Listen up Banks, it's becoming a PayPal World

Traditionally PayPal has dominated the online payment space while offline payments have been dominated by the banks. However, PayPal is stepping into the door of brick-and-mortar storefronts by installing a payment terminal at checkout. Recently they landed a pilot program with Home Depot and Office Depot. They have Visa, MasterCard and banks such as U.S. Bank in their crosshairs.

The transactional banking business, the 1.9-2.9% per transaction model, is very competitive. PayPal knows they could never be as cheap as banks (because in essence PayPal is a third party), so they have been developing innovative technology to steal brink-and-mortar merchants from the banks. I agree with PayPal cold-heartedly, innovative social business technology will differentiate financial firms from each other in the near future. Thus, the ones who innovate first will win.

An example of PayPal’s innovative technology is their Virtual Window Shopping Experience – The idea is merchants can sell products through the window shopping while being closed. This is a phenomenal concept, it’s definitely the future of window shopping, and PayPal can charge a monthly fee or maybe even an additional transactional fee for this service.

PayPal has a network of consumers and merchants; they can transfer funds virtually for free between the two parties (PayPal account to PayPal account) and charge a transactional fee to the merchant. With over 100 million active accounts, PayPal’s market is huge and banks should be worried. PayPal is stepping on the bank’s toes by developing a payment terminal and new technology to entice a compelling reason for merchants to make the move over to PayPal.

The best way to predict the future is to create it and it appears PayPal is doing it. With new services such as the virtual window shopping, PayPal wallet, micro-payments and mobile payments, PayPal is clearly in the lead. If the banks want to compete with PayPal they need to get moving and develop technology for merchants to facilitate relationships with their customers in a 24/7 setting, through social web contact points, and have a clear mobile strategy.

If not, it will be a PayPal world.

Today's Social f-Commerce is not the Answer

In 2007, I found myself, as an entrepreneur, jumping head deep into social media. I was about to finish my BS degree in Political Science and social media was becoming all the rage. MySpace was booming, Facebook was about to open there platform and Twitter was merely an infant. It wasn't until late 2009 when the term Social Commerce started to percolate. Today, this percolation turned into an angel and VC frenzy with numerous of social commerce (f-commerce) vendors receiving funding. The bad news, social commerce is only producing mild results with many major retailers closing their Facebook stores.

E-commerce was born in the 80s, adopted in the 90s and went mainstream by 2000. I agree with many entrepreneurs that it makes logical sense that e-commerce and social networks should go hand in hand, but it isn’t working out that way. As a merchant you want to sell your products on Facebook exactly how you would like your product in every shopping mall across the globe. The problem is Facebook is not a shopping mall – Facebook is a destination for personal relationships. This context is key.

Today’s social commerce (f-commerce) is static e-commerce. Static e-commerce doesn't belong on Facebook, it belongs on static websites. Henry Ford said (and I'm paraphrasing), "If I asked my customers what they wanted, they would have said a faster horse." Do consumers really want static e-commerce in Facebook? With social commerce not taking off, I would say no.

Innovation is much more than reinventing the wheel and throwing it on a Prius. Today's social commerce is the horse. It’s time for the automobile.

What say you?

What does Social Business mean for Social Networks?

It's becoming well-known in the developing relationship economy how important being social is for business. If your business is not using Facebook or Twitter to promote itself, you will fall behind your competition. For some businesses, Tweeting and Facebooking is their life blood, and the only marketing technique they use. What's so great about these services is they're (currently) free and they really work! But this leaves us questioning, what does “social business” actually mean- and why is it so important to social networks?

Let’s step back for a minute and think about the 1990s. The Internet was a brand new frontier and marketplace for the business world. New wealth was being created every week. Some businesses refused to use the Internet while most embraced it. Nowadays, a business isn’t a business unless it has an online presence. The difference between the 1990s and today is social media. Social media is the new marketplace of today, a marketplace full of conversations and knowledge. Conversations between friends can end in the purchase of a product, and the translation of knowledge can result in the building of trust between a business and a consumer.

