Leveraging Social Media to Optimize Sourcing-to-Shelf Processes
1. • Cognizant 20-20 Insights
Leveraging Social Media to Optimize
Sourcing-to-Shelf Processes
As Facebook, Twitter and other social tools go mainstream, retailers must
tap these rich pools of consumer-generated data to make more strategic
buying, stocking and selling decisions.
Executive Summary Thus, we believe retailers should take this existing
dialog one step further and actively involve them
Based on a survey of more than 2,000 shoppers, 1
in the product design and development process.
we identified 10 megatrends transforming the
retail industry. One trend we unearthed was the
Retail Challenges and Opportunities in
convergence of social media and product devel-
‘Source to Shelf’
opment.
Before we analyze how these trends can benefit
Retailers are learning to deal with a generation of retailers, we need to understand how the “source-
consumers who not only demand instant gratifi- to-shelf” process has historically worked for
cation but are also among the biggest consumers retailers and where the gaps lie between customer
and generators of information. Moreover, they expectations and retailer operations.
expect retailers to leverage all available infor-
mation about them. For these consumers, Retailers have typically had to work around long
product value and quality are not achieved by lead times, seasonal fluctuations and an inability
detailed planning and product development in to react to customer demand within the selling
silos. Instead, they prefer doing business with season. From a sourcing perspective, retail
companies that are transparent and allow them buyers endured these challenges, along with their
to actively participate in the product design and colleagues in the sourcing and product develop-
development (PDD) process. ment functions. Today, however, buyers can incor-
porate historical trends, customer insights and
This white paper analyzes how retailers can future consumer demands surfaced by social
leverage social media across the entire value media analytics into the company’s buying plan.
chain, from sourcing through arrival on the shelf. Following creation of this buying plan, buyers
Shoppers are already connecting with retailers generate initial orders and wait for products to
and their products in innovative ways by interact- reach distribution centers and ultimately stores,
ing on Facebook, sharing user-generated content, hoping that their instincts map with shopper
creating viral videos, blogging and tweeting. buying behavior.
cognizant 20-20 insights | january 2013
2. Traditional Buying Process
Historical Focus Group Strategic
Analysis Studies/Trends Intent
Buying Plan & Virtual Sample
Intent to Buy Range & Buyer Edits Buy Trip
Sampling & Final Inwards &
Commit Buys Final Approvals Shipments to Stores
Figure 1
Buying Process Challenges • Retailers are missing a potential opportunity
A typical product development lifecycle is to creatively engage with consumers, resulting
depicted in Figure 1. This process inherently in the loss of a collaborative brand-building
challenges retailers to be relevant to consumers. opportunity.
The challenges of the buying process include the
following: Getting it Right: A Proposed Approach
to Leverage Social Media
• Insufficient data for a proper look forward: Considering the challenges with the traditional
>> Within fashion and other short lifecycle approach of product design, development and
categories, the design and/or use of prod- promotions, the opportunities offered by social
ucts can vary significantly from one season media can provide a handsome payoff. Social
to the next. While product attributes have media can help retailers combat many of the
yielded some success in forecasting de- aforementioned challenges, since it provides an
mand, it is still a challenging endeavor. instant way of connecting with consumers. Figure
2 (next page) offers a basic construct that can
>> The buying decision (what to buy and how help retail buying and planning organizations
many to buy) is made based on historical
more effectively leverage social media.
analysis and future forecasts, while accom-
modating long lead times for imported mer- Getting Started with Social Media
chandise.
Social media clearly helps retailers connect the
>> Consumer engagement through focus dots of customer input and feedback on product
groups and surveys is largely not reflective creation. However, the most difficult decision is
of their current demands and needs. determining the right time and method to begin
leveraging social media and setting proper expec-
>> These challenges relegate the process to
tations with consumers on how ongoing conversa-
more of a push system. The retailer com-
mits in advance to what to sell and pushes it tions will be translated into an improved shopping
to the customer, then waits for the consum- experience. Hence, while a social presence is
er’s reaction before sending some more almost mandatory for retailers these days, it is
their way. When initial feedback is not posi- important to ensure this additional channel is
tive, the items are instantly marked down, fully leveraged for business benefits. Here’s a
leading to a reactionary cycle of events. basic checklist:
• Thedegree of uncertainty over consumer • Continuous social conversations: Retailers
acceptance of a product is quite high: must engage consumers all year round in
PDD and promotional conversations. Sporadic
>> More importantly, the current process also attempts to seek input will very quickly lose
negates retailers’ ability to truly react to relevance with the customer. Social conversa-
consumer feedback in the current season.
cognizant 20-20 insights 2
3. A Phased Approach to Leveraging Social Media in PDD and Promotions
3
2 Becoming
a social
Building enterprise
actionable
social data
1
Beginning to
leverage social
media
Figure 2
tions are an ongoing exercise, unlike the tradi- to see for themselves the value created from
tional means of customer engagement, which their inputs. This will motivate them to engage
are typically sequenced and pre-planned. with the brand over the long term.
