6.1 Definitions, Drivers, Concepts, and Benefits of Social Shopping

Transcription

1 CHAPTER 6 Social Shopping: Concepts, Benefits, and Models Content Opening Case: Groupon Will the Company Prosper? 6.1 Definitions, Drivers, Concepts, and Benefits of Social Shopping 6.2 Components and Models of Social Shopping 6.3 Group Buying and Deal Purchasing 6.4 Shopping Together: Communities and Clubs 6.5 Social Shopping Aids: From Recommendations, Reviews, and Ratings to Marketplaces 6.6 Innovative Shopping Models and Sites and Virtual Goods Learning Objectives Upon completion of this chapter, you will be able to: 1. Describe social shopping and discuss its drivers. 2. Describe the framework for social shopping, its major participants, its components, and various models. 3. Define group buying and flash sales and explain how they work together. 4. Describe shopping together, shopping communities, and shopping clubs. 5. Describe social recommendations, marketplaces, and other shopping aids. 6. Provide examples of other innovative shopping models. 7. Discuss shopping for virtual goods. Case 6.1 Questions

2 1. How can one use the Polyvore Editor to create designs? Watch the short video (2:02 min. by Polyvore titled How to Create a Set in the Polyvore Editor at vimeo.com/ The application allows for the creation of different combinations of items. 2. The company added supermodel Tyra Banks as an investor in Comment on the logic of this. Opinions will vary, but the addition of Tyra Banks acts as an endorsement for the company. 3. Jacobs (2010) writes, Polyvore is a lot like playing paper dolls with pictures of real clothes. Discuss. Student perceptions will vary. 4. Read Jacobs (2010) and explain what and how people create at Polyvore. Also identify the critical success factors of this site. 5. Explain the statement made by Polyvore s vice president of product management: Our mission is to democratize fashion. The company seeks to allow all those that use its features to create clothing combinations to share with others (instead of a few designs doing this). 6. Identify all the features of a shopping community in this case. This group has the same interests, and will rely on suggestions from others in the group to make purchases. REVIEW QUESTIONS 1. Define social shopping and describe its drivers. Social shopping (also known as Sales 2.0) is online shopping with social media tools and platforms and using sharing shopping experiences with friends. The large number of people visiting social networks attracts advertisers. Changing customers shopping habits (see infographic at visual.ly/social-media-changing-wayyour-customers-show-online).

3 The increasing number of recommendations/suggestions made by friends and the ease and speed of accessing them. The pressure from top management to increase effectiveness and efforts to improve overall efficiency of marketing in general. The need to compete (e.g., by differentiation) and to satisfy the social customers. The emergence of social customers with knowledge and competence in using the Internet (e.g., in finding reviews and comparing prices). The need to collaborate with business partners. The huge discounts provided by some of the new business models (e.g., flash sales), causing customers to buy more goods/services. The socially-oriented shopping models (e.g., group buying, communities). The ease of shopping while you are using social networks (e, g., the Facebook Buy button). The ease of communicating with friends in real time using Twitter and mobile devices. 2. List the major benefits of social shopping. Social shopping can provide benefits to buyers such as: Get super deals (50 to 90% discounts) via group buying, daily specials, and more. Join Groupon for daily deals. Socialize while shopping and receive social support and rewards. Discover products/services you never knew existed (e.g., see thisnext.com). Interact directly with vendor (brand) representatives easily and quickly (e.g., feature available at stylehive.com). Increase confidence and trust in online shopping by interacting with friends. Shop anytime from any place. Exchange shopping tips with friends, fans, and others. Therefore, you can learn from other shoppers experiences.

4 Build and share wish and gift lists. Shop together with people like you. Get simplified comparisons, even in real time. Communicate in real time while shopping with friends and others using Twitter and other social media tools. The seller can: Improve overall sales unit productivity (e.g., see Smith and Ballve 2013). Increase revenue growth per customer. Gain feedback from new customers. Learn from customers. Increase customer loyalty and trust. Quickly liquidate overstocked or obsolete merchandise. 3. List the major models of social shopping. Briefly describe their capabilities. Group buying Deal purchases (flash sales), such as daily special offers Shopping communities and clubs Recommendation sites Marketplaces Innovative models Shopping for virtual products and services Location-based shopping

