The mass adoption of social media has resulted in one fundamental change in the way businesses function. This form of media unlike traditional media (i.e. tv, radio, news papers) is not one way, hence it is not really governed by any business or institution. It provides end consumers a scalable way to share their opinions and genuine popular opinions tend to bubble up.
What this has done, is completely changed how people are taking purchase decisions. They now have a mechanism to get a true opinion about a product or service from people they know or are influenced by.
So really what has happened is these social dynamics have transformed the purchase funnel into viral loops.
Here are some statistics which confirm this trend:
- 90 % of all purchases are subject to social influence
- 90% customers trust recommendation of people they know
- 67% people spend more online after recommendations
Most commerce firms have already started to make investments in solutions that will help them leverage this change in purchase behavior and in turn drive more sales.
However, what they must realize is that we are going to witness a transformation change in which commerce happens. We will be moving from a world where customers find products to a world where product find customers at the rite time and place.
We are going to witness commerce change around four key aspects:
Availability: Go where your customers spend time as opposed to expecting them to come to you. Hence a lot of commerce companies both online and offline are investing in the ability to be closer to where their customers spend time. Two key platforms where they seem to be investing are facebook and mobile. Here are some of the reasons why
- It has a clear top of mind recall – 48% of 18-34 year olds check facebook when they wake up
- Americans spend the equivalent of 101,000 years on facebook in a single month
- 10,000 – the average number of sites integrating with facebook everyday since social plugins were launched
- 56% of facebook users click through retailers website because of a facebook post
- 81 minutes per day is the avg time some on spends on mobile phones
- Smartphone penetration in the US – 40% (iOS 28%, Andrond 40%)
- Hence most commerce firms are investing in facebook promotions, storefronts, and also facebook connect on their sites. The next phase would be to make all of these tools synchronize to get integrated analytics.
- Traditional retail firms are looking to connect with their member community through mobile apps to have the ability to engage with them throughout the whole shopping experience. This is where mobilizing loyalty programs is going to gain momentum
- Some statistics on the value brands are getting from such availability
- 1000: Number of diapers P&G sold on its f-store in under an hour
- 6 hours: Time it took for the Rachel Roy Facebook jewelry store to sell out
- 1m+: Starbucks customers using their e-commerce-enabled Facebook CRM loyalty program
Personalization: It is no longer enough for commerce firms to rely on generic demographic data or basic personal information they have about their customers. The goal is now to have the ability to leverage information from their customers social network. This means that commerce companies not only need to connect with their customers on their favorite social network, but also mine information from customers profile and their social interactions to understand their preferences, how they are influenced by their network, and the preferences of their friends. This gold mine of information along with location information helps them achieve the following objectives
- Local demand forecasting : Ability to know the demand of people living around store to manage inventory more effectively
- Personalized outreach: The ability to know which deals and offers are of true relevance to the customer
- Gifting : Leverage social graph of customer and information about his friends interest to suggest gifts
- Customer experience: Strong understanding of the customers needs and influence information can help transform the in-store shopping experience
- Example: Tripadvisor use facebook open graph api to personalize the experience on the site by prominently featuring friends’ reviews. customers will also be able to see where your friends have traveled, so they can know who to ask for advice
Online shopping: Online shopping allows for easy social interactions but does not provide the feel or experience of shopping in the real world. There is a lot of investments in building virtual trial, virtual fitting rooms, personalized closets to try stuff, mix & match, and get the real experience of shopping
Example ( JC Penny Virtual Fitting Room): JC Penny used metaio’s virtual dressing room software to enable shoppers to automatically try on clothing within the live-video stream. To shop in Penney’s virtual dressing room, prospective buyers have to activate their computer’s Webcam and enter the dressing room. They first select what item interests them and then position themselves within a silhouette that pops up on their computer screen. They have to wave their hands to adjust the clothing for a proper fit. If they like the item, they can take a screenshot of themselves in it to send to friends, post on Facebook or move on to the JC Penny online store to complete the purchase.
Offline shopping: Retailers are using augmented reality, mobile apps and gestural interfaces for engaging customers, store finding, personalization, product details & comparison, know in real-time about their friends preferences, and get their suggestions
Example (Ben & Jerry’s Moo Vision): Ben & Jerry’s used Unifeye Mobile SDK to roll-out the AR application “Moo Vision” on the iPhone. By pointing the camera at selected Ben & Jerry’s carton lids, a 3D world is revealed which can be viewed from different angles by moving the phone around the lid. This provided customers with a fun and engaging twist to sharing in-store product details.
Social Layer: Companies will invest in creating a social layer which runs across their entire purchase funnel. This will help them provide their customers a true social shopping experience and in-turn increase purchases
Some Statistics to justify investments in creating a social layer:
- 57% of people talk to people more online than in real life
- 75% of shoppers spend more online after receiving friend recommendations
- $5 billion of physical good will be bought on social networks in 2011
To be able to create a social layer, businesses would have to invest in the following areas:
- Social promotion engine to introduce various new retailing techniques for social shopping like group deals, sneak peaks, tryvertising, etc
- Social recommendation tools which are like “kaboodle” / “This Next”
- Synchronized online shopping through toolbars like “ShopTogether” and “Do Together” where customers can bring in their friends into shopping experience
- Social purchase sharing capabilities like “blippy”, and “shwowp”
- Asking advice around purchases like “shop socially”
- customer support communities for post purchase interactions like getsatisfaction.
We think that very soon we will start witnessing large retailers coming up with integrated solutions that combine all these capabilities with integrated analytics across the entire purchase experience. Walmart’s acquisition of Kosmix to create @walmartlabs seems to be a strong step in this direction.
What do you think?