This is all good for today, but for tomorrow the business world needs to have a new presence, new ideals, and new technologies to infiltrate the burgeoning social marketplace. To do this, a business needs to become social within both social networks and their physical storefront. This means embracing new technologies and taking part in a social business network, allowing consumers and other businesses to find and communicate with you directly through social network contact points. This also means have a seamless connection between your storefront and your social presence.

Why is this so important to social networks, as businesses? If the business world has a picture-perfect way to use social networks for marketing and sales purposes (initiating effective viral and word-of-mouth advertising, among other benefits), then those same businesses will spend marketing dollars to make advertisements flow throughout the social sphere.

The Era of Social Commerce is here

If you haven't yet heard of Jeremiah Owyang’s five eras of social media, I highly suggest reading it. I have one fundamental problem with it though. In his article, Owyang claims social commerce will appear sometime in year 2011, but this is not true. Social commerce is already here today. What I mean is, the technology and the ideas are here, they're just waiting for mainstream adaption.

For years I’ve been referring to social users as consumers because in fact everyone, besides young children, pays money for goods. This makes all of us consumers. This is why social media is ripe for social commerce, because of the ability to have live time conversations. Social commerce refers to the addition of social business transactions and conversations. Adding social business transactions and conversations, as a separate but connected network, into live time conversations (social media) would give the consumer the instant option to communicate and share reviews about your brand and goods.

These business activities are unique to social media today. These actions are taking place right now on a very small but connected social business network. Currently there are over 1,700 companies on this network. This network of companies can interact in various ways and sell directly through social networks. Being separate but connected means the social business network is on social networks (Facebook, MySpace, bebo, etc.) through two applications, a business directory and a social shopping center. The interactions can take place through these applications or on the social business network itself.

Another article which grabbed my attention was, “Are social networks the next-gen commerce, CRM hubs?”. Absolutely! The web itself has always been referred to as tubes connecting one thing to another. What social networks bring to the table is a well-structured conversation platform to spread ideas, thoughts, dialogue and data between social consumers.

There are hundreds, if not thousands, of social networks on the web today. There is no way one business, even at an enterprise level, could engage with every user on every network. This is why a separate but connected social business network is needed. It is the job of the social business network to be connected through social applications on every social network so your organization only has one back end to manage that reaches every social network.

The future is here today. The concept of connecting every social business to every social network for social commerce is no longer a concept, it’s a reality.

The New Order of Business

With social media on the rise and businesses finally beginning to realize its potential, a new sort of industry is being created- and its much more than just social media. Everyone has been asking, “What will be the next big thing in the social web?” The answer lies within the business world.

It isn’t simple to integrate the business world into the social web. This demands precise technology, and groundbreaking insight on the part of developers and social strategists. Technology such as this, just like you, me, or social media, will always be changing and adapting to new developments and technologies. One side, either the consumers or the business world, needs to bend to the other; and if consumers are forced to bend to the business world, both sides will lose. The business world needs to shoulder most of the burden and all of the costs. And since the consumers are the ones who mostly contribute to social media, it only makes sense for the business world to intertwine themselves with these consumers- correctly, efficiently, and without causing any privacy concerns.

If the business world wants to have effective social connections with consumers to serve them for various marketing and sales functions, there need to be a few more attributes. As we have been learning from Social Media Connection, there are five elements to adapting social media to the business world. All five steps are important, but the last step, and the only truly revenue-generating, is action. Action can refer to a consumer transferring information to other consumers (by retweeting, posting on Facebook, leaving a comment, etc.), or making a financial transaction with a business. For a financial transaction to take place, one needs a financial institution that understands the new innovation economy.

Consumers have a lot to gain if the business world joins social media. With a social business network a consumer can seamlessly engage and purchase goods directly through social networks. A social business network allows for consumers to socially shop with their friends on social networks. And with a social business network consumers know there is one place within all social networks where they can connect, engage with, buy from and share information with a social business.

If a business doesn’t jump aboard, their competition surely will. Will you be a leader or a follower? Will you allow for your competition to leap frog you onto the social business network? This is the wave of the future, the new order of business, and what consumers will demand.

