Social Shopping by Proximity Prague

Social Shopping 1

August 2011

Introduction:

Trust Me, Shop Here social graphs and beyond to create interesting dynamics for promoting and influencing consumer behavior beyond what is possible with simply paid traditional media promotion. The question is who will control the process and use it to their benefit? It’s necessarily true that the relationship between customer and retailer depends primarily on the latter, so how retailers manage the tools of social media will, to an as yet unknown extent, either make their customers their “friends” or their ex-customers and antagonists. That said, the goal of any retailer is to let the product and its customers market the product.

Social shopping has manifested itself historically in two distinct but related ways. The first is commercially driven social online shopping tied to a user behavior during and after transacting (both on and offline). The second is the more traditional word-of-mouth, just people discussing shopping with other people. In either form, the rise of the social Web and the shift in how consumers share and consume information has changed the way people make their purchasing decisions, develop brand loyalties and ultimately become brand advocates. The first case of social shopping is all about leveraging social media, and increasingly mobile platforms, by both consumers and retailers. Consumers can take full advantage of social media “hooks” in either a proprietary brand retailer’s website or via a third-party mobile application or website to share their ratings, reviews, desires and opinions on products, goods and services they engage with or encounter on virtual shelves or in the aisles of real-world retailers. These user-generated “likes” and content bytes are socialized throughout shoppers’ personalized

The other kind of social shopping is the simple non-commercial act of friends telling friends, relatives, acquaintances, co-workers and even selected strangers what they bought, where they bought it, how much they paid and how much they liked the experience and the product. This kind of trusted wordof-mouth has long been an essential element of successful marketing and traditional shopping, and indeed trust between strangers is one of the foundations of capitalism. But

Brands are learning how to harness the power of social shopping by actively participating in the conversation and incorporating social tools into their branded site. They trust that the benefits far exceed the risk. By encouraging active sharing of the shopping experience, brands are providing a platform for their consumers to communicate on the brands’ behalf and engage their social graph.

the phrase “social shopping” as a kind of matured Internet meme now references the growing ubiquity and falling prices of both Web access and mobile platforms for such access. Word-of-mouth now also means the deliberate use of social media to leverage word-of-mouth into their marketing as retailers try to incorporate their customers’ and potential customers’ online social identities with their own online marketing and product-development strategies. Ultimately, the issue of social shopping/ marketing comes down to trust: how it can be earned, protected and exploited. This defines the basic difference between “traditional” eCommerce and its newest manifestation. In the former, trust is a straightforward matter between strangers doing business either between themselves via a known entity, or between themselves and that entity itself. By contrast, social shopping incorporates input from individuals who may not be partaking in any given transaction at all, but who may merely be active and interested observers. How many degrees of separation is their trust good for?

Social Shopping’s Pre-History: Shop online and, by the way, what do you think?

The key to the long-term success of both eBay and Amazon.com was not just customer feedback, but customer feedback in a worldwide arena with increasingly affordable access and popularity. It was understood that enough user attention to past transactions would necessarily increase and promote high levels of trust. It worked, and the first platforms of what came to be called social shopping began to make its way up into popular culture. By the time recommendation engines and price engines made mass collaborative filtering feasible in the late 1990s, broadband, smartphones, and WiFi began finding acceptance as well. Trust, ubiquity, mobility, portability and economy reinforced the interests of all, and a new hybrid commercial/ social foundation was laid. A profoundly innovative marketing tool and customer experience was on the horizon, and businesses began to realize that the rules of successful retailing were about to change, once again, in a radical way.

Social shopping is not a new concept. From the beginning of eCommerce, the interconnected world of the Internet inherently provided the means to extend word-of-mouth beyond its offline origins. Although Netscape’s debut in 1995 marked a kind of foundational “Big Bang” in web-based commerce, and the launching that year of SSL (Secure Sockets Layer) encryption-protocol lent the perception that Web-based buying and selling could be safe, secure and user friendly, services such as Prodigy, America Online, and CompuServe had long been introducing the Internet to millions. In parallel with this, direct selling of PCs to the public (pioneered by Michael Dell) had already begun to lower computer prices. Thus, 1995 was a good year for the two biggest successes of eCommerce itself: eBay and Amazon.com. Two factors made them both unique at the time: first, they were online; and second, trust was recognized as uniquely integral to their respective success and was fostered from the outset – specifically trust among strangers who would almost certainly never see each other in person, and perhaps ever deal with each other again even after a mutually successful transaction. Initially, both enterprises were protected by their relative exclusiveness.

