Here’s a short and instructive podcast from leading UK trade magazine New Media Age, on the state of social commerce in the UK.
The NMA podcast is part of the rising tide of media coverage that social commerce is receiving in the UK right now.
Last week New Media Age ran a high profile article with the title “Is the UK ready for social commerce?” by Charlotte McEleny (archived below). In the NO camp, Ebay representatives Phillip Rinn and Alex Marks and online retail trade body IMRG suggested that the Brits, or rather their digital markets, are too immature for social commerce.
The argument seems to be an alleged British disconnect between an e-commerce mindset, which is still “transactional”, and a social mindset, which for brands and retailers is about “reputation management”; essentially another PR vs Marketing debate.
In the YES camp, Sienne Veit, social and mobile commerce development manager at high street retailer Marks & Spencer, argued that brands and retailers are being pulled into social commerce by consumer demand. Smart brands and retailers are wising up to this market demand – and offering social commerce services. Jim Clark, analyst at retail analysis firm Mintel, dismissed Ebay’s dissing of social commerce as ostrich-like motivated perception: Social networks pose one of the biggest threats to Ebay and its PayPal subsidiary, with Facebook with it’s size and imminent launch of Facebook Credits, the leading menace.
That Ebay’s cries of British immaturity are acts of self-delusional bad faith gets echoed in the above NMA podcast, where the NMA editorial team conclude if “if I was Ebay, I’d be quite worried at the moment”. Charlotte McEleny summarizes current social commerce excitement due to opportunities for building in real-time social functions into the transactional process – at the point of transaction and concludes “it’s going to be huge”. Nevertheless, both the article and podcast suggest that in the UK there is still some confusion over what social commerce actually is – social on commerce sites and/or commerce on social sites?
And today Marketing Week publishes a bombastic article “Forget e-commerce; social commerce is where it’s at” (archieved below) penned by Michael Nutley explaining that with leading brands such as P&G and Disney embracing f-commerce, and the upcoming launch of Facebook currency, social commerce is set to go mainstream in the UK. Michael notes that if social commerce on Facebook stumbles, it’ll only be because of Facebook itself – 30% commission on transactions (when using credits) and privacy concerns.
And finally in an accompanying article in today’s Marketing Week “Local businesses turn to social commerce“, Peter Briffett, managing director of group-buy site LivingSocial UK, sets out guidelines for local businesses looking to choose from the myriad of group-buy sites sprouting up over the country.
- The group buying site has invested money and energy into building quality lists in your city.
- The group buying website has been running deals successfully in your city or others.
- There is dedicated team on the ground that will help you make sure you get the exposure you seek and have someone to call if something is not to your liking.
- Checkout past deals to see if you would like to be in their company.
- Check the terms and conditions carefully to ensure you’ll be paid promptly for all the sales not just vouchers redeemed and that you have a way out in the future and are not promising exclusive rights to one group buying operator.
Is the UK ready for social commerce?
By Charlotte McEleny, in New Media Age
Ebay, one of the world’s biggest ecommerce brands, has said that the UK market isn’t yet mature enough for social commerce, despite commitment from brands such as Dell and Disney.
Phillip Rinn, director of advertising partnerships at Ebay UK, said British consumers aren’t ready for social commerce, and the auction site is instead testing ways in which social media more broadly could fit into a transactional website.
This is in contrast to commitment from big-name brands including Dell, Disney, easyJet and P&G (nma 22 July 2010), which have launched social commerce services and tools or plan to over the next year.
Dell has been using Twitter to sell computers since 2007 and earlier this year said it had made $6.5m via the profile since it launched (nma 25 March 2010), while Disney was the first brand to sell cinema tickets directly through a Facebook app to US consumers.
But Ebay’s Rinn said, “For us social is probably not where it could be. We’re using Twitter and Facebook but haven’t fully embraced them. We’re in a testing mode to see how social fits into a transactional mindset. Social shopping isn’t yet mature in the UK.”
Likewise, Alex Marks, head of international business marketing at Ebay Advertising, said that although social media is important for retailers, it doesn’t need to be a separate focus.
“I don’t think social shopping needs to take a foothold because it’s by definition a social activity and a retailers’ experience should be worth talking about,” he said.
David Smith, operations director at online retail trade body the IMRG, said there are still some doubts from retailers, whose focus in social media is on reputation management.
“For a lot of retailers there are other channels from which they feel they can get a better return on investment,” he said.
