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eCommerce Blog – Opportunities in US and India (by Darpan Munjal)

Future of Social Shopping – Key Opportunities

Posted by Darpan Munjal On October - 15 - 2009
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Chicago, 2010: Dan is looking to buy a decent home theater system to complement the new LED TV he purchased. Dan doesn’t know much about home theater systems so he logs on to Bestbuy.com where he has setup his online “Media Closet” which tracks all the gadgets and electronic devices he currently owns. Dan is able to find 18 “Audio Gurus” who also have an expertise on the products that are currently in his media closet. These gurus have been voted as the experts by the online community so Dan thinks that he can trust their recommendations. Dan invites one of the experts to view his “Online Media Closet” – which shows the information about the Blu Ray player, LED TV, a Netflix streaming device and a WII console that he would like to connect to the home theater system. The expert makes recommendation for two high end home theater systems that are currently on sale. Dan purchases one of the home theater systems and the Audio Guru receives affiliate points from Bestbuy for his help in the consultative selling.

New York, 2010: It is 11:30pm and Sally is looking to buy a new dress for the upcoming Christmas party. She logs on to Looklet.com, picks up a dress and matching shoes and saves the new look in her profile. She gets prompted by Looklet if she would like to get an opinion from her friends. Looklet displays all her online Facebook friends via Facebook connect . Sally sees that her best friends Nancy and Tina are still online and invites them to give an opinion on the new look. They are able to chat and view the products in real time. Both Nancy and Tina love the new dress but aren’t too crazy about the new shoes. Sally is able to find other “Fashion Experts” on Looklet who have favorited the same dress – and she is able to find better shoes based upon recommendations from those experts.

Welcome to a new phenomenon in online retailing – “Social Shopping”. This term has been used more and more in the past few months to describe the future of online shopping. Although the above two examples are not yet real but several pieces of these concepts are already in action at several online retailers. Given all this hype around social shopping, I thought it would be good to talk about some of the practical examples where online retailers can start thinking about implementing some of these concepts on their platforms.

The Progression of Social Web

If we think about the progression of social web, it has significantly evolved over last few years. It started out “Relationship based” where people could just connect with others and stay in touch. Then it evolved into an open medium where the social platforms took the role of an operating system allowing third party applications to enable significantly richer social interactions among people . Now, it has evolved even further where all interactions are context based (think Facebook News Feed) where users only see information and conversations in the context they are interested in. The next logical step in this evolution is to allow sharing of products and services within the social context so that users can turn to their friends and trusted experts for advice on buying products.

For those who think social shopping is just a fad, consider this–What makes a great product recommendation? Is it the number of strangers who recommend something or is it the person who recommends it that matters most? In other words, if you are asked to chose between a book on Amazon that is rated 5 stars by 10 strangers and another book highly recommended by a close friend who has very similar tastes and background as you – which book are you more likely to buy? If the answer is latter, then you believe in the power of social shopping. The only thing needed is a platform which helps you listen to your trusted friend’s and follower’s recommendations in a structured format. Facebook Connect is the first step that would make these interactions possible in a meaningful way. Still not convinced? Let’s hear what our friends from Nielson say –

Recommendations by personal acquaintances and opinions posted by consumers online are the most trusted forms of advertising globally, according to the latest twice yearly Nielsen Global Online Consumer Survey. The Nielsen survey, the largest of its kind, shows that nine in every ten Internet consumers worldwide (90 percent) trust recommendations from people they know, while seven in every ten (70 percent) trust consumer opinions posted online”

Ok – enough about general ideas and numbers. Let’s look at specific opportunities that are likely to shape up the social shopping landscape in the coming months and years:

Key Opportunities in Social Shopping

Opportunity 1: Product Discovery (Help me find a good product)

This is where most of the action is today. If you think about most of the social shopping sites today such as Kaboodle or Stylehive, they allow users to follow other experts and discover new products every day.

