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Zuupy White Paper - Creating Ecommerce Value with Onsite Social Commerce

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  • 1. Creating Ecommerce Value with Onsite Social Commerce by Alvin Tan (CEO and Co-Founder of Fezzl Pte Ltd) July 2010
  • 2. Introduction It is trite wisdom that the ecommerce is becoming increasingly social. While social media platforms have been extensively used by brands to concretize their brand presence and provide a listening channel, another category of high-potential social technologies is far more under- utilized: social commerce technologies. Social commerce is narrower than any mere application of social media to drive ecommerce. According to Bill Zujewski, VP of Product Marketing at ATG, “[s]ocial commerce is about customers having the means to interact with one another in order to make better buying decisions.” At its heart, social commerce is a movement – a new way of consuming that revolves around inter-consumer interactions that drive consumerism. For online retailers, this may mean that marketing messages no longer play as crucial a role as they used to, now that consumers frequently seek shopping advice, recommendations, and other purchase-planning information from other like-minded, impartial consumers. This represents a tectonic shift of power from retailers to consumers. However, social commerce can be leveraged to multiply sales organically simply by creating a social environment where consumers shop. This paradigm is in contrast to the prevailing approach of commercializing social platforms. To reach out to consumers in their native social space and sell to them directly assumes that said consumers have some degree of intention to shop; this assumption is unlikely to be true in most cases. Furthermore, focusing on social media storefronts has the effect of decentralizing online brand presence, resulting in brands having less control over the range of shopping experiences that can be created. A more opportunistic application of social media is to engage consumers who are already on the retailer’s website and provide them with authentic social proof about your Visit us at http://zuupy.com
  • 3. brand or products to reinforce and validate their purchase intent. “Social proof” in this context refers to advice or reassurance from those whom we already trust most: friends and family members. This is a potentially big but largely- overlooked opportunity to significantly increase sales, engage customers, and build brand loyalty. Socializing Storefronts: Maximizing Sales Opportunities with Onsite Social Commerce Technologies The predominant methods of socializing the storefront today include social media sharing buttons, the Facebook Like button, the “email a friend” feature, and product reviews sections. While seemingly adequate, these ubiquitous tactics only skim the surface of what is possible with today’s technologies. To truly profit from the explosive growth of social media, a new way of thinking is required: ecommerce can no longer be brand-centric or product-centric, especially with the shift in consumer expectations and cultures. It needs to be people-centric. Beyond perfunctory share buttons or social media sharing widgets, social media holds immense potential in that retailers can now mobilize its entire customer base, particularly its fiercest advocates, and transform them into a voluntary sales force to unlock new, sustainable sales opportunities. The most effective onsite social tools not only enable satisfied customers to broadcast noteworthy brands, products, and online stores as well as their product experiences to their social networks but also leverage on all their onsite activities, such as purchases, wish lists, reviews, comments, and likes, to influence the mindset other onsite customers. Such a new approach represents a more holistic, complete social media optimization strategy and plays a major supporting role in your funnel optimization strategy. Visit us at http://zuupy.com
  • 4. The Business Case for Social Commerce Technologies With a confluence of new cultures and new secondary technologies, ideas that used to be pipedreams are now possible. Two major technologies are of interest: Facebook’s Open Graph API and mobile internet. With the former, developers can now gain access to the social graph of consumers, presenting remarkable opportunities for instant personalization and socially-driven functionalities. The latter brings to consumers true portability – the ability to connect with their social graph anytime, anywhere. Let us imagine the following hypothetical scenario:  Karen is a fashion enthusiast who shops for clothes online at least once a week. She arrives at an unfamiliar store and finds a new top.  She is unsure about adding it to her cart, since she needs trusted information and reference points as to whether it suits her style, whether it is comfortable, and whether the retailer can be trusted.  Looking around, she finds a new feature that allows her to see her online Facebook friends, post the item to her friend’s wall, and get advice in real time. She can interact with her friends without dropping off to her social network to find for information.  Meanwhile, Karen’s friends see the item and follow the link, since they trust her reference. Some of them like what they see and eventually buy the top.  With her friends’ approval, Karen adds the item to her cart. She then remembers that she will need a dress for her upcoming prom night.  Problem: Karen knows nothing about prom dresses. Aimlessly, she heads over to the prom dresses Visit us at http://zuupy.com