However, Sienne Veit, social and mobile commerce development manager at M&S Direct, said Marks & Spencer is investing in social media because of demand from consumers.
“I don’t think anyone has yet come up with the perfect solution but our customers have a propensity to shop in this way,” she said. “The more people access social media the more this will be the case. The potential lies with the link between social and mobile, which is where we’re already seeing good results.”
Will Dymott, head of ecommerce at men’s fashion retailer Lyle & Scott, said the problem lies in a lack of definition around social commerce. “Ebay was one of the pioneers in social functionality by introducing feedback on sellers,” he said. “The problem is that social isn’t defined yet because it’s so new. It can mean either using Facebook to sell or including customer reviews.”
Facebook, expected to announce its 500 millionth user imminently, is due to roll out its credits service beyond beta trials this September. Brands and agencies said it could become a challenger to big online retailers because it can use social information for targeting and recommendations (nma 15 July 2010).
Jim Clark, senior technology analyst at retail analysis firm Mintel, said social networks could pose one of the biggest threats to Ebay.
“It has become paralysed by the fact that it now has a massive audience but has moved away from its roots as an online car boot to become a high street aggregator,” he said. “Social networks also have the added benefit of products being recommended or people buying directly from friends.”
Forget e-commerce; social commerce is where it’s at
By Michael Nutley, in MarketingWeek, 29 July 2010
Plans from Facebook that will enable users to buy products without leaving the site could have major implications for etailers.
New buzz word ahoy!
Yes, for those of you who have been eagerly awaiting the latest phrase with which to impress your less digitally inclined friends and colleagues, I give you: “social commerce”.
As a term for the latest development in the interactive space, social commerce has a lot going for it. It includes the word social, for a start. It’s vague enough to be subject to a number of different definitions, which allows for endless discussions about whether something is, or isn’t, part of it. And what’s more, by some of those definitions it has been around for ages, allowing some “promise of the internet” credibility to cling to it.
Amazon’s use of customer reviews and eBay’s system of groups and seller ratings could both be seen as early examples of social commerce, while Dell claims to have made $6.5m (£4.2m) selling computers on Twitter since 2007. But if that’s the case, why are people just beginning to talk about social commerce now?
Two announcements in the past month have catapulted the concept into the forefront of discussions on new media. The first was that Facebook announced it would shut down its Facebook Gift Shop next month, paving the way for the launch of its virtual currency, Facebook Credits, possibly as early as September. Already in beta testing, Facebook Credits will initially allow users to pay for virtual goods such as games, but will eventually let them buy anything, with the network expected to take a 30% cut of all transactions.
The second announcement was that Procter & Gamble has started selling its Max Factor brand cosmetics through Facebook as part of what the FMCG giant calls “small-scale direct-to-consumer” initiatives. This follows in the footsteps of Disney in the US, which recently launched a Facebook app allowing people to book tickets for Toy Story 3 without leaving the social network.
These two approaches take social media on a step by bringing the ability to purchase what you’re talking about on the social network within the network itself. Etailers know that every page you ask people to click through results in a drop-off in numbers, just as each floor you ascend in a shopping mall has fewer shoppers. So when there’s buzz being generated about your products in the social space it makes sense to bring the checkout to the potential customers, rather than the other way round.
Facebook Credits could take that principle and write it very large indeed. The social network is on the point of announcing its 500 millionth member, which alone makes it a compelling place for brands to set up shop. That, along with the cost, is one of the reasons brands are increasingly using Facebook pages rather than microsites as the hubs of their digital marketing campaigns. Add to that the amount of data that Facebook collects on its users, and the fact that Facebook Connect allows users to log into sites outside the platform using their Facebook login, and you have an ecommerce platform of unprecedented reach and power.
But while there are compelling reasons to use Facebook as an ecommerce vehicle, there are also big questions. The first is whether this is a vehicle for everyone with a product to sell, or whether that 30% transaction fee will mean it will be used mainly by brands looking to sell direct. Certainly it opens up the possibility of brands collecting levels of data about their customers that have never been available before.
Another big question is what Facebook’s move means for other players that could be considered to be in the social commerce space. Speaking to New Media Age last week, eBay UK’s director of advertising partnerships Phillip Rinn said that social shopping isn’t yet mature in the UK. This seemed like a curious remark from one of the pioneers of social commerce, not so much because it’s clearly true as because one of the signs of a market maturing is the arrival of new entrants. The real concern for eBay must be the threat that Facebook Credits would pose to PayPal, which is currently the closest thing there is to a web currency. There must also be a concern that a retail structure based on Facebook could damage eBay Shops, but as this has carved out a niche providing an ecommerce platform for smaller retailers, it may be able to coexist with Facebook Credits.
