zuupy white paper - creating ecommerce value with onsite social commerce

Creating Ecommerce Value with

Onsite Social Commerce

by Alvin Tan (CEO and Co-Founder of Fezzl Pte Ltd)

July 2010

Visit us at http://zuupy.com

Introduction

It is trite wisdom that the ecommerce is becoming

increasingly social. While social media platforms have been

extensively used by brands to concretize their brand

presence and provide a listening channel, another category

of high-potential social technologies is far more under-

utilized: social commerce technologies.

Social commerce is narrower than any mere application of

social media to drive ecommerce. According to Bill Zujewski,

VP of Product Marketing at ATG, “[s]ocial commerce is

about customers having the means to interact with one

another in order to make better buying decisions.”

At its heart, social commerce is a movement – a new way of

consuming that revolves around inter-consumer interactions

that drive consumerism. For online retailers, this may mean

that marketing messages no longer play as crucial a role as

they used to, now that consumers frequently seek shopping

advice, recommendations, and other purchase-planning

information from other like-minded, impartial consumers.

This represents a tectonic shift of power from retailers to

consumers.

However, social commerce can be leveraged to multiply

sales organically simply by creating a social environment

where consumers shop. This paradigm is in contrast to the

prevailing approach of commercializing social platforms. To

reach out to consumers in their native social space and sell

to them directly assumes that said consumers have some

degree of intention to shop; this assumption is unlikely to be

true in most cases. Furthermore, focusing on social media

storefronts has the effect of decentralizing online brand

presence, resulting in brands having less control over the

range of shopping experiences that can be created.

A more opportunistic application of social media is to

engage consumers who are already on the retailer’s website

and provide them with authentic social proof about your


brand or products to reinforce and validate their purchase

intent. “Social proof” in this context refers to advice or

reassurance from those whom we already trust most: friends

and family members. This is a potentially big but largely-

overlooked opportunity to significantly increase sales,

engage customers, and build brand loyalty.

Socializing Storefronts: Maximizing

Sales Opportunities with Onsite Social

Commerce Technologies

The predominant methods of socializing the storefront today

include social media sharing buttons, the Facebook Like

button, the “email a friend” feature, and product reviews

sections. While seemingly adequate, these ubiquitous

tactics only skim the surface of what is possible with today’s

technologies. To truly profit from the explosive growth of

social media, a new way of thinking is required: ecommerce

can no longer be brand-centric or product-centric, especially

with the shift in consumer expectations and cultures. It

needs to be people-centric.

Beyond perfunctory share buttons or social media sharing

widgets, social media holds immense potential in that

retailers can now mobilize its entire customer base,

particularly its fiercest advocates, and transform them into a

voluntary sales force to unlock new, sustainable sales

opportunities. The most effective onsite social tools not only

enable satisfied customers to broadcast noteworthy brands,

products, and online stores as well as their product

experiences to their social networks but also leverage on all

their onsite activities, such as purchases, wish lists, reviews,

comments, and likes, to influence the mindset other onsite

customers. Such a new approach represents a more holistic,

complete social media optimization strategy and plays a

major supporting role in your funnel optimization strategy.


The Business Case for Social

Commerce Technologies

With a confluence of new cultures and new secondary

technologies, ideas that used to be pipedreams are now

possible. Two major technologies are of interest: Facebook’s

Open Graph API and mobile internet. With the former,

developers can now gain access to the social graph of

consumers, presenting remarkable opportunities for instant

personalization and socially-driven functionalities. The latter

brings to consumers true portability – the ability to connect

with their social graph anytime, anywhere.

Let us imagine the following hypothetical scenario:

Karen is a fashion enthusiast who shops for clothes

online at least once a week. She arrives at an

unfamiliar store and finds a new top.

She is unsure about adding it to her cart, since she

needs trusted information and reference points as to

whether it suits her style, whether it is comfortable,

and whether the retailer can be trusted.

Looking around, she finds a new feature that allows

her to see her online Facebook friends, post the

item to her friend’s wall, and get advice in real time.

She can interact with her friends without dropping

off to her social network to find for information.

Meanwhile, Karen’s friends see the item and follow

the link, since they trust her reference. Some of

them like what they see and eventually buy the top.

With her friends’ approval, Karen adds the item to

her cart. She then remembers that she will need a

dress for her upcoming prom night.

Problem: Karen knows nothing about prom dresses.