The key tools to make this concept are following:

  1. Product Experts – There needs to be a notion of unbiased product experts who have authority in various categories. These experts have ability to share products that others will discover. The key aspect is that these experts need to be recruited by the online community using some sort of unbiased reputation/ point system. This leads to my second point.
  2. Reputation Management – Experts earn reputation based upon the quality of their contributions to the online community. This needs to follow a democratic process where users vote for expert’s contribution and based upon pre-determined eligibility criteria, certain users are able to earn an “Expert” or “Guru” status in specific categories.
  3. Online Profile – Ability to know about the tastes, preferences and the products currently owned by an individual would allow platforms to better connect individuals with each other based upon their common interests. I think this is a critical step in a successful social shopping platform because it would make all shopping related interactions context sensitive. Imagine logging into Facebook and seeing News feeds from all Facebook users at the same time! Facebook has allowed users to customize the context around their own friends – similarly the social shopping sites should allow the users to customize the context around other “experts” and individuals who have common tastes.

Opportunity 2: Product Selection (Help me pick between the products that I like)

This is the next step of the purchase process. Once the user has discovered a few products, they need to select which one would be the best match for them. Whether it is a dress or a pair of shoes or a gift for a co-worker, a lot of times people look at their trusted advisors or friends to select a product. Technology has now evolved such that social shopping platforms can now enable these interactions. Following are the key components that will act as the technology foundation of this aspect:

  1. Facebook Connect – In my mind, in the short history of social shopping, Facebook connect is the most powerful development that will help take the concept of social shopping to mainstream. For those who are not aware what Facebook connect is, it is a powerful set of APIs for developers that lets users bring their identity and connections everywhere

So what’s the big deal? Well, this would allow users to take their friends along with them for shopping. Shopping online, that is. With Facebook connect, the shopping platforms now have the capability to allow interactions across the 300 million users who are currently on Facebook. I have some examples later that illustrate the practical implementations of Facebook connect in a social shopping context.

2. Google Wave

For those who don’t know what Google Wave is – here is a great2 minutes illustration of what it can do.

Now you might think that this looks slick for email communication but what does it have to do with shopping. Well – given that the API is open for developers, the opportunities are endless. For example – an Outdoor apparel retailer could allow customers to connect with each other via Google Wave and share their pictures of favorite Ski Vacations, showcasing all the products purchased at the online retailer. The opportunities are endless – the key thing is that Google Wave is a revolutionary product that opens up new way of communication and collaboration which could be easily applied to social shopping to connect individuals with common tastes and interests.

So what are some of the retailers doing in the collaboration and product selection space? Here are some real life examples where the concept of social shopping is already advancing to the next level:

1. My Zappos: Users are able to add items to their closet, and can then invite their friends from Facebook or Twitter to help select the best product. After registering, you can get introduced to groups with similar interests, such as Zappos Golf, Zappos Beauty, etc. Consumers can create shopping lists of items they want, have or like. Friends can tell them what they think and/or suggest new “stuff” for them. In the past when you shopped online, it was a lonely experience. With My.Zappos, consumers can shop together and have their “best friends” give them feedback.

2. Jansport has done something similar where prospective customers invite friends from Facebook (using Facebook Connect) to shop with them; then share comments and ratings conveniently—without a need to leave Jansport.com. Shoppers are able to converse freely with those whose opinions matter the most: their friends and family. Purchase validation can be achieved without interruption.

3. Apparel retailer Charlotte Russe has also implemented a “Shop Together” concept. Users can invite their friends to simultaneously shop the latest styles. Friends can view, compare, chat about and create a “favorites’ list of items together. This allows online customers to share synchronized shopping sessions with friends and family.

