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Loading ...It is human tendency to resist change. The most natural instinct is to continue doing things the old way. And when changes are implemented, we try to fit them back into the mold because of our comfort level with how things used to work in the past. That is kind of how online shopping has evolved. Even in the western world, not many physical retailers believed in online channel during its infancy – they looked at it more as a distraction. However, when they started understanding the potential of online shopping, more and more retailers began to build an online presence. However, they did everything in their power to ensure that the online shopping works as close to the physical channel as possible – whether it was pricing decisions or merchandising decisions or logistics – everything was designed to work similar to how it works in the physical store. Most of the online retailers overlooked the power that internet offers around connecting individuals so that they can help each other in making better purchase decisions. Since then several new age online retailers have come up and have started capitalizing on the true potential of internet, and the role it can play in changing how people make their purchase decisions. These new players have started questioning the well accepted norms such as “category managers are the ones responsible for selecting the product assortment and making the pricing decisions” – Why should an internal category manager’s intelligence be better than the collective intelligence of hundreds of thousands of online users – who use these products day in and day out?
This question is the premise of my topic today – a topic that is near and dear to my heart and the one that happens to be first in my series of new venture ideas – Community based shopping. Before we go further, let me just clarify what I mean by community based shopping. At the most basic level, this describes an environment where online communities or users play a key role in helping other people make their purchase decision. As you read this post, I am sure one thought would certainly go through your mind – is India ready for this? At a time when internet hasn’t reached the home of a common man, when users aren’t even able to do their own online shopping, how can we expect them to help others shop online? This is a good thought and at a high level, it makes a lot of sense. However, we really need to dig a bit deeper to understand the real opportunities.
For a few minutes, let’s keep the issue of internet adoption in India aside (I promise, I will come back to it later). Let’s just evaluate, at the most basic level, whether the concept of social shopping makes sense. If we look at most online players today, the notion of human touch is missing from the online shopping experience. For all its power, Google can’t tell shoppers what’s cool or what their friends or like-minded consumers recommend. Same is the case with majority of the shopping sites. A search for men’s shoes on a typical shopping site will probably reveal a long list of shoes, and the end users have to sort through a lot of information to really make their purchase decision. So what if we started to stir things up a bit? What if we can build something that can combine the networking power of Myspace or Orkut with the data crunching muscle of Google, and in the process bring a little more humanity to the act of shopping online. Social shopping sites can do just that—they offer new ways for consumers to find what they should buy and provide new opportunities for retailers to reach their customers. Taking our Men’s shoes example further, a similar search on social shopping site on the contrary will immediately point the users to the opinions of the site’s most fashion conscious and influential users – a much stronger factor in helping the users make their purchase decision. This is where psychology of human shoppers comes into play. Most of the online retailers, almost assume that people coming to their sites know exactly what products they are looking to buy. They hope that the visitors will search for the product they are looking for and then begin the purchase process. That is, however, hardly the case. Although a small percent of visitors may know exactly what they are looking for, a large number of them need help in deciding what they should buy. Especially, in the Indian context, word of mouth plays a great role in individual’s shopping decisions. However, that word of mouth spreads in a very ad-hoc fashion today. How many times we have heard statements like these – You shouldn’t buy that LG LCD television because my neighbor’s cousin thinks that LG is not a good brand for TV, or I know someone at work whose Aunt purchased a Bosch washing machine and they love it! If we were able to build a platform where these recommendations could be more structured and easily accessible, there is a potential to significantly change the buying behavior. Now the question is how do we make these recommendations more structured and available online? How do we get that neighbor’s cousin or friend’s Aunt to be online and make the same recommendations? The answer is we don’t really need to get everyone and their brother to be online for this model to work. We just need a small number of experts, early adopters and some knowledgeable product owners who have made good or bad shopping decisions in the past – we need to give them the right incentives so that they can actively contribute to the online community. So what kind of platform could we build that can enable all of this? I see the following ingredients that could make such a model successful –
- <!–[if !supportLists]–> Ability for experts to make unbiased product recommendations and share their favorite products online.
- <!–[if !supportLists]–> Ability for others to vote for the product recommendations or other content (such as reviews) posted by these experts.
- <!–[if !supportLists]–> <!–[endif]–>An incentive structure that rewards the experts based upon their level of contribution and the size of their following in the online community. The rewards could be monetary or a premium status that gives them access to additional benefits.
- <!–[if !supportLists]–> Popularity driven navigation – ability for popular products, popular expert recommendations to bubble up to the top of the site.
- <!–[if !supportLists]–> Ability for appropriate checks and balances to deter individuals who want to game the system for their personal benefits.