The final question is one of privacy. A similar scheme to the one proposed for Facebook Credits was suggested back at the beginning of the decade. It would have stored people’s personal data, allowing them to shop across participating sites with only one login. But it was proposed by Microsoft and people decided they didn’t trust the Redmond giant with that sort of data. The question for Facebook is how much times have changed, and whether people now trust Mark Zuckerberg more than they used to trust Bill Gates.
Inset: Facebook Credits will initially allow users to pay for virtual goods such as games, but will eventually let them buy anything, with the network expected to take a 30% cut of all transactions… and Procter & Gamble has started selling its Max Factor brand cosmetics through Facebook as part of what the FMCG giant calls ‘small-scale direct-to-consumer’ initiatives.
Michael Nutley is editor-in-chief of New Media Age and Reputation Online
Local businesses turn to social commerce
By Peter Briffett, in MarketingWeek, Wed, 28 Jul 2010
Peter Briffett, managing director of LivingSocial UK, sets out some guidelines for small, local businesses looking to harness the power of social commerce.
“Group buying” is an advertising phenomenon that has proven popular with local businesses in the US, and it is rapidly gaining ground in the UK marketplace as businesses look for cost-effective and low-risk ways to promote their business and acquire new customers. Group buying enables merchants to market their products and services directly to consumers living in their local area with zero risk and ROIs unmatched by other digital and traditional marketing channels.
Tens of thousands of subscribers opt-in to receive emails with daily deals for restaurants, spas, concerts, sporting events, attractions and consumer goods in their city at a significantly reduced rate. In addition, the retailer is promoted on the group buying website, through social media and the word-of-mouth “buzz” that the campaign creates by focusing on one great local merchant per day.
How does group buying work?
The concept of group buying is quite simple: Every morning subscribers receive an email with a daily deal from a local business at a significantly reduced price, generally 50-90% off. Subscribers who grab the deal within the 24-hour window immediately commit to becoming customers of the featured business, but don’t have to redeem the voucher for a few months to a year. It is a risk free platform that guarantees local businesses more customers into their shops, restaurants or venues without making any upfront investment.
How is this different from other types of online marketing?
Unlike other forms of online marketing such as Google AdWords which is constructed on the pay per click basis , “group buying” businesses only pay commissions on each deal sold. Local merchants also benefit from exposure on a highly trafficked website and to tens of thousands of email subscribers in their geographic area. On a per click model this would normally cost the business thousands of pounds. Although merchants need to put together an offer to generate interest, the cost per new customer has been proven to beat all other forms of traditional marketing by an order of magnitude.
Who buys daily deals and what’s in it for the merchant?
There are a number of different group buying sites, some general and some specialising in health and beauty or a specific audience. Contrary to detractors’ belief that group buying sites are only used by people on tight budgets or who would have shopped there anyway, the subscriber lists are comprised of affluent, socially networked professionals. They have higher than average income and enjoy going out, want to learn about new things to do in their city and like to get a great deal in the process.
In addition, the subscribers are social media savvy and use platform such as Twitter and Facebook to let their friends know about a great deal they’ve just purchased or plan to buy if their friends join them. This creates a huge word of mouth buzz about a business over a 24 hour period. Some of the group buying sites even offer free deals or rewards to those subscribers who recommend a deal to their friends who then purchase it. If they like the restaurant, spa or venue, they will keep coming back and spreading the word online and offline.
How to pick the right site for me?
Group buying has become a very successful marketing tool for many businesses. Below are a few tips on how to pick the right group buying site for your business:
1. The group buying site has invested money and energy into building quality lists in your city.
2. The group buying website has been running deals successfully in your city or others.
3. There is dedicated team on the ground that will help you make sure you get the exposure you seek and have someone to call if something is not to your liking.
4. Checkout past deals to see if you would like to be in their company.
5. Check the terms and conditions carefully to ensure you’ll be paid promptly for all the sales not just vouchers redeemed and that you have a way out in the future and are not promising exclusive rights to one group buying operator.
While this is still relatively new in the UK, group buying has already attracted the attention of many successful brands including the Marco Pierre White restaurant group and London Zoo. If you have wondered how to acquire new customers quickly, harness the power of social media and get your brand into email inboxes of tens of thousands of local residents, group buying could be the way to go.