Illustration by: Oliver Widder ›

The Present: Is ever changing There are a number of different categories of social shopping sites. There are “house” social-shopping sites that are part of an established retailer (like Sears) and monitored by management; and there are those that are strictly product-based, like Woot. There are shopping-themed blogs that aren’t monitored. There are sites that require established online identities (specifically a Facebook or Twitter identity), and sites that permit pseudonyms that may be a bit harder to trust. The constellation of sites is indicative of the pervasiveness of social shopping and has spawned numerous new companies and names that probably deserve their own linguistic study. Suffice it to say, due to their late arrival on the Web, creativity is needed (and, of course, desired) in the naming of social media sites. The following is a modest sample: appsavvy, Blippy, BrightKite, BuyBooBuy, Cinematch, Chictopia, Chompon, Flashmob, Flightpath, Foursquare, Gilt, Gowalla, Groupon, ideeli, iLike, Justboughtit, Klout, LivingSocial, Loopt , Moblog, Pearltrees, PeerIndex, Pinterest, Polyvore, Pricegrabber, ProductPulse, Shopow, ShopSocialy, StumbleUpon, StyleFeeder, Svpply, Swipely ThisNext, Tippr, Tumblr, TweetLevel, Wanelo, Woot, Yammer, Yelp and Zibaba.

If 1995 was eCommerce’s breakout year, then social shopping’s counterpart was 2005-2006, first with the debut of YouTube, followed in 2006 by Twitter and, later that same year, the opening up of Facebook to anyone 13 years of age or older. In the space of a year, communication had, once again, been suddenly and thoroughly revolutionized by extreme democratization. Social shopping, long taken for granted in its analog word-ofmouth format, would now embark on its selfconsciously digital and mobile phase. It has developed quickly and not at all predictably. A 2006 article in The New York Times specifically about social shopping makes no mentionof Facebook, instead citing Kaboodle, Wist and StyleHive as sites hoping to ride the MySpace wave. Today, of those three hopeful sites, none merit their own Wikipedia article. MySpace was overtaken by Facebook in 2008 and has since been restructured and redesigned, without immediately apparent success. Playing in the background of these developments was the evolution of a perceived “Web 2.0” capability, indicative of the growing interactive, participatory nature of websites, and of a greater receptivity to user-generated content vs. the more passive viewer paradigm of “Web 1.0.”

‹ Graphic by: Yelp

Now, to illustrate the dynamic nature of social shopping and the need to understand the current marketplace, letâ&#x20AC;&#x2122;s move on to several of the current key principle players (from Facebook to the Blogosphere) and trends (Private Flash Sales to Mobile Commerce) of the social shopping universe. Obviously the landscape is constantly shifting and brands need to be fully aware of what is happening today while keeping an eye on what will emerge tomorrow. This is nothing if not a truncated list.

Whatever their names, the essential socialshopping user experience associated with most of them is to find a retailing website; create a public profile; follow fellow shoppers (friends, strangers and their Twitter feeds); see ratings and reviews of products and services; check in at a physical location with a smartphone; get a special discount as a result; get invited to a flash sale; scan a barcode and tweet the result; register to buy a group-based coupon (as in Groupon) and hope enough others do the same; tweet that hope; recommend that same coupon to a friend; and finally share all these experiences with others who in their turn will do (or are already doing) the same thing at other places of interest to those within a given social graph. The leading social-shopping-enabling platforms are presently Facebook and Twitter because you often can log onto and register on any given companyâ&#x20AC;&#x2122;s website through your Facebook or Twitter account. Companies simply integrate their own website-specific logon through the Facebook or Twitter tool embedded on their homepage, thus greatly simplifying the process of becoming a registered member.

â&#x20AC;š Photo by: Groupon

The Players Facebook. Friends are obviously what

companies are now inviting their customers (and potential customers) and their friends to log on at their official websites through Facebook’s tool. They can then find friends who have also registered and read their comments and see whether or what they have purchased. Within Facebook itself, companies establish their own branding and information sites known as pages (some of which are starting to offer fully transactional shopping and have rich interactive applications), and each site has a “Wall” feature that acts as a blog.

Twitter. As with Facebook, customers and

routinely invite their customers to “follow us on Twitter,” a textbook example of how established enterprises quickly make use of behaviors previously attractive to subcultures.

YouTube. The marketing opportunities of

favors: tweets, text messaging and blog postings. As with anything on the Web, this will almost certainly change in the near future as technology and cost permit. The development of visual equivalent tweets is no doubt already in the making, potentially opening the door to a host of hybrid apps.

