Plugging In: Can E-Commerce Leverage Social Networks?

Auction site eBay has always had considered itself a community, making it an early adopter of some of the aspects of social networking, which is presently red hot. Today, its sellers and buyers are able to reach beyond the virtual walls of eBay to tap into existing social networks, something more e-commerce companies are seeking ways to duplicate.

The auction and e-tail site has a long history of building community and making connections that go beyond commerce, Adam Trachtenberg, the senior manager of platform evangelism at eBay, told the E-Commerce Times. Within eBay itself, wikis and blogs are being used to build community and conversation around products and around selling and buying on eBay itself.

Across the rest of the Internet, meanwhile, including the Web 2.0 realm of social networking, eBay is extending its reach thanks to the work of some of its 1,000 third-party developers. The developers program, now in its sixth year, has created scores of plug-ins and other tools to help people sell, with 25 percent of all eBay listings now being generated through third-party tools.

Now, it’s also helping eBay tap into the power of social networking.

“We’ve always been very focused on community for the 11 plus years we’ve been here,” Trachtenberg said. “As the Internet has evolved over the last decade, the definition of what is community has also changed — it’s become more international, more democratized, more user-driven.”

Cooqy Anyone?

One plug-in, known as Cooqy, enables eBay sellers to display their auction listings on various social networking sites, including MySpace.com pages. The nature of social networking makes it a perfect place to find like-minded buyers and sellers, noted Cooqy founder Robert Yeager.

“eBay sellers are already there on MySpace and the other sites,” Yeager explained. “They are part of those networks, connecting on those same ideas and interests, but they didn’t have enabling technology to let them show off their inventory and help snag shoppers.”

For instance, a rare coin dealer can use Cooqy to integrate his eBay listings into his MySpace page, or onto a blog that he publishes on the topic, Yeager said. Likewise, the technology can provide value for buyers, who can use the plug-in to refine searches and help them hone in on items of interest to them.

The plug-in works automatically, Yeager said, with a few lines of code doing all the work to insert the listings into a variety of different Web settings. Other developers are working on similar ways to extend the eBay platform, be it to mobile devices or digital video recorders or through existing Web real estate, according to Trachtenberg.

“There really is a new wave of e-commerce taking hold,” Yeager claimed. “Just like you have the Web 2.0, you are going to have e-commerce 2.0.”

As social networking continues to gain a stronger foothold, with News Corp’s MySpace now at more than 100 million members and Google recently scooping up YouTube for $1.65 billion, it’s logical for e-tailers to seek ways to tap into that zeitgeist to drive traffic and pinpoint likely buyers.

Still, there are reasons not to embrace social network tie-ins, at least not without careful consideration.

“There are some risks involved in opening up your marketing to these less-controllable social networks,” said Robbie Baxter, a branding and marketing consultant with Peninsula Strategies, a firm that counts Netflix, Yahoo and Sun Microsystems among its clients.

Aligning a product or company with such sites where content is user-generated and often not edited or filtered has its downsides.

“You need to be willing to have negative reviews and feedback. It will happen,” Baxter said. “If your company has really positive customer relationships and strong feedback, and you are willing to have customers share the good, the bad and the ugly, you are a good candidate. If you worry about what your customers would say if they were alone in a room with your prospects — your product/business might not be ready yet.”

Build Your Own?

Certain types of retailers may find social networking a good match, with fashion, travel and recreation among those that can benefit most, noted Chase Grover, an Interactive Strategist at Carlson Marketing.

“Consumers are less likely to read product reviews, testimonials or even blogs about purchasing one paper towel brand over another. A community forum about the best hotels in Mexico is an entirely different story,” he told the E-Commerce Times.

Still, when it comes to using social networking to drive sales, most companies are best off building their own networking platforms, according to Grover.

“Most marketers will be best served with concentrating on their own brand’s Web traffic and how to better build community applications on these sites,” he said. Online forums, chats, product-focused blogs, customer reviews and ratings and, increasingly, video mash-ups that offer brand insight are the types of features e-tailers can borrow from the social networking niche.

Not surprisingly, several firms have begun to target the opportunity represented by firms that want to increase the amount of social interaction that takes place on their sites.

Product user bases are “the most overlooked source of untapped wealth right now,” said Rob Frankel, the owner of I-Legions, which creates ready-made networking sites called “Branded Communities” for companies.

“Companies have been hoarding all kinds of user data for internal use, but have no idea how to leverage that same data for generating more brand usage and loyalty,” he said. “The market is finally beginning to understand the power of individuals as they interact with each other.

By networking around products or services, as within Branded Communities, Frankel added, users “interact with each other via the brand,” which can create deep affinity and longer lasting customer relationships.