  • 5. category page and discovers another new feature that shows all the prom dresses bought by her friends. She is now curious and positively intrigued.  Some of her friends had also posted particular dresses to their friends’ walls, so Karen browses through these product conversations and pick the dress that most resonates with her.  Karen is delighted. Upon checking out, yet another feature recommends a pair of gloves that her friend bought to go along with her prom dress. She adds it into her cart, since she is already in a buying mood. The hypothetical scenario above is not beyond today’s technological capabilities. An onsite social commerce utility that fortuitously facilitates the shopping process at various stages of the sales funnel, as opposed to generic share buttons, highlights the most important factor influencing the psyche of customers: contextual relevance, especially during the moment of purchase. The table below illustrates the differences in principle between the two approaches: ACTIVE SHARING PASSIVE SHARING Share buttons Product conversations Examples “Email a friend” Purchase sharing Social widgets Incidental to own Effort Required Onerous shopping experience Spam-like, Helpful, informative, Perceived Value salesman-like empowering Minimal, since Candid context Actionability purchase intent is provides insight and low or absent drives impulse buying Impact on Generally low Persuasive, reassuring Decision-Making Clearly, a less abrupt and more seamless way of sharing is possible and much more preferred. Socializing the storefront in this way also presents a host of strategic benefits that can be easily quantifiable using actionable metrics, thus allowing for ROI measurement: Visit us at http://zuupy.com
  • 6. Funnel Social Strategic Metrics to Bottleneck Commerce Benefit Track Solution Store is Create affinity Build trust and Bounce unfamiliar or from the outset credibility in rate, home unheard of; by displaying the eyes of page-to- reputation friends who first-time product concerns have checked customers page STORE-LEVEL (DISCOVERY) abound in, liked, or conversion purchased rate something Low average Recommend Social cross- Average order size complementary selling results items per items socially in higher transaction, conversion average rate by order value leveraging on items a trusted friend had purchased Customers Curate products Streamline Category overwhelmed by showing funnel by page-to- CATEGORY-LEVEL (SELECTION) or rendered most providing product indecisive by prominently socially-guided page unsorted products with navigation, conversion product greatest interest reduce rate choices among social browsing circle friction Product Socialize Friend activity Page views category does category pages increases per not naturally probability of customer, interest exploration average customer and purchase time on site Specific Show friends’ Reduce cart Drop-off products lack interaction with abandonment rate, length social proof product (likes, by inspiring of sales PRODUCT-LEVEL (EVALUATION) purchases) buying cycle confidence Customers Allow customers Reduce cart Drop-off need trusted to ask friends for abandonment rate, length product advice directly by avoiding a of sales information to on the website, disjointed cycle make final as opposed to shopping decision elsewhere experience Customer has Socialize Social Visits-to- no purchase product page validation purchase intent (viewing inspires conversion for research) impulse buying rate Visit us at http://zuupy.com
  • 7. Onsite Social Commerce for Multiple Verticals, Multiple Customer Modalities and Multiple Customer Intents A common misconception of onsite social commerce technologies is that they only pander to the needs of the socially-conscious demographic and thus only work in specific verticals. Consider, however, the universal value and influence of our social network. Specifically, shopping advice from a knowledgeable, trustworthy friend is always welcome across all verticals – from consumer electronics and automotive parts to luxury furniture and artwork. It is difficult and indeed foolish to discount the merits of the shopping advice and purchase behavior of people whom we personally know and/or respect. Consider the justifications for onsite social commerce technologies across verticals: Vertical-Specific Prime Concerns of Role of Friends Idiosyncrasies Customers High-ticket, high- Quality, durability, Informed friend offers consideration items suitability or fitness tips, experiences, and for particular recommendations as E.g. Electronics, purposes a knowledgeable software, furniture, enthusiast sports equipment Low-priced, fast- Novelty, uniqueness, Friends’ browsing, moving items range of choice liking, and buying behavior provide E.g. Foodstuff, anchor ideas that toiletries, decors drive impulse buying Socially-conscious Peer opinion, Approval of like- purchases aesthetics minded friends leads to buying confidence E.g. Clothes, and gives assurance accessories, shoes, due to validation of jewelry personal choice Leisure/personal Satisfying sensory Vivid emotional purchases experience, experiences shared entertainment value by friends create E.g. Books, games, deep desire to CDs/DVDs, events, replicate experience; cinema tickets, increase buyer holidays discernment Visit us at http://zuupy.com