How Mom & Pop Shops (as merchants) can use Social Networks

I was recently down at Portland’s Saturday Market to pick up a new hacky sack when I suddenly remembered an old and forgotten inspiration to all my work on social networks. There are millions of small mom-and-pop shops around America and many of them are only known within their community- and they are able to stay afloat because they are trusted and valued within that community. If a mom-and-pop shop left one community and planted roots in another, the concept of building a fan base among this new community should hold true. But what if the mom-and-pop shop opened their doors to communities on social networks?

Let’s use a fictional mom-and-pop shop called “Rad Surfing” as an example. They have created a trendy apparel line, and they also sell numerous surfing products. They are based out of southern California, and want to increase their audience by using social networks. They have already created a Facebook page and a MySpace profile. Rad Surfing does a great job engaging with people on both social networks, and they have seen an increase in traffic to their static website. However, there has been little increase in walk-ins, and Rad Surfing believes this is because many of their following on social networks are spread out across the globe, and nowhere near southern California. Rad Surfing wants to address this problem head-on.

Rad Surfing decides to create a social business profile to enhance and invigorate their presence on social networks. Rad Surfing’s business profile facilitates social e-commerce, live chat and b3urls for consumers to share through social media. Rad Surfing now has a true social business presence on social networks, and has created a target marketing campaign using Google AdSense, YouTube, Facebook and MySpace ads. Rad Surfing’s goal is to be no more than one click away for consumers, from anywhere in the social web. The owners and employees of Rad Surfing link their social business profile to their social network profiles to help promote their new social presence.

Rad Surfing has also created a few new videos which they have posted on YouTube and within social networks, and has started to tweet. Overall, Rad Surfing has become very social media-savvy, and knows it takes man-power to have an effective social media presence, just like having a store front. Every time a customer enters into a live-chat, it is like a customer entering into the store via the front door. It is the responsibility of Rad Surfing to engage the customer in a conversation when she/he enters the store, and it’s the same on social networks.

With a social presence like Rad Surfing now has, a new sales and marketing channel has been formed. This channel, we'll call it Social Network Marketing, was facilitated with the help of Facebook and MySpace, but was completed by the social business profile. Rad Surfing now has an easy-to-manage presence on global social networks through one single portal.

With this new marketing and sales channel, the once small time mom-and-pop shop can become a global business, with products being shipped anywhere around the world. To do this, they must be motivated enough to invest the man power necessary to manage an effective social business presence. With new innovative advertising methods and advanced technology, small mom-and-pop shops can have a true social presence; from there, social users can virally spread their unique brands to friends around the globe.

This is one example of how to monetize social media. Do you have an example you want to share

How to reach each and every consumer on the social pyramid

Every day, the number of consumers and companies involved in social media is growing. Companies are engaging customers via Twitter, YouTube, blogs, social networks and other forms of media to help promote their brand and provide customer service to those who are in need of it. In the future, companies are going to need to expertly manage customer relations, and do it in a way that is highly practical for both the company and customer.

When thinking about functionality, social consumers and social companies essentially want the same thing. They want functions that are helpful, useful and that benefit their cause. However, consumer’s and company’s causes can seem polar opposites. A social consumer wants seamless interaction, quick information, and easy purchasing from a business. The social consumer also wants ways to share their new findings or purchases with their friends and family through social media. These functions are ones which can be virally spread through the social web.

A company’s foundation within social media necessitates functions which will help maintain good customer relationships as well as provide easy ways to engage customers, spread information and sell goods via the social web. This means a company needs to have a presence within social networks, understand how to use social media efficiently and have a corporate structure to support social media. What every company should strive for is a social presence where customers are never more than one click away from engaging with the company.

Each of these functions, for both consumer and company, is essential to making social media work. Without adequate functions on social media, the consumer can’t share their findings easily with their friends or family. Therefore, the company’s efforts to be completely social within social media are useless. The functionality of a social business network needs to be aligned within social media precisely, because if not, neither the consumer nor company will benefit, and social media will fail to be monetized.