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Social Shopping: Reshaping the world of retail

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Reactive whitepaper on social shopping

Reactive whitepaper on social shopping

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  • 1. Social Shopping:Reshaping the world of retail
  • 2. ReactiveSocial Shopping: Reshaping the world of retailSocial Shopping:Reshaping theWorld of RetailSocial Shopping is a rising trend that integrates the powerof social media into both on — and offline shopping. It isrevolutionising the business world, with retailers realising andcapitalising on the potential and reach of social media. It hasalso transformed the average shopper’s behaviour, causingbusinesses to sit up and change the way they sell. This whitepaper, produced by Reactive, explains what Social Shopping isall about, and how it is changing eCommerce as we know it.P2
  • 3. ReactiveSocial Shopping: Reshaping the world of retailReshaping Social media has thrown a monkey wrench in the retail industry and the traditional rules that govern it. For retailers, running a successful business is no longer just about operating a bustlingthe world brick-and-mortar store or a pretty website. And for shoppers, purchasing decisions are no longer driven by in-store interactions with salespeople or physical evaluations of products.of retail The rise of online shopping activities coupled with social media integration allows consumers to consult and interact with one another, bringing to life the concept of social buying in the digital realm. Convenience is no longer sufficient; we are social creatures and marketers are beginning to capitalise on that to stand out in a crowded marketplace. A trend that has surfaced over the last year is social shopping, and consumers all around the world are catching on fast, or as eCommerce consultant Linda Bustos describes it; ”a mashup that resembles social bookmarking, social networking and comparison shopping in a blender.”1P3
  • 4. ReactiveSocial Shopping: Reshaping the world of retailConsumers According to the 2011 Social Shopping Study report by e-tailing group, 35% of respondents spent 75% of their overall shopping time researching products online2. Today’s shopper is savvy andnow get the willing to invest a lot of their time to ensure they find the right product at the right price.upper hand For consumers, social shopping services have opened up possibilities to post about potential/ past purchases, ask for advice and opinions from friends online, and collaborate on purchasing decisions. These are key factors for increasingly social online shoppers as peer influence and discussion become more important when having a pleasant online shopping experience. Consider how numerous online retailers have started including ‘Share’ functions on their sites, giving shoppers the option to show products to friends easily via social networking or bookmarking services. Online opinion sharing is on the rise, as demonstrated by Bazaarvoice’s 2011 Social Commerce Trends Report which reported that while 90% of online consumers trust recommendations by people they know and 70% trust those of people they don’t know, only a miserable 14% trust advertising and a paltry 8% trust celebrity endorsements.3 As more than 70% of shoppers consider user-submitted consumer reviews as a significant driving factor behind purchasing decisions, these brief comments generated by consumers and social media users are slowly replacing traditional advertising models. The advent of online social shopping seems to have reshaped the Business-to-Consumer relationship; it has shifted power back into the hands of the consumer, forcing brands to think through messages they are sending out because a few complaints can very easily grow into a global rabble of upset shoppers. Now everybody with a mobile phone can be a critic, truly demonstrating the democratic power of the social web.P5
  • 5. ReactiveSocial Shopping: Reshaping the world of retailTypes There are, of course, many different types of social shopping services catering to the varying needs and wants of shoppers. We will now look at several common ones, along with other emergingof social services that are proving quite popular among users now.shoppingservices Group Buying Social shopping programmes such as Groupon and LivingSocial offer discounts of up to 90% off on local products, services and events. Such massive discounts are only made possible because they rely on bulk purchases, allowing businesses to reach new customers. Moreover because of the social power of the Internet, these services can also pull in those who otherwise wouldn’t normally patronise or even be aware of certain businesses. The spectacularly growth of these sites has more recently seen an inevitable back-lash. Reviews and Recommendations Because shoppers tend to trust peer reviews more willingly than corporate advertising, sites like ThisNext usually list out products which are then reviewed by site users. Many online stores have this feature so it’s nothing new, but the growing trend of online social shopping has driven the proliferation of customer reviews and ratings functions, and retailers have started offering customers discounts or virtual points for reviewing a product or simply recommending it to others. Geo-location Services Location-based apps like Foursquare, Facebook Check-ins and Google Places are being integrated into the act of in-store shopping, in which users will be awarded points or directed to in-store deals and discounts from within the app, giving brands the opportunity to capture market share by providing seamless cross-channel shopping experiences. To further reinforce its social networking abilities, such apps also let users look up product information, upload pictures of purchases, track and share desired items and comment on their friends’ activities as well.P6