If these basic ingredients are there, a platform can be built that not only offers high quality recommendations for products but also keeps users closely connected with the style leaders and experts resulting in much more informed shopping decisions that would otherwise be very difficult. Stylehive.com, for example, showcases its top experts on the front page and lets people literally “follow” these experts. As these experts make recommendations or share products they like, they are immediately visible to all the users who follow these experts. The experts themselves are selected and voted by the online community based upon their contributions – building a self correcting eco system. ThisNext.com goes one step further – with the tagline “Real recommendations from Real People” , it truly “gets” the psychology of online shoppers and starts engaging them not when they are ready to make a purchase – but when they are ready to discover what to buy. Sometimes I wonder, why do most of the traditional online retailers build these artificial boundaries? They try to capture customers too late in the purchase cycle – and then get concerned when 9 out of 10 visitors leave without making a purchase. If we can extend these boundaries and start engaging customers when they really start the product discovery process, they will certainly build a strong loyalty and will keep coming back more often. This is where social shopping can really fill the void.
Having said all of this, let’s come back to the India scenario and the issue about internet adoption. First of all, I don’t want to discount the fact that the level of PC and broadband/internet adoption in India is a big concern. However, sometimes I feel that this issue gets played up much more than it should – it almost gets used as a “whipping boy” for all the things that are not working for internet and eCommerce in India. If customers see enough value in online shopping, I don’t think the adoption as a big hurdle. There are over 30 million Indians who are online today – this is nothing to sneeze at! Over 10 million Indians are registered on Orkut alone– making India #2 country on Orkut. People see a clear value in what Orkut offers, and as a result have adopted it. One could certainly argue that comparing Orkut adoption to eCommerce adoption is not apples to apples – but my point is that we need to think about the psychology of these 30 million users and give them a reason to consider online as a shopping channel. We need to think of ways the online channel can play a role in their product discovery and purchase process so that they can make much better informed decisions, compared to what they can do today. There is no question that over time, customers will see this value – and there is no question that the 30 million internet population will grow to 50 or 100 million in the coming years. The question really is, are we offering a strong enough value proposition to these 30 million people for them to shop online? Internet is all about connecting individuals with no constraints around geographical barriers. Are we doing enough to leverage this true potential and connect individuals with other shoppers or experts so that they can make much more informed shopping decisions? I strongly feel that the concept of social shopping, if implemented properly, will be very successful in India. It will take few years for this concept to fully mature, and for consumers to start changing their shopping behavior. However, if you are considering an investment in an eCommerce venture, this is a good time to start thinking about adding that missing Human touch so that your customers can not only start connecting with other customers, they can start building a much bigger connection with you!
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Well, I completely agree with what you have said. Being an Indian I know what is the exact problem resisting e-commerce from being that popular in the east as it is in the west.
It is often said that an Indian won’t even spend a single penny if he doesn’t get to see the worth of it. True enough, this psychology prevails largely in our society. I personally feel the trust factor is what matters here. People here have been used to the ‘touch and feel’ mode of shopping over generations. We never like to leap to decisions and this is what I feel is missing in these portals.
Well, a piece of advice for the business giants… when you are doing business in a certain country you have to infuse into it the tradition and culture that the society has been following.
The existing shopping portals are immensely confusing. To get hold of a particular thing one has to go through numerous categories. Then there is the trust factor working…how do I know that I’ll get the exact thing shown online? And what infact is the guarantee that the material is good??? The portals have no answer for these ! Then there is the shipping part…we don’t like to wait and specially when the whole procedure is so damn costly…if we are paying big prices then why won’t they deliver it now???
We Indians have always believed in living in communities. It is also true for shopping as we love to shop in groups. Comparative shopping is the word ! The shopping portals would definitely do good if they provide this opportunity for shopping with friends and kins. Then there is bargaining…I know it is tough but the portals have to come up with something that would enable bargaining online…don’t ask me how…I don’t have the answer !
As for Internet. Yes, the percentage of PCs at Indian homes has increased remarkably in the past years …but Internet is still the problem…Thanks to the Indian government that broadband is not yet available in every part of the country.
The latest researches say that e-commerce has immense possibilities in India and the rest of Asia…but I don’t see it if the names in business don’t delve into the Indian psychology whatsoever.
Whether it can be done…that is for us to see !
For further studies on this refer to…
http://maketicklive.com/blogs/
Sir, I see Community based shopping is surely the way to shop in the next few years. But I disagree to your point that we need to incentivize the users to provide their recommendation. From what I see, people really love to pour their experience in using a product out on the internet. Providing incentives will veer the purpose away from truthful recommendations and the website owners might end up seeing the ‘make quick money online’ crowd thronging to the site.
This is what the numerous message boards(forums) and more importantly websites like Mouthshut.com are capitalizing on. In fact, I see community based shopping as a logical extension to what sites like Mouthshut currently do – provide the reader product reviews.
Why should a user visit Mouthshut to read the review about a product and then go to another site to purchase? How about selling products on review websites itself?
Thanks Seemantini for your comments – I agree with your thoughts.