  • 8. Even within specific verticals, onsite social commerce technologies serve the shopping needs of a wide range of customer modalities throughout different stages of buying. The following analysis is based upon the model popularized by the Eisenberg brothers: LOGIC EMOTION Competitive Spontaneous “I want to get the best product or “I don’t really know much about the latest edition/model as early this product, but the color is FAST as possible.” really lovely. I really want it!” Friends’ purchase patterns Friends’ wish-lists, egg-on lists create urgency to “catch up” and and purchase list aid in parade own purchases. insightful product discovery. Methodical Humanistic “I will find out as much as “I want to talk to someone and possible about this product and discuss about shopping.” make a full evaluation before SLOW purchasing it.” Friends’ assurances and parallel opinions result in higher Discussion with friends having in-store satisfaction and thus strong product knowledge forms increased shopping tendencies. an indispensable component in the research process. How Onsite Social Commerce Technologies May Support Your Inbound Marketing Strategies Consistent with the shift in power from retailers to consumers, user-generated content is increasingly sought after by consumers, and consumers are gradually more adept at cutting through the noise of traditional marketing to reach the trusted signal of word-of-mouth marketing. Apart from the obvious cue to ramp up inbound marketing efforts, this shift in consumer behavior presents two valuable opportunities to online retailers: Visit us at http://zuupy.com
  • 9.  Making the storefront relevant to a larger audience that has a wider range of motivations will increase traffic. With inbound marketing becoming an increasingly popular methodology, brands and retailers are slowly moving away from the advertising model and gravitating towards the publishing model. Content is king, and consumers are getting tired of being marketed to. In context, having fresh, consumer-generated content about their own friends’ shopping activities and experiences not only provides highly-fortuitous information for purchase planning to serious buyers but also appeals to the visitors who visit by mistake, for inspiration, or to satisfy innate voyeuristic tendencies.  High-quality content will help online retailers present a unique value proposition, differentiate, and build a long-term competitive advantage. Ecommerce is a competitive space, and consumers are awash in choices and alternatives. Retailers that offer fresh, intriguing information about people within their social graph are likely to generate instant familiarity and increase engagement. The more time consumers spend on your website, the more likely they are to become buyers and, more crucially, brand loyalists. How Friends-Driven Social Commerce Technologies Compare with Ratings and Reviews Most retailers are familiar with and know the value of onsite ratings and reviews, thus it is tempting to think that a perfunctory deployment of a ratings and reviews section forms an effective, complete onsite social commerce strategy. The analogy between the two is clear, since ratings and reviews are indeed a superset of onsite social graph- Visit us at http://zuupy.com
  • 10. driven technologies. The key difference lies in the underlying level of affinity: while the former strives to provide peer opinion via affinity factors (e.g. purchase history, occupation, gender, age, geographical location), the latter leverages on pre-existing bridges of trust to help customers acquire purchase planning information, i.e. “people like you” versus “people you like”. Consider, however, the glaring inadequacies surrounding the mature technology of ratings and reviews:  Ratings and reviews are old technologies that are incapable of meeting new consumer expectations. Between crowdsourcing and friendsourcing advice, the former presently confers greater breadth and diversity in views whereas the latter confers greater dependability. However, it is not unthinkable that crowdsourcing would be relegated to second best in light of the rapid growth of social graph-driven applications and functionalities.  Ratings and reviews are increasingly perceived as unreliable. In 2010 Social Shopping Study conducted by PowerReviews and the e-tailing group, it is revealed that a staggering 39% of consumers doubt that reviews are written by real customers. Moreover, products are almost always highly rated, nullifying any actionable differentia that can lead to sounder purchase decision-making. With friendsourced advice, the identity of the author is known and additional corroboration can be pursued to further buttress buying confidence. The following quote by Jennifer Saranow Schultz (Wall Street Journal, Shop Talk: Retailers Explore Links to Social- Networking Sites) may also be helpful: “Retailers routinely post customers’ product reviews online, hoping that favorable comments will boost Visit us at http://zuupy.com