  • 6. ReactiveSocial Shopping: Reshaping the world of retailTypesof socialshopping Real-time Social Shoppingservices Shopping sites like DoTogether or even retailers like Wet Seal let shoppers log on and connect with their social media account, or invite friends over email. They can then browse and shop online together, all at the same time. Such services are bringing the social experience of shopping unto the web, and usage is spreading amongst consumers due to the proffered one-click convenience. An example of this is the social shopping application Givvy. Givvy is a social shopping app that allows users to discover, share and curate gifts, which are then ranked in order of popularity. Users can follow gift recommendations of their favourite curators or browse gifts based on the personality type of the gift recipient. Barcode Scanning A 2011 report by ScanLife4 has revealed that the company is now processing more than one scan per second, compared to just 10 scans per minute a year ago. Apps like RedLaser, ShopSavvy and Amazon Mobile allow users to scan barcodes of in-store goods, upload information like prices on the network for other shoppers and simultaneously check for cheaper prices across other retailers. Though not social shopping in the strictest sense, the ability to share product information allows shoppers to use the app as a reference point before purchase. Facebook Shopping Yet another factor behind the social shopping revolution, this method involves buying, selling and paying for goods within Facebook itself. This manner of social shopping will be explained in detail later in this paper. Peer-to-Peer Services Social shopping also appears in the form of peer-to-peer services like Rentoid, which connect individuals and allows for the renting or swapping or goods between registered users, like renting a car for a short weekend trip or even exchanging old video games.P7
  • 7. ReactiveSocial Shopping: Reshaping the world of retailTaking the Dedicated social shopping sites no longer stand alone. Businesses are now including functions like user-generated reviews and social media integration to better extend market reach, proving thatworld by social media can be utilised by retailers to work in their favour.storm Money is being poured into social shopping as businesses are moving into this area, like eBay. In November 2011, eBay acquired recommendations service Hunch, which uses data to make predictions about its users and provide them with personalised content recommendations. “Hunch will enable eBay to move beyond standard item-to-item recommendations and use a broader variety of members’ online tastes and interests to suggest new and interesting items for them to browse and buy on eBay” eBay said in a statement5. Not surprisingly, another global brand that has capitalised on the social shopping trend is Amazon. In addition to its numerous apps and growing list of acquired online social services, the company has integrated Facebook Connect functionality into the site, providing logged-on users with individualised product recommendations based on data gathered from their Facebook profiles. Moreover if the user activates the feature on their Facebook accounts, he/she will also find gift suggestions for friends based on details gleaned from their profiles and Amazon Wish Lists. This is a useful feature for shoppers, especially when it comes to finding the right gift. For Amazon, all the information gathered from their users’ Facebook profiles is priceless.P8
  • 8. ReactiveSocial Shopping: Reshaping the world of retailThe new In its recent US Digital Media Usage report, eMarketer estimates how digital media usage will grow in 2012 in terms of the internet, mobile, social, video, and ecommerce6. TheyeCommerce, predicted that 90% of social network users will be on Facebook in 2012. While over 800 million users are already on Facebook7, the site offers savvy digital marketers unique, cost-fCommerce is effective opportunities to sell to potential customers on a Web site they are engaged with.here to stay fCommerce, commerce over Facebook, is wreaking havoc on traditional retail business models.. The Facebook fan now wants to express their brand preferences with more than just Likes and comments, and businesses are going beyond branded pages to better drive consumer engagement. Seen as an effective way of connecting with customers, the trend of fCommerce began picking up speed last year and now some of the world’s biggest brands, including Coca- Cola, Starbucks and Disney are selling directly on Facebook. Strategists from Reactive predict that within the next five years, more sales will be happening on Facebook than on Amazon.8 For smaller brands and retailers looking to get started in fCommerce, Facebook-based ecommerce platforms are emerging, with Payvment leading the small, but growing pack. Payvment focuses on companies wanting to sell goods and services on Facebook. It does this by offering several options to e-retailers looking to utilise Facebook’s social platform. The first and original version of the app is free, and once installed, allows anyone to set up a virtual storefront in under 15 minutes. Powered by PayPal’s Adaptive Payment APIs, the app features a site-wide shopping cart system and accepts over 20 currencies, enabling Facebook users from around the world to shop across multiple Facebook stores and check out whenever they’re ready. The two paid versions, Payvment Premium and Payvment Platinum, provide online stores with a deeper, analytics-based understanding on how consumers are talking about and sharing their goods on Facebook and Twitter.9 Since its inception in November 2009, Payvment has already registered over 100,000 independent retailers and new sellers usually take two to three days to get their first sale on Facebook. In 2012, Payvment announced that the company reached one million monthly active shoppers in December 2011, and saw a 3X year- over-year increase in transactions by its network of over 100,000 sellers during 2011.10 “While many businesses feel that social commerce activities have yet to prove themselves in hard ROI... consumers aged 18 to 34 are in fact embracing certain social commerce activities, and social media is becoming a significant driver of product discovery.”P9
