The Financial Times ran an interesting article on social commerce recently (archived below for reference).

Top takeouts;

  • Value of social commerce (qua user reviews) is not just sales – but also a valued source of direct customer feedback for retailers and manufacturers
  • Social commerce is the business application of social media of choice because it delivers a hard return on investment
  • Manufacturers are going beyond simply posting customers reviews on their e-commerce sites, but syndicating them to other sites selling their wares, using them in for in-store and catalogue marketing – and even providing “review codes” to access customer reviews in-store via mobile (Sephora)
  • 70 per cent of consumer trust product reviews posted online, an increase of 9 percentage points on April 2007, and customers are 10 per cent more likely to buy products that had been reviewed on a site than those without them.

Views you can use

By Jonathan Birchall
Published: September 2 2009 22:51

THE schoolteacher was not happy with the inflatable solar system set that was meant to be engaging and educating children in the classroom, and went on the supplier’s website to say so.

“I opened the package, blew up the planets, hung them in my classroom, and came in the next day to find three blobs of rubber hanging from the ceiling,” complained the teacher last September. “Totally disappointed!!!!”

The blow-up solar system had been bought from Oriental Trading Company, a US catalogue and internet retailer, for about 18. The teacher was not alone: at the end of last year, other customers buying the set from Oriental were just as unhappy — and were going online to say so.

They complained in reviews on the company’s website that the sun, the eight planets and Pluto would often just not stay inflated.

With customers regularly giving the product low scores on its site, Oriental contacted the manufacturer. By January, its customer service team was able to announce that it had worked with the makers to make sure the planets stayed inflated. A series of five-star reviews suggests the deflation problem is over.

The experience illustrates the evolution of a feature that is increasingly familiar in online transactions: originally seen as an aid to other potential buyers, online reviews are becoming a valued source of direct customer feedback for retailers and manufacturers.

Samsung Electronics started hosting reviews on its US website last year, using technology and processing provided by Bazaarvoice, which has become the dominant provider of third-party review services in the US since it started in 2005 in a single office in Austin, Texas.

Bazaarvoice now works with more than 500 brands belonging to companies including Wal-Mart, Home Depot, Boots, Argos, Lego and Procter & Gamble. It has 400 employees providing services in 25 languages, and offices in London, Paris and Singapore, says Brett Hurt, co-founder and CE.

At Samsung, using reviews as a source of feedback “has changed some aspects of the way we work, primarily because of the speed with which information comes in”, says Kris Narayanan, Samsung’s director of marketing. “It helps us look at issues as they arise. If there is a malfunction or a problem, then we identify it very early.”

The company has used reviews in this way for less than a year, but Narayanan says Samsung has already changed products in response to the new kind of feedback. For instance, large flat-panel televisions were initially produced with speakers on the side. When customers pointed out in their reviews that the units were too wide to fit into conventional cabinets, Samsung put the speakers below the screen.

“It was certainly the product reviews that clinched the issue,” Narayanan says.

The Container Store, a US home storage retailer, plans to introduce customer reviews on its website this year to help shape product development. Using customer feedback is not new, says Casey Priest, marketing communications vice-president. “But that was based on people writing on customer comments sheets. This will take it to a whole new level.”

Sears Holdings, which owns retailers Kmart and Sears, says it is increasingly passing on information from its online reviews to suppliers, says Rob Harles, head of Sears’s online community activities.

For Samsung, reviews are just one of several sources of consumer input it monitors, including specialised discussion boards on consumer electronics websites such as CNet, as well as the less structured discussions on social media sites such as Facebook, MySpace and Twitter.

With so much opinion to keep an eye on, the company tries to focus on analysing “qualified” input — opinions from customers who know what they are talking about. “We spend a tremendous amount of resources trying to parse through the qualified brand opinion,” says Narayanan, rather than a spurious mention that does not truly represent meaningful input or opinion about the brand.

Sam Decker, chief marketing officer at Bazaarvoice, says brands’ interest in such “social commerce”, as he calls it, has ballooned because it is more measurable, in contrast to the efforts of brands to analyse the less focused input from open social sites. “For all the hype and impact social networks make, it is a really thin bridge to what a company cares about, which is bottom-line impact. We are trying to make this a very broad bridge. Not only is it measurable with the same measures that you use today, but the contacts with the customers are going to endure.”

Internet shoppers are increasingly turning to reviews on websites. Nielsen, the marketing research group, says its twice-yearly global survey of more than 25000 online consumers found in April that 70% trusted product reviews posted online, an increase of nine percentage points on April 2007.

Bazaarvoice says it is seeing interest from manufacturers in putting its review service on their websites and then “syndicating” the reviews to retail sites such as

Brands have also begun using their most positive reviews in other marketing channels such as catalogues, or in-store marketing . Sephora, the cosmetics retailer, is testing in-store advertising that gives customers a code to access reviews on their cellphones.

Just two years ago, Decker says, opening up a site to potentially critical third-party reviews was a big decision for retailers, and usually had to be approved by the CEO. Now, some retailers actively solicit reviews: Sears Holdings recently offered customers the chance to participate in a sweepstake by submitting reviews to its new MySears and MyKmart community websites.

Argos, the UK catalogue retailer, which started running customer reviews last year, found customers were 10% more likely to buy products that had been reviewed on its site than those without them. When it e-mailed recent customers to ask them to submit reviews, the company received more than 200000 in the first four months of this year, with 70000 in one day alone.

Sidebar: Honest and uncensored comments are the key

CUSTOMERS value reviews by other shoppers. Third-party services, which organise reviews on behalf of customers, monitor and analyse what purchasers are saying on brand websites, but insist that the credibility of the reviews and other user-generated content depends on their being uncensored.

Rob Harles, head of Sears’s online community activities, says the retailer “really pushed customers to say if something is good or if it is bad … it is really important to have honest reviews”.

However, Kris Narayanan at Samsung Electronics, notes that reviews of products on manufacturers’ own websites tend on average to be more positive than those of the same product on retailers’ sites — suggesting that manufacturers’ websites tend to attract more brand loyalists.

He also argues that customer- generated content about products tends overall to be balanced because manifestly unfair opinions on sites provoke a corrective response from other, better- informed customers.

“The predominant type of discussion is reasonably informed people answering the questions of people who are not so informed,” he says.