I must admit that I have seen way too many social networking related plays that want to be the next MySpace of some niche market. When asked about monetization the standard answer is they have a much more focused audience than MySpace with highly targeted CPMs. Guess what, if MySpace is only monetizing a fraction of their visits, how can a tiny, little niche site scale to enough volume to make a meaningful business? In addition, who wants to sign up for multiple social networking platforms like MySpace, Facebook, and niche sites for politics, sports, etc. While there will always be a few dominant social networking sites, I firmly believe that we will see more and more social networking functionality get built and weaved into commerce sites and other ventures. One of the reasons why eBay and Amazon have done so well is because of their respective communities and the ratings that are created by their customers. Netflix does a great job as well by allowing you to sign up friends and track their recent movies and get recommendations based on your location.
The next step in this evolution of commerce will be social shopping or companies leveraging Citizen's Media (blogs, podcasts, videocasts, tagging) to drive commerce. According to Answers.com, "Social Shopping is based on the principles outlined in the wisdom of crowds where a large group of users can recommend products to each other and between them work out what to buy and which ones have the most buzz." I believe this is an interesting area that has not been fully tapped yet. At the root of it, people want to connect. Most people I know tend to check the Internet first to research a purchase and also ask friends for recommendations or reviews about products. The more inefficient a market is, the more opportunity there is to educate consumers and peers leveraging the web.
A great example is the wine market. I am certainly no wine connoisseur, but I have been trying to learn more about it over the last two years. Over time, I moved from an Excel spreadsheet to using the web to track some of my purchases and to learn more about each bottle. One of my favorite sites is Cellartracker. It leverages almost a wiki like concept so when I add a bottle of wine, it first searches its database to see if anyone else in the community has already input the data. If it does, I can easily add a bottle to my virtual cellar and if not, I can add the data myself. It already has over 3 million bottles of wines in its database so I did not have to do alot of work to get started. It also has community reviews built into each input of wine so you can get recommendations for other bottles and figure out what others that have the same bottle as you have in their wine cellar. The downside is that the UI is not the prettiest and the site may be too flexible for the average user. Cork'd is another example of social shopping - it allows you to catalog your wine, review and rate it, maintain a wish list, and subcribe to your friend's wine lists.
One of my favorite examples of leveraging citizen's media is Wine Library, which has one of the largest selection of wines and some of the best prices on the web. Gary Vaynerchuk, Director of Operations, really gets the web and has leveraged podcasts and videocasts to launch Wine Library TV, a wine video blog with daily updates. If you haven't checked it out, I suggest subscribing to his videocast and buying wine from his store. I just had dinner with Gary tonight and it really blows my mind to hear how he helped take a small, family owned wine retailer based in New Jersey and leveraged the Internet to create a powerful wine retailer. It is great to see Gary bring next generation web concepts to the under the radar world of wine retailing. He especially understands how content can and does drive commerce for his company. Every videocast drives sales and as you can see from his site, he has built a pretty loyal following in a short period of time. He has a pretty sizable subrscriber base and uses RSS, tagging, and comments effectively to build a community around his videocasts. Since Gary understands how powerful the web can be, I would not be surprised to see him becoming the Robert Parker for the web generation as he delivers his reviews and thoughts in a way that we get and can consume on the go on any device. The big difference will be that Gary can and will leverage the web and his community to rate the best wines versus relying solely on the fine taste of one person. When speaking with Gary, it is also quite interesting to hear him talk about Wine Library as a content and social networking site as much as an ecommerce player. In the future, Gary plans on delivering alot more functionality on his site allowing his users to instantly add any purchase to their own virtual wine cellar, take notes on the wine, and share recommendations with their friends or the public. In my mind, this is a great example of how powerful social networking and blogging concepts can be for ecommerce plays. It has allowed Gary to build a stronger brand, acquire new customers virally, improve his conversion rates from web marketing, sell more wine, and ultimately boost his profitability per new customer (lower acquisition costs + increased sales). Given some of these benefits, I truly believe that social shopping will become a big thing in the next few years.