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Leaders of the social shopping boom


Social media’s rapid rise is often compared to the dotcom boom of the late nineties; as a feeding frenzy over potential business is hungrily fought over by eager tech start-ups.

Retailers now know that online communities are not just good for gossiping about the latest Apprentice episode or swapping holiday pictures, they are goldmines of consumer data and potential sales which are only starting to be plundered.

A whole range of services are now being offered by emerging tech firms such as One Iota, Dealised and Zibaba designed to cater for a social shopping revolution where consumers readily want to share product advice, search for deals and write reviews on retailers.

History records that the dotcom boom was followed by a big bust however and the swift rise and fall of Myspace social media sphere shows how cautious firms should be in investing in this area.

As the market for social shopping matures only those tech providers which offer the most compelling and cost effective services are likely to survive - so what is currently out there on the market?

Done deals

One of the fastest emerging consumer trends is for online voucher schemes made famous by the US website Groupon, which promote product deals from a selection of affiliated retailers, events organisers and leisure providers.

The power of such services is highlighted by data from Lightspeed Research which shows that over half of people who shopped via daily deal sites bought items they had no intention of purchasing before seeing them on offer.

That is a powerful sales driver, particularly for the currently weak electricals market which makes up 39 per cent and 15 per cent respectively of all male and female purchases via deal sites according to Lightspeed’s study.

Although Groupon is targeting to raise as much as $1 billion (£619 million) in an IPO later this year, there are plenty of other services such as Dealised representing a new generation of deal sites which could challenge the market leader.

Dealised promises to allow its clients such as The Daily Telegraph & The National Health Service to create and manage their own promotions on their websites using its solutions, and argues that this is the “new wave” of deal site.

A particularly interesting development in this sphere of social shopping may come from a company called Madai which has created a service offering deals in exchange for customer feedback or product reviews on a trader’s website.

Time will tell if these innovations catch on or challenge Groupon but it is clear that this sphere is still emerging.

Tell me what you think

Madai’s idea will be especially compelling to retailers because of the chance to grab extra customer data, oil to the industry in this multichannel age.

Facebook stores and the platform’s ‘Check-in’ deals are so compelling because they give traders a chance to capture lots of consumer data whilst shoppers enjoy an interactive experience.

Topshop was named as the number one UK brand on Facebook by the end of June, closely followed by New Look, according to e-commerce solutions provider Channeladvisor, and both now have over one million ‘fans’ with which to contact, test products on and source sales from.

Liane Dietrich, Managing Director of affiliate marketing firm Linkshare UK, demonstrates the power of Facebook fans by claiming that around 50 per cent of consumers regularly spend with brands that they follow on the social media giant.

Still, not enough is being done by retailers to engage in social shopping according to the admittedly bias One Iota, which produces Facebook solutions for retailers.

Charlotte Woods, analyst at Verdict Research, agrees with the criticism and says that Youtube videos, blogs, Twitter feeds and Facebook pages should be used more by retailers in order to make their websites social media hubs.

Woods commented: “Retailers have the ability to attract increased levels of traffic to their online stores by using social media to create entertainment destinations which consumers can get excited about.

“As a result, retailers have the ability to create retail theatre online.”

The big question hanging over these new technologies however is ROI. In these testing economic times retailers have to weigh up the dangers staying ahead of the crowd by over-investing in a new medium.

Damian Hanson, CEO of One Iota, admits that it is early days to conclusively prove profits from investments in social shopping but says that by putting products in the sphere where customers are, is creating an impressive amount of viral sharing both pre and post sales.

In this ever changing landscape Hanson is also wise to say that not all of One Iota’s eggs are in the Facebook basket, and that the next revolution in social shopping may just around the corner.

“Adaptability is built into our platform meaning we can take retailers, once we are integrated with them, across many different channels,” he added.

“Five to ten years in this space is a very, very long time.”

Published on Monday 25 July by Editorial Assistant

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