2009 marked another profitable year for online retailers with e-commerce growing by 5% despite lower overall consumer spending . This implies the continued decline of brick and mortar stores and rise of online commerce. This is due, in part, to the richer online experience, which helps consumers make better purchase decisions from convenience of a few clicks. What’s next for online retailers? Would social media transform online shopping into “social shopping”?
Let’s first look at what physical stores offer that online ones do not. At a physical store, consumers use senses to evaluate a purchase and receive instant feedback from friends and employees who work there. Therefore, for online retailers to grab even more consumers, they need to solve two basic problems: fitting and instant feedback.
A few retailers such as H&M are experimenting with virtual fitting rooms and augmented reality to solve the fitting problem, but with limited success so far. Zugara offers a Webcam Social Shopper to try remote fitting. With momentum behind augmented reality, there are reasons to believe that remote fitting would become more practical in a few years. What online shops are still lacking is instant feedback. Popularity of social media such as Twitter and Facebook appear to suggest that this is going to change soon!
Studies have suggested that social experience can drive higher conversion as well as improve buying experience for customers. Customer reviews and Facebook fan pages have become perhaps the most effective social tactics for driving sales. However, it is only the beginning to a true social shopping experience.
Social experience is about providing buyers the ability to communicate with others and tools for self expression. Communication and self expression should be a seamless experience that happens simultaneously as consumers browse through different items online. Twitter is an example of how instant communication and feedback can totally change the web social landscape. So far, in the e-commerce realm, this communication is limited to static reviews, comments, and email sharing with limited interaction opportunities. It’s still hard to get the instant dialog and conversation on a retail website. As companies try to figure out how to do social shopping, a new landscape of social shopping begins to emerge, and a new value chain is created.
Social platforms will become the source of identities. They define our social graph and can be a source of list of people to include in our online shopping trip. Perhaps one day we will tap our LinkedIn friends to our professional purchases and negotiations, and Facebook friends for casual decisions. With the increasing popularity of Facebook Connect, Facebook promises to be the most influential force in becoming the de facto social identity. Inevitably, all online retailers would need to find a way to integrate seamlessly to these social platforms.
Social shopping communities are the new product aggregators. These companies provide consumers with self expression tools to create designs from a collection of items found on the web and share them with the community. Going forward, I expect that consumers would start their shopping process by going to one of these communities to find hot trends or by asking and receiving instant product suggestions from their extended community. Success of communities such as Kaboodle or Polyvore relies on the assumption that wisdom of the crowd would be better than any machine generated recommendation. At the end of the day, trends and hot items are based on subjective opinion of consumers. It’s hard for any recommendation algorithm to compete with human judgment.
Technology providers enable retailers to create an environment where consumers can shop together by sharing viewed items and participating in chat discussion. Fluid, Decisionstep, and Sesh are promising companies that have partnership with major retailers. Fluid is behind the Jansport’s social design that creates a lot of marketing buzz while Decisionstep’s ShopTogerther solution powers Charlotte Rousse’s experiment with social shopping. The biggest challenge for these companies at this point is the adoption. These players are in a tough position right now as the market is still in its infancy. The winners in this market segment will be the one who manage to stay afloat while waiting for the market transition to happen.
Traditional online retailers are still trying to figure out what technologies to invest in. Majority of retailers are still working on the basic functionalities such as customer reviews and product videos. Full social experience is still only an afterthought and not a product feature. However, experience has taught us that the winning retailers will be the ones who keep their eyes open and invest in innovations.
Is the timing right for social shopping to go mainstream?
What social shopping can’t compensate for is physical interaction with friends and socializing that takes place while shopping in a store. While it is true that one reason behind people wanting to go shopping with friends is that they want to solicit their feedback, more often than not this is an implicit reason. In an online environment, the model is reversed: Users deliberately solicit feedback from a friend for a specific item before they can chat and socialize. Moreover, your friends might not be available online when you need them. That’s part of the reason why social shopping at Charlotte Rousse is not gaining enough traction.
Nevertheless, convenience and benefits of social shopping would result in increased adoption with time. Just the way Facebook stretched users limits (very few users could even imagine they would be leaving messages to their friends on public walls), social shopping would also gradually change users behaviors. Tapping into immediate social network will become part of the online shopping experience in future.
