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Comment: Retailers require thriving e-communities

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By Chris Webster, Head of Retail Consulting & Technology at Capgemini -

The 20th anniversary of the web is an opportune moment for retailers to re-evaluate where they will choose to invest for growth over the next decade. On the back of slowing July online sales in the UK, it’s worth bearing in mind that online shopping is not immune in tough times, and must be supported with the same focus as high street stores.

It was just four years from the web’s commercial opening to the launch of Amazon.com, and since then online shopping has evolved rapidly. Today, many large retailers’ biggest stores can be found online, and the most successful recognise that their e-store must do far more than offer goods for sale, but rather thrive as communities in their own right. One of my favourite quotes from Tim Berners-Lee, the creator of the web, sums up this challenge brilliantly: “You affect the world by what you browse.” Successful online stores recognise that the strength of online shopping lies not in the design of the homepage, but rather the intelligence that shapes what you see. The very best online stores realise that as with Einstein’s theory of relativity, that what you see on the web is relative to your perspective and your behaviour on the web. Successful stores are not restocking their warehouses for each and every shopper, rather they are shaping what we see to present only what is most appealing to each of us.

An intelligent view of the customer at its most basic makes it possible to ensure that a given customer receives the most appropriate propositions – no meat product vouchers for vegetarians for example. Beyond this simplistic presentation of targeted offers, however lies a much richer opportunity to interact with customers but one that requires real insight and deep customer understanding to achieve. People who shop in multiple channels are typically a retailer’s best customers, but traditionally getting the information to support them in a seamless way required a substantial upfront investment. Today though a multichannel view of the customer is not only affordable, but in my opinion, one that retailers cannot afford to be without.

Retailing is characterised by a distributed model, with large numbers of people making independent decisions. Traditionally, stores seeing unexplained variance in performance between product ranges or stores, attempted to correct this by applying best practice from high performing stores to others in the chain. The multichannel customer view shows that this approach is blinkered, seeking to impose the views of the mainstream on all shoppers. Instead, smart online retailers are realising they can be all things to all men, reinventing their store for each of their customers and with their willing collaboration. Many of the biggest retailing brands names have realised the potential of Facebook and Twitter to build communities selling a curated selection of goods recommended by their customers. They are using social media portals to complement other sources of customer insight to attract customer attention and earn loyalties by offering a stake in the sale, whether that is through discounts or shared ownership of the recommendation. So not just avoiding half price offers on sausages for vegetarians, but knowing the social occasion and becoming part of the dinner party itself.

Research by the Aberdeen Group reveals that 85 per cent of retailers are investing time and money in social media, with recent deals including Walmart’s purchase of Kosmix followed by Tesco snapping up BzzAgent. These acquisitions will, alongside these retailers’ impressive in-store and loyalty intelligence, help Walmart and Tesco better understand their consumers’ buying habits and product sentiments both online and in-store. Making use of this insight for such large retailers depends on a reinvention of the supply chain and the back office, but in the short term here are five must dos for retailers looking to integrate social media insight with that gathered from traditional channels.

Social Media Optimisation (SMO): SMO is critical to a social commerce strategy. SMO can be gathered by interlinking your social media profiles with an official e-commerce portal and store loyalty cards. Company profiles on Facebook, Twitter, YouTube and other platforms can be integrated with your product catalogue so as to provide customers with direct access.

Reviews, Ratings & Likes: Social media works on the principle of public opinion. Comments and Facebook ‘likes’ dictate the popularity or lack thereof of a particular brand or product. Burberry is just one example of a retailer seeking candid customer opinion on its products via online communities, recently pre-launching a fragrance for testing via Facebook.

Social Shopping: Social shopping should be the ultimate goal of a social commerce strategy, allowing customers to purchase online and share with their friends what they are buying, or even book tickets together. Malaysia Air is doing this, allowing customers to book seats next to their friends via their Facebook site. As Facebook and Twitter develop mobile propositions will we see shoppers choosing a dress for a ball automatically linked to their friends to ensure no clashes?

Referral Rewards: Referral rewards on social commerce portals create interest among visitors but also help increase the customer base. Dozens of companies are following this strategy including Walmart, Dell and Home Depot with the latter using Twitter to dish out rebates, offer special promotions and address complaints and queries.

In-store check-ins: Perhaps the most important thing in social commerce is the opportunity to increase in-store traffic and lift comparable store sales. Tools such as Foursquare and Shopkick provide verified users with exclusive rewards when they walk inside a store or check into the location. In May 2011, Best Buy expanded its use of location based Shopkick app from 250 stores to a national rollout.

To those who dismiss the next step in online commerce I would like to leave them with two thoughts. One, online sales have continued to grow at 15 per cent throughout the economic downturn, and two, while Einstein is sadly no longer with us, the patent office in the UK today offers both a personalised online service but has a Twitter feed too!

Note: The views expressed here are those of Chris Webster and do not necessarily represent the views of Retail Gazette.

Published on Tuesday 30 August by Editorial Assistant

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