Aimlessly, she heads over to the prom dresses


category page and discovers another new feature

that shows all the prom dresses bought by her

friends. She is now curious and positively intrigued.

Some of her friends had also posted particular

dresses to their friends’ walls, so Karen browses

through these product conversations and pick the

dress that most resonates with her.

Karen is delighted. Upon checking out, yet another

feature recommends a pair of gloves that her friend

bought to go along with her prom dress. She adds it

into her cart, since she is already in a buying mood.

The hypothetical scenario above is not beyond today’s

technological capabilities. An onsite social commerce utility

that fortuitously facilitates the shopping process at various

stages of the sales funnel, as opposed to generic share

buttons, highlights the most important factor influencing the

psyche of customers: contextual relevance, especially

during the moment of purchase. The table below illustrates

the differences in principle between the two approaches:

ACTIVE SHARING PASSIVE SHARING

Examples

Share buttons

“Email a friend”

Social widgets

Product conversations

Purchase sharing

Effort Required Onerous Incidental to own

shopping experience

Perceived Value Spam-like,

salesman-like

Helpful, informative,

empowering

Actionability

Minimal, since

purchase intent is

low or absent

Candid context

provides insight and

drives impulse buying

Impact on

Decision-Making Generally low Persuasive, reassuring

Clearly, a less abrupt and more seamless way of sharing is

possible and much more preferred. Socializing the storefront

in this way also presents a host of strategic benefits that can

be easily quantifiable using actionable metrics, thus allowing

for ROI measurement:


Funnel

Bottleneck

Social

Commerce

Solution

Strategic

Benefit

Metrics to

Track

ST

OR

E-L

EV

EL

(D

ISC

OV

ER

Y)

Store is

unfamiliar or

unheard of;

reputation

concerns

abound

Create affinity

from the outset

by displaying

friends who

have checked

in, liked, or

purchased

something

Build trust and

credibility in

the eyes of

first-time

customers

Bounce

rate, home

page-to-

product

page

conversion

rate

Low average

order size

Recommend

complementary

items socially

Social cross-

selling results

in higher

conversion

rate by

leveraging on

items a trusted

friend had

purchased

Average

items per

transaction,

average

order value

CA

TE

GO

RY

-LE

VE

L (

SE

LE

CT

ION

)

Customers

overwhelmed

or rendered

indecisive by

unsorted

product

choices

Curate products

by showing

most

prominently

products with

greatest interest

among social

circle

Streamline

funnel by

providing

socially-guided

navigation,

reduce

browsing

friction

Category

page-to-

product

page

conversion

rate

Product

category does

not naturally

interest

customer

Socialize

category pages

Friend activity

increases

probability of

exploration

and purchase

Page views

per

customer,

average

time on site

PR

OD

UC

T-L

EV

EL

(E

VA

LU

AT

ION

)

Specific

products lack

social proof

Show friends’

interaction with

product (likes,

purchases)

Reduce cart

abandonment

by inspiring

buying

confidence

Drop-off

rate, length

of sales

cycle

Customers

need trusted

product

information to

make final

decision

Allow customers

to ask friends for

advice directly

on the website,

as opposed to

elsewhere

Reduce cart

abandonment

by avoiding a

disjointed

shopping

experience

Drop-off

rate, length

of sales

cycle

Customer has

no purchase

intent (viewing

for research)

Socialize

product page

Social

validation

inspires

impulse buying

Visits-to-

purchase

conversion

rate


Onsite Social Commerce for Multiple

Verticals, Multiple Customer Modalities

and Multiple Customer Intents

A common misconception of onsite social commerce

technologies is that they only pander to the needs of the

socially-conscious demographic and thus only work in

specific verticals. Consider, however, the universal value

and influence of our social network. Specifically, shopping

advice from a knowledgeable, trustworthy friend is always

welcome across all verticals – from consumer electronics

and automotive parts to luxury furniture and artwork. It is

difficult and indeed foolish to discount the merits of the

shopping advice and purchase behavior of people whom we

personally know and/or respect. Consider the justifications

for onsite social commerce technologies across verticals:

Vertical-Specific

Idiosyncrasies

Prime Concerns of

Customers

Role of Friends

High-ticket, high-

consideration items

E.g. Electronics,

software, furniture,

sports equipment

Quality, durability,

suitability or fitness

for particular

purposes

Informed friend offers

tips, experiences, and

recommendations as

a knowledgeable

enthusiast

Low-priced, fast-

moving items

E.g. Foodstuff,

toiletries, decors

Novelty, uniqueness,

range of choice

Friends’ browsing,

liking, and buying

behavior provide

anchor ideas that

drive impulse buying

Socially-conscious

purchases

E.g. Clothes,

accessories, shoes,

jewelry

Peer opinion,

aesthetics

Approval of like-

minded friends leads

to buying confidence

and gives assurance

due to validation of

personal choice

Leisure/personal

purchases

E.g. Books, games,

CDs/DVDs, events,

cinema tickets,

holidays

Satisfying sensory

experience,

entertainment value

Vivid emotional

experiences shared

by friends create

deep desire to

replicate experience;

increase buyer

discernment


Even within specific verticals, onsite social commerce

technologies serve the shopping needs of a wide range of

customer modalities throughout different stages of buying.

The following analysis is based upon the model popularized

by the Eisenberg brothers:

LOGIC EMOTION

FA

ST

Competitive

“I want to get the best product or

the latest edition/model as early

as possible.”

Friends’ purchase patterns

create urgency to “catch up” and

parade own purchases.

Spontaneous

“I don’t really know much about

this product, but the color is

really lovely. I really want it!”

Friends’ wish-lists, egg-on lists

and purchase list aid in

insightful product discovery.

SL

OW

Methodical

“I will find out as much as

possible about this product and

make a full evaluation before

purchasing it.”

Discussion with friends having

strong product knowledge forms

an indispensable component in

the research process.

Humanistic

“I want to talk to someone and

discuss about shopping.”

Friends’ assurances and

parallel opinions result in higher

in-store satisfaction and thus

increased shopping tendencies.

How Onsite Social Commerce

Technologies May Support Your

Inbound Marketing Strategies

Consistent with the shift in power from retailers to

consumers, user-generated content is increasingly sought

after by consumers, and consumers are gradually more

adept at cutting through the noise of traditional marketing to

reach the trusted signal of word-of-mouth marketing.

Apart from the obvious cue to ramp up inbound marketing

efforts, this shift in consumer behavior presents two valuable

opportunities to online retailers:


Making the storefront relevant to a larger

audience that has a wider range of motivations

will increase traffic. With inbound marketing

becoming an increasingly popular methodology,

brands and retailers are slowly moving away from

the advertising model and gravitating towards the

publishing model. Content is king, and consumers

are getting tired of being marketed to. In context,

having fresh, consumer-generated content about

their own friends’ shopping activities and

experiences not only provides highly-fortuitous

information for purchase planning to serious buyers

but also appeals to the visitors who visit by mistake,

for inspiration, or to satisfy innate voyeuristic

tendencies.

High-quality content will help online retailers

present a unique value proposition, differentiate,

and build a long-term competitive advantage.

Ecommerce is a competitive space, and consumers

are awash in choices and alternatives. Retailers that

offer fresh, intriguing information about people within

their social graph are likely to generate instant

familiarity and increase engagement. The more time

consumers spend on your website, the more likely

they are to become buyers and, more crucially,

brand loyalists.

How Friends-Driven Social Commerce

Technologies Compare with Ratings

and Reviews

Most retailers are familiar with and know the value of onsite

ratings and reviews, thus it is tempting to think that a

perfunctory deployment of a ratings and reviews section

forms an effective, complete onsite social commerce

strategy. The analogy between the two is clear, since ratings

and reviews are indeed a superset of onsite social graph-


driven technologies. The key difference lies in the underlying

level of affinity: while the former strives to provide peer

opinion via affinity factors (e.g. purchase history, occupation,

gender, age, geographical location), the latter leverages on

pre-existing bridges of trust to help customers acquire

purchase planning information, i.e. “people like you” versus

“people you like”.

Consider, however, the glaring inadequacies surrounding

the mature technology of ratings and reviews:

Ratings and reviews are old technologies that

are incapable of meeting new consumer

expectations. Between crowdsourcing and

friendsourcing advice, the former presently confers

greater breadth and diversity in views whereas the

latter confers greater dependability. However, it is

not unthinkable that crowdsourcing would be

relegated to second best in light of the rapid growth

of social graph-driven applications and

functionalities.

Ratings and reviews are increasingly perceived

as unreliable. In 2010 Social Shopping Study

conducted by PowerReviews and the e-tailing

group, it is revealed that a staggering 39% of

consumers doubt that reviews are written by real

customers. Moreover, products are almost always

highly rated, nullifying any actionable differentia that

can lead to sounder purchase decision-making. With

friendsourced advice, the identity of the author is

known and additional corroboration can be pursued

to further buttress buying confidence.