Facebook is all about, and the site offers the ability to friend someone – or some business. When you do this, you become a member of that person’s or business’ social circle. In the latter case, you become a friend by purchasing a product or service or when you “Like” it with the click of the thumbs-up button. For some businesses, large and small alike, Facebook now plays a leading role in customer outreach and service-branding, although not everyone is sold on its potential (see “The Future,” below). As already noted,

website visitors of a company’s proprietary site can register on that site through the Twitter icon, a powerful marketing tool connecting the two entities. Users then tweet their own comments and see their friends’ Twitter feeds about that company (or anything else). Registered users can automatically follow their friends’ Twitter feeds, and tweets can be linked to videos. Businesses now

quick and easy uploading of personal and professional videos to a potential audience of millions is too obvious for extended discussion. However, one does not typically log onto a company website through YouTube, and, although mobile devices can take and transmit pictures and video, they are (at present) less likely to be used for the kind of communication that social shopping currently

‹ Graphic by:

Ibraheem Youssef

11 11

Groupon and LivingSocial are currently

a variable, such as how many buyers chose to participate. A certain number of members are required to purchase the discounted service within a certain time period, thus encouraging members to contact their friends about a specific deal.

the leading group buying sites, although serious competition is on the horizon. Google has Google Offers, Facebook has Deals, Yahoo has Local Offers and eBay has Kuponan. Additionally, by August of 2010 there were a reported 500 other group-buying sites, some of them offering local-only discounts. Group buying, sometimes characterized as â&#x20AC;&#x153;deal of the dayâ&#x20AC;? offers, provide discounts based on

Expert bloggers. The blogging universe

site, or simply go it alone. Sites of the moment would include myfashionlife.com, Iamvintagelover.com, 5inch andup.blogspot.com, culturejunkie.co.uk, gluttonforgrandeur.com and FashionableMaven, each targeting their own particular niche, large or small. Basically, their purpose is to drive consumers either to or from a website, product or service.

is by now virtually an infinite one, expanding daily. Inevitably and rightly, some bloggers will garner much more attention than others (who may garner none at all), and this is also the case with their impact on social shopping. Particular bloggers may be sponsored, or meld their identities within a larger blogging

â&#x20AC;š Photo by: LivingSocial

Trends Private, invitation-only “flash” sales.

Social CRM. Customer Relationship Management has always been important for business. Before the advent of the Web, managing customers was (relatively) straightforward, although never easily perfected. But with the advent of social shopping, the challenges businesses confront have gotten much more complex. User ratings, website feedback, Twitter feeds, Facebook comments and YouTube videos are venues for both positive and negative input from prospective and former customers. CRM is increasingly a matter of managing those sources, and that focus may be termed social CRM. The field is a new one, and both prospective entrepreneurs and established firms struggle to find their way through the maze. Ultimately, the best control of social media in the field of business is the same as it ever was before the Web: offer the best service and products at the best price. Thus, social CRM is and will be about using social media to achieve that goal – assuming such a goal is in fact achievable at all.

The kinds of private, invitation-only sales found on the Web are usually open to virtually anyone with a credit card. How private the sale is will, as a practical matter, depend on the merchandise and the price – the higher the price, the more “private” it will necessarily be. Registration is simple and sometimes can be done through a website’s “Facebook Connect” icon. Users are encouraged to invite friends, either through Facebook or by submitting their email addresses. Sales are for limited periods, and may offer substantial discounts, thus, there is pressure on the customer to decide quickly to purchase or risk losing the opportunity. The incentive for retailers is to create a buzz around an item or brand, and these sales may also give users a first chance look at certain products before they are introduced into wider circulation, thus, lending a sense of exclusivity to the experience. But flash sales aren’t only for customers seeking high-fashion deals. More and more travel offerings are promoted in the private-sale format. Current examples catering to the luxury crowd are Jetsetter, Spire, SniqueAway, Tablet Hotels, TripAlertz, Vacationist, and Voyage Prive, while Vacations, Trippo and Yuupon aim for the mass market.

Photo by: Vacationist ›

Trust your friends. The now existing

Mobile Commerce. The use of

abundance of online user reviews has spun off a new, more differentiated wave of online advice: that of your friends. Product advice seeking users want two things: 1) insights from someone who knows whatâ&#x20AC;&#x2122;s important to them, from someone they actually know, and 2) validation from their friends that they are buying, or simply thinking about buying, a great product. There are an increasing number of sites that serve up advice from users with similar interests and similar backgrounds (e.g. sex, age, family situation, product usage scenario), like honk.com and hunch.com, that get users closer to more trustworthy advice. The site that currently gets closest to personal, trusted advice is groopi.es, a pilot project recently launched by Atmosphere Proximity. It is built entirely on real friend connections and the products these friends know and can recommend to each other around the virtual equivalent of a campfire. Other brands, like airbnb. com (private vacation and room rentals), rely on Facebook tie-ins to offer tips from actual connections. And we will undoubtedly soon see many more variations on making social shopping more trusted, personal and relevant to individuals needs.

