Reactive whitepaper on social shopping

1. Social Shopping:
Reshaping the world of retail

2. Reactive
Social Shopping: Reshaping the world of retail
Social Shopping:
Reshaping the
World of Retail
Social Shopping is a rising trend that integrates the power
of social media into both on — and offline shopping. It is
revolutionising the business world, with retailers realising and
capitalising on the potential and reach of social media. It has
also transformed the average shopper’s behaviour, causing
businesses to sit up and change the way they sell. This white
paper, produced by Reactive, explains what Social Shopping is
all about, and how it is changing eCommerce as we know it.
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3. Reactive
Social Shopping: Reshaping the world of retail
Reshaping Social media has thrown a monkey wrench in the retail industry and the traditional rules that
govern it. For retailers, running a successful business is no longer just about operating a bustling
the world brick-and-mortar store or a pretty website. And for shoppers, purchasing decisions are no longer
driven by in-store interactions with salespeople or physical evaluations of products.
of retail The rise of online shopping activities coupled with social media integration allows consumers to
consult and interact with one another, bringing to life the concept of social buying in the digital
realm. Convenience is no longer sufficient; we are social creatures and marketers are beginning to
capitalise on that to stand out in a crowded marketplace.
A trend that has surfaced over the last year is social shopping, and consumers all around the
world are catching on fast, or as eCommerce consultant Linda Bustos describes it; ”a mashup that
resembles social bookmarking, social networking and comparison shopping in a blender.”1
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5. Reactive
Social Shopping: Reshaping the world of retail
Consumers According to the 2011 Social Shopping Study report by e-tailing group, 35% of respondents spent
75% of their overall shopping time researching products online2. Today’s shopper is savvy and
now get the willing to invest a lot of their time to ensure they find the right product at the right price.
upper hand For consumers, social shopping services have opened up possibilities to post about potential/
past purchases, ask for advice and opinions from friends online, and collaborate on purchasing
decisions. These are key factors for increasingly social online shoppers as peer influence and
discussion become more important when having a pleasant online shopping experience.
Consider how numerous online retailers have started including ‘Share’ functions on their
sites, giving shoppers the option to show products to friends easily via social networking or
bookmarking services. Online opinion sharing is on the rise, as demonstrated by Bazaarvoice’s
2011 Social Commerce Trends Report which reported that while 90% of online consumers trust
recommendations by people they know and 70% trust those of people they don’t know, only a
miserable 14% trust advertising and a paltry 8% trust celebrity endorsements.3 As more than
70% of shoppers consider user-submitted consumer reviews as a significant driving factor behind
purchasing decisions, these brief comments generated by consumers and social media users are
slowly replacing traditional advertising models.
The advent of online social shopping seems to have reshaped the Business-to-Consumer
relationship; it has shifted power back into the hands of the consumer, forcing brands to think
through messages they are sending out because a few complaints can very easily grow into
a global rabble of upset shoppers. Now everybody with a mobile phone can be a critic, truly
demonstrating the democratic power of the social web.
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6. Reactive
Social Shopping: Reshaping the world of retail
Types There are, of course, many different types of social shopping services catering to the varying needs
and wants of shoppers. We will now look at several common ones, along with other emerging
of social services that are proving quite popular among users now.
shopping
services
Group Buying
Social shopping programmes such as Groupon and LivingSocial offer discounts of up to 90% off
on local products, services and events. Such massive discounts are only made possible because
they rely on bulk purchases, allowing businesses to reach new customers. Moreover because of the
social power of the Internet, these services can also pull in those who otherwise wouldn’t normally
patronise or even be aware of certain businesses. The spectacularly growth of these sites has more
recently seen an inevitable back-lash.
Reviews and Recommendations
Because shoppers tend to trust peer reviews more willingly than corporate advertising, sites
like ThisNext usually list out products which are then reviewed by site users. Many online stores
have this feature so it’s nothing new, but the growing trend of online social shopping has driven
the proliferation of customer reviews and ratings functions, and retailers have started offering
customers discounts or virtual points for reviewing a product or simply recommending it to others.
Geo-location Services
Location-based apps like Foursquare, Facebook Check-ins and Google Places are being integrated
into the act of in-store shopping, in which users will be awarded points or directed to in-store
deals and discounts from within the app, giving brands the opportunity to capture market share by
providing seamless cross-channel shopping experiences. To further reinforce its social networking
abilities, such apps also let users look up product information, upload pictures of purchases, track
and share desired items and comment on their friends’ activities as well.
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7. Reactive
Social Shopping: Reshaping the world of retail
Types
of social
shopping Real-time Social Shopping
services Shopping sites like DoTogether or even retailers like Wet Seal let shoppers log on and connect with
their social media account, or invite friends over email. They can then browse and shop online
together, all at the same time. Such services are bringing the social experience of shopping unto
the web, and usage is spreading amongst consumers due to the proffered one-click convenience.
An example of this is the social shopping application Givvy. Givvy is a social shopping app that
allows users to discover, share and curate gifts, which are then ranked in order of popularity.
Users can follow gift recommendations of their favourite curators or browse gifts based on the
personality type of the gift recipient.
