Posted by Shopping is a social activity. You would think that retailers would be running to figure out everything they can (and should) be doing online to improve their conversion rates by building community and connecting to consumers through online social networking.
That was the general message speaker after researcher after retailer after venture capitalist told the crowd in Amsterdam this week during the first-ever Global E-Commerce Summit presented by Shop.org (full disclosure: I was one of the keynote presenters).
The usual slew of, "people don’t shop because they need things, they shop because it’s an act of belonging to a community and provides them with a sense of connectedness" has some glaringly obvious and similar links to why platforms like Facebook and MySpace are working: it offers people a place to promote themselves, communicate, share and validate who they are and what they’re about.
So, how do retailers stack up with their Digital Marketing?
According to an August 2008 study by Internet Retailer and Vovici that was recently discussed in eMarketer as part of the news item, Retailers Get Social with Facebook (October 29th, 2008), Facebook seems to be the clear leader:
"Nearly one-third of responding businesses said they had a Facebook page, compared with 27% that had a MySpace page and just over one-quarter that had a page on YouTube. A September 2008 study by Rosetta (formerly Brulant) that focused on the top 100 online retailers in the US found that 59 had a fan page on Facebook, up from 30 in May 2008. Among the 29 who added Facebook pages since that time were Best Buy, Toys “R” Us, Kohl’s and Wal-Mart."
The bigger question is: what are they doing in these online channels? Are they connecting, building real interactions and being overall good community citizens or are these online social networks just a cover-up to shill their wares through tightly controlled one-way communications?
“It’s important that retailers don’t just slap up a page because everyone is talking about Facebook. An effective presence requires that you carefully consider what your customers are looking for, what you would like to communicate, and what role a fan page should play in your overall online strategy,” said Adam Cohen, partner with Rosetta’s consumer goods and retail practice, in the eMarketer news item.
Cohen is speaking directly to the same philosophy Blogged about here: Instead of "What?" Ask "Why?". Retailers know how to build a community around their products and services better than anyone else. They’re doing it day-to-day in their physical locations. One of the reasons they may be challenged in the online social circles is the time, dedication and patience it takes to build it up from scratch. Retailers can be a patient group. Moving forward with the economic challenges that they are already facing (Hitwise recently reported that online traffic to e-commerce sites is down for the eight consecutive week), they may be feeling like they should have spent more time building up their community when times were better. Now, could it be too little too late?
Are retailers making the most of Social Media and online social networks? Which ones are you liking?
Never another podcast episode or article 
Shopping is social in one additional way: word-of-mouth recommendations for products and services, before you go for a trip to the store. Mitch, you will love the new product we’re about to launch…
I agree with the first part: “people don’t shop because they need things” but definitely not with “they shop because it’s an act of belonging to a community and provides them with a sense of connectedness”. People who own a $1,000 mobile device when all they (know how to) do is make a phone call, or those who drive a 503 horse power 6.3 liter SUV to bring their kids to school and go to the supermarket, are purely show offs! As for the question, no it’s never too late (for anything).
Mitch – Thanks very much for including my quote. I don’t think it’s too late – in fact, during this economic period I think it’s prime time for retailers to look for was to differentiate and innovate. Social media channels (of which a fan page in Facebook is a VERY small slice of the potential pie) are ripe to be explored. I also think the space is new enough that there is still room to fail, so long as they start small.
Thanks again for including me.
Best,
Adam
Hey Mitch,
Good posting.
Retailers are definitely not yet making the most of social media and social networks, but I predict we will see a lot more adaptation in 2009. I’m sure many retailers will be more constrained in their approaches than they would have been prior to the current economic condition, but nonetheless retailers will begin to enter. I’m hearing about it too much from fellow retailers for me not to believe there is some action coming. The next question will be how effective will these entries be, and how many retailers will join exiting communities versus trying to create their own?
I’m sorry. I don’t exactly see how Walmart, Target, and other retailers stand to benefit from adding social networks to their sites. Or running what will invariably be inauthentic and impersonal Twitter/Facebook/MySpace/etc “campaigns.”
Should there be a social network dedicated to just talking about shopping?
Mitch, I think you need to more clearly and articulately define here what you mean by “create communities.”
That’s starting to sound quite hollow.
In a large part of the world Inditex is the leader to beat in Retail, having multiple brands. The best known is Zara http://www.zara.com.
Now Inditex never ever does advertising nor any other marketing effort besides an informative website by brand and having shops in impressive buildings from the 19th century. (Actually these are the buildings build before the long depression of 1873).
Will they need a social website for their customers? I doubt as their connection with the customer are their shops in these great buildings giving the people the feeling of importance, good quality at very competitive prices.
The Zara community is in the shops, not on the Internet.
The idea of shopping as an act of belonging and providing a sense of connectedness is undeniably true.
Any woman will tell you – shopping is sweeter when done with girlfriends.
What I like about this argument is the insight it provides as to why e-commerce is not as widespread as it could be.
It’s convenient to order and receive your purchases without having to change out of your pajamas, but there’s a social aspect of human nature that cannot be extinguished.