Threadless.com has opened its entire
product design and development
The top 250 Internet retailers are process to crowdsourcing. Its Web
on Facebook, Twitter or Pinterest.2 site ensures consumers can score/
And 64% of the Interbrand Top 100 submit designs, participate in design
retailers are on Google+.3 challenges and win awards. The entire
process is clearly communicated to
consumers online.
• Continuity of physical and virtual experi-
ences: It is important for in-store experiences • Scalability: As the number of consumers who
to flow freely into social conversations and the participate in the PDD process and promotions
online experience. Retailers should leverage increases, it is important to keep in mind that
existing social media channels like Shopkick, this form of customer engagement must be
Facebook, Foursquare and Pinterest to enable consistent and scalable. A scalable approach
this in a much faster way than starting from will ensure long-term creative collaboration.
the ground up. These channels should also
be seamlessly integrated with the retailer’s
Walmart has embarked on creating
existing Web sites in order to ensure continuity
store-specific Facebook pages in order
of the customer experience across media and to better engage consumers and track
channels. the company’s huge fan following.
This ensures that its Facebook
engagement is scalable beyond its
Charming Charlie, a boutique fashion current reach and effect.4
retailer, encourages conversations
around in-store experiences and
Pinterest contests on its Facebook page.
Build Actionable Social Data
Most retailers embark on the social journey with
a basic listening page on any of the existing
• Mechanisms for customer engagement: It is social media brands such as Facebook and
very important for retailers to have a process
Twitter. However, even as these pages gather
designed to solicit PDD input from consumers
customer feedback and interaction, engagement
and to incorporate their input into their
sustenance is threatened if the retailer is not
internal PDD process. Transparency is another
perceived as acting on this information. Hence,
key requirement. Consumers should be able
cognizant 20-20 insights 3
4. it is important for retailers to have a definitive can be tested and measured. The value of
framework for the data they want to collect and social sourcing can only be measured through
specific insights that they want to derive from inclusion of the relevant data in the product
this data. development cycle.
Typically, retailers that have been successful Build a Social Enterprise
in disseminating social data take the following Involving the customer socially in business
actions: functions such as PDD and retail promotions
inherently demands that the enterprise be more
• Define specific business objectives. Are
socially affable. This involves the following:
you looking to improve an existing product or
create a new one? Have consumers expressed
a desire for a different product configuration • Social collaboration in regular business
operations. Clearly, customer input should be
then what you currently offer (e.g., available
solicited all along the value chain of sourcing-
in plus sizes or a new color palette)? You
to-shelf. However, it is important for retailers
will need to consult with key stakeholders
to reverse-engineer their working terms with
throughout the product development and mer-
vendors as well, to enable them to incorpo-
chandising process in order to establish and
rate social feedback. This increases flexibility
prioritize these objectives. Without identify-
across the supply chain and makes it collab-
ing specific business objectives, you may find
orative. Many times, while a retailer is not in a
yourself chasing a lot of “potential” solutions
position to act on customer feedback, vendors
that appear to have value but instead result in
can make necessary changes to product design
a waste of time and resources.
and course-correct prior to shipping out the
• Search across several social platforms and merchandise. Buyers can even ask consumers
look to extract only relevant data. Your to rate new product offerings before bringing
business objectives will define what you should new vendors onboard, thereby reducing the
gain in the social ecosystem. By using sophisti- risk of having to wait for consumer reaction to
cated text analytics tools and creating targeted ascertain the product’s potential.
search streams across Facebook, Twitter and
other social platforms, you will eliminate
irrelevant chatter and noise and drill down to Walmart recently introduced the
the sentiment that corresponds to your overall Orabrush brand of toothbrush, based
goal of deriving value from social media. In on its popularity on YouTube and a
addition, don’t limit your search to your own Facebook ad campaign targeted at
the Walmart buyer. Walmart also ran
social platform; apply the same qualifications
a “Get on the Shelf” contest, whereby
and rigor to the publically available informa- consumers were allowed to select the
tion from your competitors’ social networks. products they wanted stocked in their
neighborhood Walmart.