Anand – Thanks for the comments. I see your point of view and that’s why it is important to make sure that the rights checks are built in so that people are not gaming the system. The one thing that is evident consistently is that for people to contribute detail reviews or experiences, it helps to provide them some sort of incentive. As I mentioned earlier, it always doesnt have to be monetary incentive – it could be a better social status with additional privileges on the site. However, without that, it is very hard to engage people to contribute thorough and detail perspectives. Take epinions.com for example – it has a great incentive system built in for the communities – and if you look at the quality of the reviews posted on that website, they are much more detailed, and analytical compared to even sites like Amazon. Having said that, we certainly can’t discount the issue you mentioned about the folks trying to make quick money online by gaming the system – that issue has to be dealt with seriously – with appropriate reward/penalty structures.
Community based shopping is intersting . Imagine combining an ebay with an orkut – I guess thats a powerful idea!
And you probabaly dont have to even pay people to review/comment – all of us love giving our expert comments! Of course there are issues – misuse by companies, inaccurate and malicious comments etc but these can defn be addressed.
There is also a very important point in your post – why do people harp on poor internet penetration, when there is a sizeable number of Indians on the net already. The question is have they adopted ecommerce in huge numbers ? If not,then there really isnt any point in talking about internet penetration. Get the passive users to first start transacting actively – thats where the challenge lies.
Your article has given an insight about e-commerce. Definitely shopping online is time saving and easier but there is always a doubt about the product because the individual takes a decision without directly coming across the product, so I guess interacting with people who has been using those products, will for sure be very helpful for those confused customers to decide about it.
Hey Darpan,
You know what.
I was actually thinking of this idea of social shopping sites & i was actually working it out on paper that is it possible & now i think after reading your article that it is very much possible to make it happen in India.
If you have any other views or ideas in mind related to social shopping then please do post here.
It would be really helpful to me.
& by the way you have stated a really nice blog with very useful information.
Cheers.!!
Community based social shopping will be how much useful is yet to be seen. if you look at amazon i dont think you buy books just because amazon starts recommending based on what you search for. if you also look at the travel sites most of the recommendations are not adding any value to site. There is lot of work which needs to be done for community based social shopping especially when there is some financials attached to it. Need to start looking into as why this concept is not picking up. Physical world provide lot of answers for it.
Sangeetha,Pooja – Thanks for your comments. You both make great points.
Gurneet: Good luck with your new venture and keep us posted on how it evolves.
Roshan: You hit on an important point, that recommendations just for the sake of making recommendations do not add any value. In fact, they can actually hurt the brand if they are meaningless or demonstrate an obvious intention for monetary gains. However, if the appropriate reward/penalty structures can be implemented and most of the recommendations represent unbiased opinions of other end users, they can certainly help customers make better purchase decisions. Although the Amazon recommendation engine has some flaws, it does work for people who are interested in buying what other people are recommending. It took Amazon years to get their recommendation engine to a somewhat mature point however I would argue that some of the more recent startups have taken the power of community based recommendations to an even greater level.
It underestimates the human behaviour. It is not only complex but difficult to model. Any good or bad recommendation needs to taken with a pinch of salt as humans are suppose to be the intelligent species.
Hi Darpan,
This was an excellent article and resonated with me as I just finished doing a photography project with ITC (Wills Lifestyle and John Players) for their e commerce channel. The kind of visuals I see on the Indian e commerce sites, surprise me. It’s such a turn off. companies that cannot control the kind of images that are used to sell their products seem to be indirectly conveying that they dont care about the products. Being a communication design student from NIFT, I believe that each image that goes online is like an article published by your PR firm! I’d be happy if you wud talk about the importance of images n visual content in e commerce. Feel free to mail me at shivani8386@gmail.com
Cheers!
Shivani
In Second Life, residents can go to social gatherings, live concerts, press conferences and even college classes. They can do a lot of things you can do in real life — buy land, shop for clothes and gadgets or just visit with friends.
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smithsan
SEO
Hi Darpan,
Another aspect to the ecommerce phenomena in terms of providing value to the customer – if a group of friends are convinced to buy a product online they should see an incentive for buying the product together (in a community). It is like going to a wholesale club Sam’s Club (by Walmart). If I buy 5 pieces of the same product together I should get a better deal with greater discounts. This feature could enable groups of people collectively make purchase decisions.
Its an interesting post. Your enthusiasm on the subject reflects from the patience that u have exhibited b writing at length ( I get the same credit for reading through
)
My exactly 2 cents:
# The concept of UGC is that anything that gets gamed is undone by the good contributors (at a stage with good traffic), initially community managers/content would do the policing for such things.
However,I’d like to know the various ways in which such a system could be gamed by somebody. Also the precautions that should be taken.
# The best way to tackle credit card inhibition is to get every merchant involved with a COD. Thats one of the ways e-commerce can overcome the mindset hurdle.
Keep posting!
while browsing i happened to visit http://www.ishopd.com, and its actually a very neatly (read web2.0) made site…not really a comparison shopping site, but more like a social shopping site…can evolve into a full fledged comparison as well as ecom site…
what are all the revenue stream for the social shopping sites, deals sites like (dealdivine).