5 Shopping presentation sites (e.g., at YouTube) and gaming sites (Chapter 9) Peer-to-peer models (e.g., money lending; Chapter 9) B2B shopping (Chapter 9 and Gillin and Schwartzman 2011) 4. Describe ratings, reviews, and recommendations. Ratings and reviews by friends, even by people that you do not know (e.g., experts or independent third-party evaluators), are usually available for social shoppers. In addition, any user has an opportunity to contribute reviews and participate in relevant discussions. Recommendation engines allow shoppers to receive advice from other shoppers and to give advice to others. 5. How do customers and patrons of establishments conduct ratings and reviews? Merchants allow ratings and reviews to be entered on their sites, general from the product page. Some site verify purchasers as a part of their ratings. 6. Relate recommendations to social reviews and ratings. Recommendations work in a similar fashion to social reviews, since they represent a third-party evaluate of the product/service. 7. Describe social marketplaces and list their benefits. The term social marketplace refers to a marketplace that uses social media tools for enabeling shoppers to perform activities, such as the buying and selling of products, services, and resources. As with any other marketplace, a social marketplace brings sellers and buyers together to connect and transact. The social marketplace is an intermediary that provides the infrastructure and procedures for transactions, including display, product discovery, interactions, comparisons, security, and payments. 8. Define group buying. How does it work with flash sales? The group buying model describes a group of people who come together to get a quantity discount. 9. Define social communities and social clubs as they relate to marketing. How do they work?

6 The most popular method involves communities, managed by an independent company, which provide many services and opportunities. Fashion-oriented communities such as Polyvore are very popular. The communities provide opportunities for designers to create designs and see how much the communities like them. Social clubs limit membership, but they operate in a similar manner to open communities. Communities and clubs may be structured as marketplaces, or operate as referral services, generating income per click by potential buyers who click on the sellers' logo. They may also receive a commission from actual purchases. 10. Describe Kaboodle and list its major capabilities. Why is it so successful? Kaboodle is a large, comprehensive social shopping community and network, according to kaboodle.com/zm/about. According to crunchbase.com/product/kaboodle, Kaboodle is a free service that lets users collect information from the Web and store it on a Kaboodle list that can be shared with others. The site s primary goal is to simplify shopping by making it easier for people to find items they re interested in and by allowing users to share recommendations with one another using Kaboodle lists and groups. The Add to Kaboodle button simplifies the online shopping experience because, once installed, the user can simply click on it whenever a product is selected from any website. Then, a snapshot of the selected item, its price, and other product information is automatically uploaded with a link about where to place it on Kaboodle lists. The user then can find any specific item in the future. Users can also discover deals, find new products, express their unique styles, connect with others, share their discoveries, blog, create shopping lists, and more. 11. Define social marketplaces and describe what happens there? The term social marketplace refers to a marketplace that uses social media tools for enabeling shoppers to perform activities, such as the buying and selling of products, services, and resources. As with any other marketplace, a social marketplace brings sellers and buyers together to connect and transact. The social marketplace is an intermediary that provides the infrastructure and procedures for transactions, including display, product discovery, interactions, comparisons, security, and payments. 12. Define virtual goods and explain why people buy them. Virtual goods are computer images of real or imaginary goods. These include, but are not limited to, properties and merchandise on Second Life (such as virtual mobile phones to equip your avatar), and a large number of items sold in multiplayer games on social networks (e.g., FarmVille on Facebook).

7 13. Describe the major shopping aids. In addition to the typical e-commerce shopping aids such as comparison engines and recommendations, there are special aids for social commerce. The major types of tools and methods are: Customer ratings and reviews. Customer testimonials. Expert ratings and reviews. Sponsored reviews. Conversational marketing. Video product review. Blogger reviews. 14. Describe social shopping in the near future. Imagine this scenario: A retailer will ask you to log in with Facebook on your mobile device as soon as you step into a physical store. In this way, users can receive customized recommendations on their mobile phones. What about the risks? Privacy is a concern to many, but less important to millennials who frequently share their experiences with others. In addition, sometimes people do not need to reveal their full identity on an in-store screen. TOPICS FOR DISCUSSION AND DEBATES 1. Compare group buying to shopping together. In both of these methods the group selects product together, but in group buying all shoppers purchase together (to gain special terms). 2. Enter socialmediatoday.com. Choose five articles of your choice that are related to this chapter and discuss each briefly. Student selections will vary. 3. Compare Polyvore to Pinterest. Both groups allow the sharing of links and ideas, but while Pinterest is general, Polyvore is focused on fashion (and includes specialized tools). 4. Discuss the benefits and concerns of using Yelp. Student opinions will vary, but may contain concerns about the honesty of ratings. 5. Discuss the reasons why people buy virtual goods.