The following quote by Jennifer Saranow Schultz (Wall

Street Journal, Shop Talk: Retailers Explore Links to Social-

Networking Sites) may also be helpful:

“Retailers routinely post customers’ product reviews

online, hoping that favorable comments will boost

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sales. But there’s a more powerful influence on

shoppers that [online] retailers have yet to harness:

the advice of friends.

Many retail sites have email-a-friend features … but

that approach has one big drawback: Shoppers are

unlikely to get immediate feedback while they’re still

at a retailer’s site, so their decisions may be

delayed, putting sales at risk…

The biggest [social] networking sites have

developed tools that make it possible for a member

shopping on a retailer’s site to get immediate

feedback in the form of any reviews friends have left

there, as well as a history of friends’ purchases on

the site.”

Feasibility Concerns and the Future of

Onsite Social Commerce Technologies

Perhaps the greatest concerns surrounding onsite social

commerce technologies are that of its infancy and the lack of

control over the type of content posted. For instance,

deploying a Facebook “Like” button and having no likes after

many weeks does not sound appealing, nor does

inadvertently displaying a flurry of negative comments from

the people your customers trust most. There often exists a

fear of negative consequences arising from deploying new

technologies, and rightfully so. However, note the following

propositions:

1. The best onsite social commerce technologies

leverage heavily on existing social networks to

rapidly kick-start social activity on retailers’

websites. The ghost-town effect that is dreaded by

online retailers is unlikely to materialize given the

correct exploitation of social capital. For example, a

host of different high-frequency, low-commitment


interactions on the website can be tracked and

displayed to create some degree of familiarity, the

interaction of lowest-commitment being check-ins

into certain product pages.

2. Negative comments bolster credibility and quell

suspicions with regard to reputation. The 2010

Social Shopping Study (mentioned above) revealed

that 38% of consumers find the lack of negative

reviews degrades their trust in reviews. The clearest

advantage that friends’ advice has over anonymous

product reviews is that the latter is premeditated,

possibly even driven by some questionable motive,

while the former is casual, solicited, targeted, and

trusted.

3. Quality content, positive or otherwise, is

essential if a brand wants to maintain or grow

market share. Part of the reason that Amazon is so

successful is that it has registered itself in the minds

of consumers as the content hub and headquarters

for consumer research. Joshua Porter, author of

Designing for the Social Web, calls this

phenomenon the Amazon Effect.

My opinion is that elaborate social features on ecommerce

websites will be the norm rather than the exception in the

future, such that any online retailer that refuses to connect

visitors to their social graphs in useful ways will be deemed

severely deficient or untrustworthy. The more advantageous

paradigm to adopt may be to learn to manage and respond

earnestly to genuine grouses, instead of prohibiting or

artificially curating social interactions.

Conclusion

While onsite social commerce technologies are unlikely to

influence the minds of price-focused bargain hunters,

conscientious consumers who are looking for a unique,


differentiated, or best-fit product are likely to find shopping

influences from within their social graphs very helpful and

reassuring. The core value of onsite social commerce

technologies is thus to remove the bulk of the cognitive

costs associated with online shopping and make online

shopping more guided, convenient, and enjoyable.

Ultimately, the purpose of this white paper is not to present

any specific actionable plan on how to effectively socialize

the storefront and what technologies to adopt. My aim is to

pique your interest in onsite social commerce technologies

and how they can be leveraged to significantly increase

sales. I hope that this white paper has provided a valuable

perspective with regard to the subject matter, and I look

forward to discussing the matter further with you. My email

address is [email protected]. ■

mailto:[email protected]

About Zuupy

Zuupy is the flagship product of Fezzl Pte Ltd, a privately-owned Singaporean company. Zuupy is a

simple onsite tool that allows online shoppers to interact with their friends via Facebook on retailers’

websites while shopping to obtain shopping advice and recommendations. Zuupy also allows visitors

to view what their friends have bought as well as various other product interactions such as

comments and likes to drive social merchandising.

Creating Ecommerce Value with Onsite Social Commerce

By Fezzl Pte Ltd

Contact us:

(65) 9038 0368

[email protected]

Fezzl Pte Ltd

8 Prince George’s Park

Singapore 118407

© 2010 Fezzl Pte Ltd

mailto:[email protected]