facebook allows for pass-along of the offer. Friends see that their friends have bought a product and, true to human nature, want the product as well.”

Similary, Twitter commerce or t-commerce uses Twitter posts to highlight price changes, new product arrivals, and popular products. For example, Tweet-a-Beer connects Twitter and PayPal accounts together to allow users to buy a friend a beer, no matter where they are.  The following blogpost identifies 22 Essential Digital E-commerce Twitter feeds.

The best platform for B2B companies was LinkedIn with 65% of respondents acquiring a customer through that channel, while 77% of B2C companies said that they had acquired a customer through Facebook.

In the UK, sales from social commerce, driven by the influence of social media, are expected to more than double within the next five years, according to research from Barclays. It is predicted that 41% of consumers will influenced by, or use, social media to make a purchase. The figure is much higher at 73%  among 25 to 34-year-olds, which is unsurprising as 45% of this group are already engaging in ‘s-commerce’.

It’s estimated that around 70% of online shoppers are also active social networkers, while websites like Facebook, Twitter and Pinterest act as  a referral channel where consumer sentiment can be gauged and influence purchasers. While people are generally on social networks to socialise, consumers on these sites are receptive to new ideas, suggestions and recommendations, providing an opportunity for retailers.

When someone you know and trust makes a recommendation, it’s extremely powerful, and we’ve seen that the social shopper isn’t afraid to express online how much they want, love or dislike a product or service,” said Richard Lowe, head of retail and wholesale at Barclays. “This, in turn, creates a feedback loop on a product or brand. As more people post reviews, more people read them and give their own feedback, which is picked up by a new group of consumers. Retailers should be exploring ways to tap into these communities in order to create more personalised shopping experiences.”

This influential nature of social media is expected to translate into significant increases in sales revenue through social commerce, with fashion, footwear, music, film and grocery retailers experiencing the most significant gains.