4. Vans.com has taken the concept of social shopping to customizable products. Shoppers can now invite friends to help design their customized sneakers. The collaborative-shopping technology allows consumers building custom shoes online to chat with friends in real time about the product design. Click on a link saying, “Invite friends to design with you,” and access friends through AIM, e-mail or any other service a link can be sent through. Assuming the friend is also at a computer, she can join a chat on the Vans site to give a thumbs up or down on the design, as well as make her own suggestions.

Opportunity 3: From Affiliate marketing to Social Marketing

The concept of Affiliate marketing has been quite successful for online retailers to drive sales to their portals. I think affiliate marketing will continue to be one of the important marketing channels – but we shouldn’t underestimate the potential of Word of mouth marketing that is possible at social platforms such as Facebook and Twitter. Out of 300 million users on Facebook, approximately half of them log in to their account every day – according to Facebook more than 6 billion minutes are spent on Facebook everyday. If these users are able to recommend products to their friends, resulting in a sale at an online retailer, this opens up a new marketing opportunity – some people call this social affiliate marketing. If the retailers are able to figure out an incentive structure to reward individuals who share products with their friends that eventually lead to a sale, the opportunities are limitless. Keep in mind there is a fine ethical line between sharing “authentic recommendations” with friends, vs. paying individuals to become social advertisers. In addition, FTC has issued guidelines (albeit vague) that would require users to disclose the association with a retailer if they are getting paid for driving sales. As marketers continue to over-do influencer outreach – trying to capture the attention of influencers like mom bloggers and food bloggers such that they authentically talk about products – we can expect to see some simpler and more direct solutions to transparently engage those influencers as affiliate marketers. The benefit back to them is a percentage of sales – all very transparent, of course. The same concept could be applied to users on Facebook and Twitter. However, the incentives don’t always have to be monetary – they could also mean earning a better status/ reputation on the retailer’s online platform.

Although the scope of social shopping is fairly small today, the opportunities are significant. The opportunities are even greater for multi-channel retailers such as Target, Walmart and Sears in engaging the customers at stores and helping them connect with their online friends who can “virtually” shop with them in the store. I think it is time to start thinking about retailing in the context of people vs. products. At the end of the day, it is the social interactions and conversations that help drive a purchase decision. Therefore, the online retailers need to start thinking about opening up their platforms to allow people to have these types of two way interactions vs. focusing on one-way merchandising aspects of retailing.

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8 Responses to “Future of Social Shopping – Key Opportunities”

  1. Jess says:

    I really enjoyed your article. Social shopping is a brilliant concept. And I completely agree that it’s much more than just a phase. I think we can expect to see more and more of it!

  2. Lisa says:

    Great article, Darpan! It is great to see retailers like Zappos taking the lead in implementing this concept.

  3. [...] well thought through post by Darpan Munjal on social shopping opportunities for retailers, over at the Commercewiki.com [...]

  4. 224team says:

    Check out our new Google Wave shopping robot! Just add comparebot@appspot.com to your wave!

  5. stylight says:

    The comparebot Google Wave looks nice. How an eCommerce site can use it?

  6. Ido Ariel says:

    Thanks for a great post. Another example is a social wish list developed by my company, Barilliance. Using Facebook connect shoppers can see products they friend added to their wish list and share items they like.

    You can see it live at http://www.paris.cl

  7. Pradeep says:

    Nice Post. Social shopping is definitely going to be a next big thing in online retailing
    Thanks

  8. Julie says:

    Kaboodle.com is the largest and fastest growing social shopping site with over 15 million monthly visitors and ranked in comScore’s Top 150 sites. They recently relaunched their site. Now you can search and discover the LATEST hot fashion finds, popular today, last week or over the month. You can also participate and create polls where you ask the Community to “Help Me Choose” http://www.kaboodle.com/za/fun-polls or create style boards create your own style board http://www.kaboodle.com/styleboards

    Kaboodle keeps innovating and staying abreast of the latest fashions trends and various styles. What’s great about Kaboodle is that you aren’t limited to a particular style or brand but can easily create and tout your own unique look.

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