  • 11. sales. But there’s a more powerful influence on shoppers that [online] retailers have yet to harness: the advice of friends. Many retail sites have email-a-friend features … but that approach has one big drawback: Shoppers are unlikely to get immediate feedback while they’re still at a retailer’s site, so their decisions may be delayed, putting sales at risk… The biggest [social] networking sites have developed tools that make it possible for a member shopping on a retailer’s site to get immediate feedback in the form of any reviews friends have left there, as well as a history of friends’ purchases on the site.” Feasibility Concerns and the Future of Onsite Social Commerce Technologies Perhaps the greatest concerns surrounding onsite social commerce technologies are that of its infancy and the lack of control over the type of content posted. For instance, deploying a Facebook “Like” button and having no likes after many weeks does not sound appealing, nor does inadvertently displaying a flurry of negative comments from the people your customers trust most. There often exists a fear of negative consequences arising from deploying new technologies, and rightfully so. However, note the following propositions: 1. The best onsite social commerce technologies leverage heavily on existing social networks to rapidly kick-start social activity on retailers’ websites. The ghost-town effect that is dreaded by online retailers is unlikely to materialize given the correct exploitation of social capital. For example, a host of different high-frequency, low-commitment Visit us at http://zuupy.com
  • 12. interactions on the website can be tracked and displayed to create some degree of familiarity, the interaction of lowest-commitment being check-ins into certain product pages. 2. Negative comments bolster credibility and quell suspicions with regard to reputation. The 2010 Social Shopping Study (mentioned above) revealed that 38% of consumers find the lack of negative reviews degrades their trust in reviews. The clearest advantage that friends’ advice has over anonymous product reviews is that the latter is premeditated, possibly even driven by some questionable motive, while the former is casual, solicited, targeted, and trusted. 3. Quality content, positive or otherwise, is essential if a brand wants to maintain or grow market share. Part of the reason that Amazon is so successful is that it has registered itself in the minds of consumers as the content hub and headquarters for consumer research. Joshua Porter, author of Designing for the Social Web, calls this phenomenon the Amazon Effect. My opinion is that elaborate social features on ecommerce websites will be the norm rather than the exception in the future, such that any online retailer that refuses to connect visitors to their social graphs in useful ways will be deemed severely deficient or untrustworthy. The more advantageous paradigm to adopt may be to learn to manage and respond earnestly to genuine grouses, instead of prohibiting or artificially curating social interactions. Conclusion While onsite social commerce technologies are unlikely to influence the minds of price-focused bargain hunters, conscientious consumers who are looking for a unique, Visit us at http://zuupy.com
  • 13. differentiated, or best-fit product are likely to find shopping influences from within their social graphs very helpful and reassuring. The core value of onsite social commerce technologies is thus to remove the bulk of the cognitive costs associated with online shopping and make online shopping more guided, convenient, and enjoyable. Ultimately, the purpose of this white paper is not to present any specific actionable plan on how to effectively socialize the storefront and what technologies to adopt. My aim is to pique your interest in onsite social commerce technologies and how they can be leveraged to significantly increase sales. I hope that this white paper has provided a valuable perspective with regard to the subject matter, and I look forward to discussing the matter further with you. My email address is alvin@fezzl.com. ■ Visit us at http://zuupy.com
  • 14. About Zuupy Zuupy is the flagship product of Fezzl Pte Ltd, a privately-owned Singaporean company. Zuupy is a simple onsite tool that allows online shoppers to interact with their friends via Facebook on retailers’ websites while shopping to obtain shopping advice and recommendations. Zuupy also allows visitors to view what their friends have bought as well as various other product interactions such as comments and likes to drive social merchandising. Creating Ecommerce Value with Onsite Social Commerce By Fezzl Pte Ltd Contact us: (65) 9038 0368 info@zuupy.com Fezzl Pte Ltd 8 Prince George’s Park Singapore 118407 © 2010 Fezzl Pte Ltd