BestBuy, Krogers, Chico’s, Kia and
many other retailers are embarking on • Empower employees to act. Social media, by
investments related to social sentiment its very nature, is instantaneous and trans-
analysis. The findings are then integrated parent. Hence, it is important that retailers
into their merchandising processes to empower employees to immediately act on
ensure consumer sentiment is accounted information flows. This will mean changing
for in their product offerings.
internal operations, workflows and approval
mechanisms within the business in order to
truly leverage the social medium. The hidden
• Once you’ve obtained the data and prioritized challenge is identifying experienced employees
the outcomes that align with your business who are ”socially” comfortable. Additional
objectives, the next step is to identify which training and focus will be required to create
outcomes should be incorporated into your this social workforce, and technology can
existing product development process. While be leveraged for managing and monitoring.
it may be disruptive to your organization’s Retailers that are moving into the social
current workflow, it is imperative that the construct are now creating new roles, such as
results be included as part of PDD so that it sentiment analysts, social corporate responsi-
cognizant 20-20 insights 4
5. Using Social Data in PDD Processes
Crowdsourcing Team Social Help Force Sentiment Analysts
Social Enterprise
Create New Product
Historical Product Product Product Selling &
Analysis Concept Sampling Design Promotion
Improve Existing Product
Social Data
Customer Data Product Data Experience Data
• Demographic • Features • Shopping Experience
• Psychographic • Pricing • Product Experience
• Geographic • Other Attributes • Feedback & Comments
Figure 3
bility personnel and crowdsourcing teams, all • Creation of a social data construct that will
of which will engage in PDD processes. enable the new PDD processes.
Either can be leveraged in both new product
BestBuy has a dedicated “Twelpforce” creation, as well as enhancement.
of individuals who are empowered to
act on problems that consumers tweet However, both avenues are fraught with
about. This team consists of roughly challenges in working through the familiar
2,600 employees whose job is to resolve working processes within PDD. We propose the
customer issues using Twitter as a following immediate actions to mitigate risks
medium of conversation.
while integrating the social medium within PDD:
If retailers can embrace all of the above in their • Embark on including social media in PDD
processes by means of a pilot, using a subset
social media strategies, we believe they can be
of products (one brand/season) to actively
more successful in their social sourcing-to-shelf
engage shoppers in the PDD process.
journey. There are many nuances in this journey
that will be specific to the retailer. Thorough con- • Set up existing/new social media forums to:
sideration of the customizations required will be
critical to success.
>> Get started with a product line that is gen-
erated by these shopper engagements.
Looking Ahead >> Build actionable social data.
Clearly, social media has the potential to radically >> Identify the new “social enterprise/teams”
improve product design and development and needed to sustain interactions with these
its impact across the entire retail value chain. As shoppers in the PDD processes.
indicated in Figure 3, a retailer that is embarking
on including social data in this function can
• During and after the duration of the pilot,
measure and analyze the impact on sales,
anticipate a two-fold change in its product design margin and customer connect changes affected
development cycle: by the use of social media, and benchmark
these against past results.
• Creation of organizations that leverage social
media in the PDD process lifecycle.
cognizant 20-20 insights 5
6. • Discuss results and potential for future We expect the results from these early pilots to
expansion with your merchandising and be compelling and that most retailers will drive
marketing teams. significant growth from improved use of social
media in their sourcing-to-shelf processes.
Footnotes
1
“Changing Consumers & Technology: Ten Megatrends Transforming the Retail Landscape,” Cognizant
Technology Solutions, November 2010, http://www.cognizant.com/retail/sitedocument/ten-megatrends-
transforming-retail.pdf.
2
“Top 250 Internet Retailers on Social Media,” Campalyst Blog, May 2012, http://blog.campalyst.
com/2012/05/15/top-250-internet-retailers-on-social-media-q1-2012-infographic/.
3
Adam Schoenfeld, “Google+ Month 6 Adoption and Engagement Report,” Simply Measured, May 8,
2012, http://simplymeasured.com/r/google-plus-month-6-brand-adoption-and-engagement-report/.
4
Brennon Slattery, “Wal-Mart Makes Big Facebook Push: Offers ‘Rollback’ Price Alerts,” PC World, October
2011, http://www.pcworld.com/article/241713/walmart_launches_local_deals_facebook_page.html.
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