Barcode Scanning
A 2011 report by ScanLife4 has revealed that the company is now processing more than one scan
per second, compared to just 10 scans per minute a year ago. Apps like RedLaser, ShopSavvy and
Amazon Mobile allow users to scan barcodes of in-store goods, upload information like prices on
the network for other shoppers and simultaneously check for cheaper prices across other retailers.
Though not social shopping in the strictest sense, the ability to share product information allows
shoppers to use the app as a reference point before purchase.
Facebook Shopping
Yet another factor behind the social shopping revolution, this method involves buying, selling and
paying for goods within Facebook itself. This manner of social shopping will be explained in detail
later in this paper.
Peer-to-Peer Services
Social shopping also appears in the form of peer-to-peer services like Rentoid, which connect
individuals and allows for the renting or swapping or goods between registered users, like renting a
car for a short weekend trip or even exchanging old video games.
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8. Reactive
Social Shopping: Reshaping the world of retail
Taking the Dedicated social shopping sites no longer stand alone. Businesses are now including functions like
user-generated reviews and social media integration to better extend market reach, proving that
world by social media can be utilised by retailers to work in their favour.
storm Money is being poured into social shopping as businesses are moving into this area, like eBay.
In November 2011, eBay acquired recommendations service Hunch, which uses data to make
predictions about its users and provide them with personalised content recommendations. “Hunch
will enable eBay to move beyond standard item-to-item recommendations and use a broader
variety of members’ online tastes and interests to suggest new and interesting items for them to
browse and buy on eBay” eBay said in a statement5.
Not surprisingly, another global brand that has capitalised on the social shopping trend is Amazon.
In addition to its numerous apps and growing list of acquired online social services, the company
has integrated Facebook Connect functionality into the site, providing logged-on users with
individualised product recommendations based on data gathered from their Facebook profiles.
Moreover if the user activates the feature on their Facebook accounts, he/she will also find gift
suggestions for friends based on details gleaned from their profiles and Amazon Wish Lists. This
is a useful feature for shoppers, especially when it comes to finding the right gift. For Amazon, all
the information gathered from their users’ Facebook profiles is priceless.
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9. Reactive
Social Shopping: Reshaping the world of retail
The new In its recent US Digital Media Usage report, eMarketer estimates how digital media usage
will grow in 2012 in terms of the internet, mobile, social, video, and ecommerce6. They
eCommerce, predicted that 90% of social network users will be on Facebook in 2012. While over 800
million users are already on Facebook7, the site offers savvy digital marketers unique, cost-
fCommerce is effective opportunities to sell to potential customers on a Web site they are engaged with.
here to stay fCommerce, commerce over Facebook, is wreaking havoc on traditional retail business models..
The Facebook fan now wants to express their brand preferences with more than just Likes
and comments, and businesses are going beyond branded pages to better drive consumer
engagement. Seen as an effective way of connecting with customers, the trend of fCommerce
began picking up speed last year and now some of the world’s biggest brands, including Coca-
Cola, Starbucks and Disney are selling directly on Facebook. Strategists from Reactive predict
that within the next five years, more sales will be happening on Facebook than on Amazon.8
For smaller brands and retailers looking to get started in fCommerce, Facebook-based ecommerce
platforms are emerging, with Payvment leading the small, but growing pack. Payvment focuses
on companies wanting to sell goods and services on Facebook. It does this by offering several
options to e-retailers looking to utilise Facebook’s social platform. The first and original
version of the app is free, and once installed, allows anyone to set up a virtual storefront in
under 15 minutes. Powered by PayPal’s Adaptive Payment APIs, the app features a site-wide
shopping cart system and accepts over 20 currencies, enabling Facebook users from around
the world to shop across multiple Facebook stores and check out whenever they’re ready.
The two paid versions, Payvment Premium and Payvment Platinum, provide online stores with
a deeper, analytics-based understanding on how consumers are talking about and sharing
their goods on Facebook and Twitter.9 Since its inception in November 2009, Payvment has
already registered over 100,000 independent retailers and new sellers usually take two
to three days to get their first sale on Facebook. In 2012, Payvment announced that the
company reached one million monthly active shoppers in December 2011, and saw a 3X year-
over-year increase in transactions by its network of over 100,000 sellers during 2011.10
“While many businesses feel that social commerce
activities have yet to prove themselves in hard ROI...
consumers aged 18 to 34 are in fact embracing certain
social commerce activities, and social media is becoming
a significant driver of product discovery.”
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10. Reactive
Social Shopping: Reshaping the world of retail
The new And they aren’t stopping there. In 2011, Facebook and Payvment unveiled the world’s
first virtual mall on the social networking website. It brings together an initial group
eCommerce, of 100,000 online retailers offering over a million products in one centralised location,
allowing shoppers to browse and purchase items without leaving Facebook at all. Called
fCommerce is the ‘Shopping Mall, it incorporates several social shopping functions such as Liking and
sharing individual products. It also displays personalised recommendation lists based on
here to stay what the shopper has Liked in the mall and shares new product Likes on news feeds for
friends to see, making the Shopping Mall consumer experience a truly social one.