smartphones to search, browse, find, price, rate and blog as a part of the new-normal shopping experience first became significant in 2010 and continues to grow in popularity. As of that year, finding a store location was the most popular activity; searching for specific products was next in line; general product browsing was third; and comparison pricing came in fourth. Exchanging comments and making recommendations was not yet a priority. ShopSavvy, myShopanion, Scandit, and Bar Code Hero are current representative examples of mobile commerce apps. Mobile tagging, a feature that lets users scan a product barcode to read about it and its ratings by purchasers, is also an integral part of the experience. Users may soon be able to see if their friends have purchased and rated the product, and rate and post their own purchases. Check-in deals are proliferating as well. Using their smartphones, users check into a physical location. The information is essentially public, and, in exchange the location (i.e. a restaurant, bar or hotel) may offer a special discount. Foursquare and Gowalla are currently leading providers of check-in deals.

Photo by: Dan Saelinger â&#x20AC;ş

Has Social Shopping Changed the Journey? Thanks to the circular model, marketers can look at purchase decisions using a new way of thinking. The focus on the post-purchase phase (the “enjoy,” “bond” and “advocate” steps) is now the crucial driver of the purchase decision. The post-purchase phase is exactly where social shopping produces its strongest impact. This new paradigm creates a more loyal advocate who is more likely to buy and to share their experience. Sharing the joy of using a product with friends and then advocating for the product to friends is what drives purchase decisions now—and has actually always driven purchase decision; it’s only that the tools to share that joy and advocacy haven’t had such a ubiquitous reach as they have today. Marketers will be increasingly able to use these tools, as well to influence what happens after the purchase is made and get a step ahead in the race for the next purchase.

In its totality, the consumer value and popularity of all these players and trends have contributed greatly to a new shopping paradigm that the CMOs and marketing agencies of the world are catching on to now – the disappearance of the linear purchase funnel as we know it and the emergence of an iterative, social circle-influenced purchase decision process, as illustrated by McKinsey & Co. and their Consumer Decision Journey. In this paradigm, instead of following a more or less linear process from awareness to purchase, where consumers winnow a broad basket of brands (and products) down to a single choice and then stick with it, they constantly add and remove brands and products from their consideration set. Instigated by family, friends, neighbors and their preferred social media platforms, they make their buying decision along a circular purchase path where post-purchase experience and advocacy of trusted fellow shoppers define the brands and products that will be included in the next purchasedecision journey.

Moving from...

Awareness

Familiarity

Consideration

Purchase

To... Evaluation

Engage

Bond/ Advocate

Buy

Enjoy

Credit: McKinsey & Co. and their Consumer Decision Journey

The Future is Uncertain and Certain In Web-time, “the future” is a highly relative and debatable term (for example, it has been the “Year of Mobile” for each of the past eight years). It’s difficult to speculate too much on a “future” further than one year ahead of today’s calendar date, whatever that date might be. MySpace fell from favor (for now), and Facebook might also, for a while. YouTube and Twitter will almost certainly face challengers from technologies as yet unheard of. Who knows?

tweets will be in the future) about it. In each stage of that imagined progression, trust is maintained because there is an exchange of money or the potential for a specific future exchange of money, and a record of each transaction is available. A needlessly negative tweet would have consequences, just like a needlessly negative review on eBay does. But other aspects of social shopping are really just based on talk, blogging, and texting – old fashioned word-of-mouth gone digital and mobile. And that requires trust to be effective.

At this particular moment, not everyone is clear on the long-term potential of social media and its attendant user-generated content being a long-term (or even shortterm) driver of sales. Some think that Facebook is more valuable for its user data alone than for its use as an affiliate site or branding portal. Expert bloggers may help decide this particular issue, becoming more important as affiliates themselves, incentivized by the commissions they can earn, or falling victim to media-burn as their commercial perspective becomes more apparent to a skeptical and ever-changing readership. Certainly there is no reason to believe that barriers to entry will grow higher. Anyone can blog, make recommendations, alert their friends and possibly earn a commission, which is an outcome explicitly promised on the website Zibaba.

As social shopping is conducted within the environment of a social network, elements of a virtual economy, such as virtual money (already a big and growing factor in online gaming), may increasingly become determinants for the success of individuals within those networks, as well the success of the networks themselves. There are many different kinds of virtual money in use around the world and we can expect that this situation will mirror the historical growth in the use of money itself, with currencies gaining and losing acceptance as representatives for universally trusted gold and silver. In this case, the virtual currencies would represent levels of trust gained by participants in a social network.

We wait for a mobile app that will allow friends to trade those commissions, convert them into coupon futures, leverage them via eBay into virtual currency, and then sell that currency to an online gamer, who will then rate the experience and, of course, tweet (or whatever

‹ Photo by: Kiersten Essenpreis

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WRITTEN BY DAVID BEAR MIKE SZABO EDITED BY EDWIN PHILOGENE