  • 9. ReactiveSocial Shopping: Reshaping the world of retailThe new And they aren’t stopping there. In 2011, Facebook and Payvment unveiled the world’s first virtual mall on the social networking website. It brings together an initial groupeCommerce, of 100,000 online retailers offering over a million products in one centralised location, allowing shoppers to browse and purchase items without leaving Facebook at all. CalledfCommerce is the ‘Shopping Mall, it incorporates several social shopping functions such as Liking and sharing individual products. It also displays personalised recommendation lists based onhere to stay what the shopper has Liked in the mall and shares new product Likes on news feeds for friends to see, making the Shopping Mall consumer experience a truly social one. Moreover Payvment’s universal shopping cart gives users the freedom to browse across different retailers and check out to pay just once. Such ease-of-use and convenience are drawing in the numbers for both retailers and consumers. Businesses are already setting up branded pages to display and promote new and existing services and products, changing the 800 million-member strong social network into one huge marketing platform, so the idea of a virtual mall does make sense. Additionally, Facebook reportedly has more plans to drive its eCommerce initiatives forward in 2012, including a ‘Buy With Friends’ shopping programme that is currently being tested. Capitalising on the growing fCommerce trend and the rush of businesses eager for better customer engagement, Facebook is becoming a globally accessible one-stop shopping destination.P 10
  • 10. ReactiveSocial Shopping: Reshaping the world of retailConclusion: A new era has dawned upon the retail industry as social media continues to change the way businesses sell and people shop. Product awareness and purchasing decisions are now moreSocial informed by fellow shoppers and friends, and selling is no longer as straightforward as before because of savvier consumers. An article titled ‘Social media review for retailers’ reiterates theshopping power shift that social media has enacted between the retailer and shopper:and your There is a plethora of evidence to show Facebook has vast power and influence over consumers shopping behaviour, with 38% of consumers deciding to use social media when researchingbusiness products, prices, promotions and considering other consumers’ views, to validate their decision- making.(Taken from Social media review for retailers, oneiota, November, 2011) With the incorporation of social media in the eCommerce field, shoppers are now armed with the knowledge and tools needed to make informed purchasing decisions and to become a smarter shopper. It looks like brands are beginning to pay attention to the consumer’s demands: A recent study by Buddy Media Corporation reported that social media will account for a higher percentage of total digital marketing spent in the next three years.11 The aforementioned study reinforces this point, recommending that businesses need to adopt strong, integrated cross- channel marketing strategies to expand the potential market reach and effectively interact with existing consumers too. Though a relatively young trend, social shopping is one to act on now. As Barbara Kohn observed – ”Our shopping habits have changed. That should change retailers’ behaviour too”12P 11
  • 11. ReactiveSocial Shopping: Reshaping the world of retail About Reactive Reactive is an award-winning digital agency specialising in strategy, creative, technology and marketing with over 95 staff across our five offices in Melbourne, Sydney, London, New York and Auckland. Please contact us to discuss your online communication requirements. Melbourne Ph +61 (0)3 9415 2333 Fax +61 (0)3 9415 2399 Email melbourne.enquiries@reactive.com Sydney Ph +61 (0)2 9339 1001 Fax +61 (0)2 9380 4787 Email sydney.enquiries@reactive.com New York Ph +1 (917) 655 8790 Email us.enquiries@reactive.com London Ph +44 (0)20 7550 8200 Fax +44 (0)20 7550 8254 Email uk.enquiries@reactive.com Auckland Ph +64 (0)9 309 5696 Email: nz.enquiries@reactive.comP 12
  • 12. ReactiveSocial Shopping: Reshaping the world of retailReferences 1. Bustos, L 2007, Social Shopping Roundup for Online Retailers, Get Elastic, 25 May, http://www.getelastic.com/social-shopping 2. Freedman, L 2011, ‘2011 Social Shopping Study http://www.powerreviews.com/assets/download/Social_Shopping_2011_Brief1.pdf 3. Bazaarvoice, 2011 Social Commerce Trends Report, http://www.bazaarvoice.co.uk/resources/ research/social-commerce-trends-report-europe-2012?Aid=70150000000PIpY 4. Scanlife, 2011, ‘When did mobile barcode scanning take off? You just missed it’ http://blog.scanlife.com/2011/07/q2-2011-trend-report/ 5. Van Grove, J, 2011, ‘eBay snaps up recommendations service Hunch’, http://venturebeat.com/2011/11/21/ebay-hunch/ 6. eMarketer, 2011 ‘US Digital Media Usage in 2012’ http://www.emarketer.com/Products/Explore/ReportList.aspx 7. Protolanski, E, 2001 ‘Facebook confirms it now has 800 million users’ http://www.zdnet.com/ blog/facebook/facebook-confirms-it-now-has-800-million-users/3949 8. Gupta, A, 2011 ‘Seven Fcommerce strategies for brands’ http://socialmediatoday.com/achintya- gupta/306251/seven-f-commerce-strategies-brands 9. Sinksy, R, 2011 ‘Payvment has an actual plan for making money from Facebook’ ecommerce http://venturebeat.com/2011/09/08/payvment-making-cash/ 10. Payvment, 2012, Marketwire release http://finance.yahoo.com/news/Payvment-Hits-One-Million-bw-3978157464.html?x=0 11. Ruiz-McPherson, M, 2011 ‘Marketers looking to increase budgets on social media’ http://www. ruizmcpherson.com/2011/10/marketers-looking-to-increase-budgets-on-social-media/ 12. Kohn, B, New Retail Strategies: Offering a Better Fit for Today’s Careful Consumers, http:// knowledge.wharton.upenn.edu/article.cfm?articleid=2837P 13