Moreover Payvment’s universal shopping cart gives users the freedom to browse across different
retailers and check out to pay just once. Such ease-of-use and convenience are drawing in the
numbers for both retailers and consumers. Businesses are already setting up branded pages to
display and promote new and existing services and products, changing the 800 million-member
strong social network into one huge marketing platform, so the idea of a virtual mall does make
sense. Additionally, Facebook reportedly has more plans to drive its eCommerce initiatives
forward in 2012, including a ‘Buy With Friends’ shopping programme that is currently being
tested. Capitalising on the growing fCommerce trend and the rush of businesses eager for better
customer engagement, Facebook is becoming a globally accessible one-stop shopping destination.
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11. Reactive
Social Shopping: Reshaping the world of retail
Conclusion: A new era has dawned upon the retail industry as social media continues to change the way
businesses sell and people shop. Product awareness and purchasing decisions are now more
Social informed by fellow shoppers and friends, and selling is no longer as straightforward as before
because of savvier consumers. An article titled ‘Social media review for retailers’ reiterates the
shopping power shift that social media has enacted between the retailer and shopper:
and your There is a plethora of evidence to show Facebook has vast power and influence over consumers
shopping behaviour, with 38% of consumers deciding to use social media when researching
business products, prices, promotions and considering other consumers’ views, to validate their decision-
making.(Taken from Social media review for retailers, oneiota, November, 2011)
With the incorporation of social media in the eCommerce field, shoppers are now armed with the
knowledge and tools needed to make informed purchasing decisions and to become a smarter
shopper. It looks like brands are beginning to pay attention to the consumer’s demands: A
recent study by Buddy Media Corporation reported that social media will account for a higher
percentage of total digital marketing spent in the next three years.11 The aforementioned study
reinforces this point, recommending that businesses need to adopt strong, integrated cross-
channel marketing strategies to expand the potential market reach and effectively interact with
existing consumers too.
Though a relatively young trend, social shopping is one to act on now. As Barbara Kohn observed –
”Our shopping habits have changed. That should change retailers’ behaviour too”12
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12. Reactive
Social Shopping: Reshaping the world of retail
About Reactive
Reactive is an award-winning digital agency specialising in strategy, creative, technology and
marketing with over 95 staff across our five offices in Melbourne, Sydney, London, New York
and Auckland.
Please contact us to discuss your online communication requirements.
Melbourne
Ph +61 (0)3 9415 2333
Fax +61 (0)3 9415 2399
Email melbourne.enquiries@reactive.com
Sydney
Ph +61 (0)2 9339 1001
Fax +61 (0)2 9380 4787
Email sydney.enquiries@reactive.com
New York
Ph +1 (917) 655 8790
Email us.enquiries@reactive.com
London
Ph +44 (0)20 7550 8200
Fax +44 (0)20 7550 8254
Email uk.enquiries@reactive.com
Auckland
Ph +64 (0)9 309 5696
Email: nz.enquiries@reactive.com
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13. Reactive
Social Shopping: Reshaping the world of retail
References 1. Bustos, L 2007, Social Shopping Roundup for Online Retailers, Get Elastic, 25 May,
http://www.getelastic.com/social-shopping
2. Freedman, L 2011, ‘2011 Social Shopping Study
http://www.powerreviews.com/assets/download/Social_Shopping_2011_Brief1.pdf
3. Bazaarvoice, 2011 Social Commerce Trends Report, http://www.bazaarvoice.co.uk/resources/
research/social-commerce-trends-report-europe-2012?Aid=70150000000PIpY
4. Scanlife, 2011, ‘When did mobile barcode scanning take off? You just missed it’
http://blog.scanlife.com/2011/07/q2-2011-trend-report/
5. Van Grove, J, 2011, ‘eBay snaps up recommendations service Hunch’,
http://venturebeat.com/2011/11/21/ebay-hunch/
6. eMarketer, 2011 ‘US Digital Media Usage in 2012’
http://www.emarketer.com/Products/Explore/ReportList.aspx
7. Protolanski, E, 2001 ‘Facebook confirms it now has 800 million users’ http://www.zdnet.com/
blog/facebook/facebook-confirms-it-now-has-800-million-users/3949
8. Gupta, A, 2011 ‘Seven Fcommerce strategies for brands’ http://socialmediatoday.com/achintya-
gupta/306251/seven-f-commerce-strategies-brands
9. Sinksy, R, 2011 ‘Payvment has an actual plan for making money from Facebook’ ecommerce
http://venturebeat.com/2011/09/08/payvment-making-cash/
10. Payvment, 2012, Marketwire release
http://finance.yahoo.com/news/Payvment-Hits-One-Million-bw-3978157464.html?x=0
11. Ruiz-McPherson, M, 2011 ‘Marketers looking to increase budgets on social media’ http://www.
ruizmcpherson.com/2011/10/marketers-looking-to-increase-budgets-on-social-media/
12. Kohn, B, New Retail Strategies: Offering a Better Fit for Today’s Careful Consumers, http://
knowledge.wharton.upenn.edu/article.cfm?articleid=2837
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