I may be a professional in the Web industry, but I wholeheartedly endorse any online activities that keep that face-to-face human contact alive.
The value of social networking and fashion shopping goes well beyond providing a sense of connectedness. The truth is, shopping for fashion is really difficult. Women first have to identify the current trend, think about the occasion they are buying, identify who will be their “fashion peers” at this occasion and consider their own personal preferences and fit issues. This is all just to identify what they need! Then they have to fulfill that need – Women must go out into the world to find the one item among all the retail outlets, brands and channels that matches their need. For many women this is just too much work! It’s far from fun.
What’s missing in the fashion ecosystem is a destination where women can go for specific unbiased style-level advice and recommendations. Much like the role Amazon plays for books, Yelp for local retail and TripAdvisor for travel, fashion needs a place consumers can habitually click to make shopping decisions more quickly and confidently.
And, yes, I’m working on this problem 🙂
Being both a woman and a retail executive for the last 20 years, I feel I have a bit of experience on this subject. When it comes to shopping, women lead men as the largest purchasing group. They also tend to be more social about shopping.
What both men and online/tech professionals need to understand is that online social shopping is very different from real world social shopping. For women, shopping is an event; it is entertainment. Women like go out with friends to shop like men would go out to play golf. It involves conversation, maybe lunch and a manicure thrown in. Women like to try on outfits for each other or get together to take advantage of a great sale. The online environment will never be able to duplicate this type of experience.
When you talk about retailers building Facebook pages and connecting with consumers you need to tread lightly. Only the very top and high-end brands will be successful here. While I love shopping at Target, I am no more going to join a Target Facebook page than I am going to wear t-shirt with a Target logo. Gucci or Nike are a different story – these aspiration brands are the ones who can best pull off a Facebook presence.
In my opinion, I see online social shopping happening directly on a retailer’s own site (not Facebook or MySpace). Retailers should be building communities of like-minded shoppers who want to share their favorite deals and products.
Part of reason retailers are not maximizing potential of social media is because it is a two-part problem for them. It is not enough for them to “get” the value — as Mitch points out many are there in terms of appreciating the potential. The challenge is who inside of these companies is going to do the work? Very few have the bandwidth to make the necessary effort, even before the economic environment made them batten down the hatches. If you talk to the online arms of most retailers, you will find them flat out just keeping their heads above water with the current day to day – that’s not because of recession, that’s just the way retail is. This same problem is why so many other no-brainers have not gone as far as they should. Take A/B testing for example — everyone says its great, but few companies are really doing it because of the level of human involvement required. The “good news” is the same was true for site metrics a few years ago, and now it finally feels like most retailers are in fact making the requisite commitment. So time is probably on social media’s side, but it will take longer than it should. One thing can provide a little acceleration is for a few, well publicized, high-ROI efforts to succeed. Retail is a herd industry, and once a few members of the herd start making things happen, the rest will start to head in same direction. But even then it can take awhile!
All retailers will need passionate people like Gary Vaynerchuk of Wine Library – who get it – and who are also are passionate about their products and services. Are they too late? No. But the best people will be difficult to find, expensive – and worth every penny. Watch his Web 2.0 Expo talk on YouTube.
@ Maki – then you agree. People show off because they want to admired by their community. That’s exactly what I am saying.
@ Adam – starting small is the problem. Most big companies try to boil the ocean with Social Media because they are looking for mass and not the right, targeted people.
@ j. oakhurst and MondyB – creating community can be offering ratings, peer reviews and comments. This goes a long way to building loyalty and beyond just pushing products with free shipping. Community is not just the most popular social networks… it’s about connecting to consumers and connecting consumers to one another.
@ Rob – thanks for pushing more thoughts into this conversation… I’d love to hear more.
We are wrestling with the reality that much of our current demographic at Capabilities does not use the internet to shop. Some use it for research. We expect this to change, but for now we are poking our big toe into the waters of Facebook, My Space and others with the hope of capturing caregivers who are younger and looking for options.
Good discussion.
I am a social networking strategist for the home industries with a concentration in the furniture vertical. Everyday, I am having conversations with my clients-both manufacturers and retailers-about how they can use social networking to let their customers share with each other. HGTV’s “Rate My Space” is a great example of SN. They went from 0 to 11 million users a MONTH in 1 year. As a female shopper for my home, it would be wonderful to have social networking applications on every site I care about and also available on kiosks in the stores themselves or delivered straight to my mobile phone when I’m in the store. The biggest reason women don’t buy when they’re in the physical location is fear of making a mistake or finding the same thing cheaper somewhere else. Be transparent. And, if you don’t think this would work for you, think about why not. If the answer has to do with competition, that tells you something about your business model. For anyone looking to put a social networking app on their OWN website..check out http://www.liveworld.com. This is a game changer and is gaining traction fast according to Forrrester Research. Why? It is a social networking app that appears as a transparent film over your OWN website so the consumer never has to leave the page.
This is so true and actually reiterates one very important aspect of every business: what makes them different from their competitors.