8 Student selections of reasons will vary, but may include convenience. 6. Discuss the critical success factors of Polyvore. Student opinions will vary, but may include the site s ability to tap into a specific social group. 7. Discuss how traditional online vendors can add social networking capabilities to their sites. Student ideas may vary, but may include the use of corporate-based accounts for popular social networking sites. 8. Under what circumstances would you trust an expert s recommendation rather than a friend s? What about the opposite? Student opinions and justifications will vary. 9. Debate: Is the social media influence on purchasing overrated? Start with the slideshow titled Social Media Influence on Purchase Overrated (McCafferty 2011) at baselinemag.com/c/a/intelligence/social-media-influence-on-purchasing-overrated Find similar, newer data. Student positions and debates will vary. 10. Debate: One day all e-commerce will be social. Student positions and debates will vary. 11. Daily deals are being advertised today by many offline and online retailers. Internet only offers are common. Is there a need for intermediaries such as Groupon? Debate. Student positions and debates will vary. 12. Discuss the role of trust in social shopping. (Consult bazaarvoice.com/solutions). Student reports will vary, but may include details on the consumer s likelihood to purchase and its relationship to trusted recommendations. 13. Why do you think that Wanelo is so popular with teens? Student opinions will vary. 14. Watch the video titled SHOP.CA Realizes E-Commerce Vision with Smarter Commerce (3:00 min.) at youtube.com/watch?v=bfjkzmvncck and discuss.

9 INTERNET EXERCISES 1. Enter thisnext.com. What are the site s features? What do you like? Dislike? Why? 2. Enter tkg.com/social-media-marketing. What social media platforms do they offer? They support Facebook, Twitter, YouTube, Pinterest, Instagram and blogs. 3. Search Google for social shopping. Find five articles that relate to this chapter and discuss each briefly. Start with venturebeat.com/tag/social-shopping. 4. Enter select2gether.com. What services do they offer? What is the WeLiket toolbar and how does it facilitate shopping online with friends? 5. Enter kaboodle.com. What are the major benefits you can derive from becoming a member? 6. Enter blog.360i.com and find recent material on social shopping; include the 2012 POV report on social shopping. Write a summary. Student opinions and summaries will vary. 7. Enter facebook.com and find what and how you can buy there while playing social games. 8. Enter powerreviews.com. Compare their activities to those offered by similar sites.

10 9. Enter socialmediatoday.com and hubspot.com/customers, find five recent social commerce customer case studies. Summarize in a report. 10. Enter socialshoppingnetwork.org. Find material related to Chapter 6. Write a report. 11. Enter placecast.net. Explain the features offered. 12. Enter bazaarvoice.com, quora.com, and bebo.com. How can these sites facilitate shopping? TEAM ASSIGNMENTS AND PROJECTS 1. Assignment for the Opening Case Read the opening case and answer the following questions: a. It is difficult for merchants to do business with Groupon. A large percentage of merchants applications to do business with Groupon is dismissed by the company. Why do you think Groupon is so strict and how will this policy affect the competition? Groupon has a limited space for its marketing, and poor deals may drive away members. b. Some claim that Groupon is an list that charges advertisers a marketing fee to send out their coupons. Comment. Note that Groupon makes money by charging a marketing fee for advertising and promoting vendors offers. In most cases, that fee is a percentage of the revenue generated by selling via Groupon. (Start with: grouponworks.com/articles/groupon/overview/business-model/how-groupon-makesmoney.) Student opinions will vary.

11 c. Write a short essay on Groupon s chance of survival in the intensely competitive environment. Examine its revenue model and expansion plans. Check stock market analysts report about the company. d. Groupon is changing its business model again, moving from coupons to discount sales. Study this business model. Write a report. e. Learn more about Groupon s order fulfillment (e.g., ability to handle volume, control of deliveries, and dealing with marketing and competitors). Write a report. f. Research Groupon s global efforts. Write a report. g. Groupon also deals in B2B. Search the Internet and find out how this is being done and how successful it is. h. Read Phibbs (2011) book (Kindle edition) and debate the following issues: Are deep discounts good or bad for sellers? What are some of the disadvantages to merchants? What are the advantages? 2. The class will investigate group buying in China and India. What is the prospect for group buying in Asia? (Start with businesstoday.intoday.in/story/websites-specialising-in-groupbuying-deals-future/1/ html</url>. Why are group buying sites in India succeeding? 3. Shopping communities for fashion are exploding on the Internet. Make a list of 10 major sites (e.g., Polyvore, ShopStyle, Pinterest, My It Things, etc.). Investigate their activities and list their competitive advantage. Why is this industry a prime setting for social communities?

12 How are they related to Facebook and Twitter? What are their business and revenue models? Write a summary report. 4. Each group will research one publicly traded social commerce company (e.g., Groupon, Pandora, TripAdvisor, Bazaarvoice, Yelp). Check competition, stock performance, revenue sources, and so forth. Also check the major Chinese companies listed on the U.S. stock exchanges (Alibaba, Tencent, Baidu, etc.). Use information from finance.yahoo.com, google.com/finance, bloomberg.com, and so forth. Write a summary report. 5. The issue of the viability of Groupon and similar sites is highly debatable (e.g., Buehler 2012; Srinivasan 2011). Follow Groupon s financial performance, conduct a literature search, and debate the issue. Read fool.com/investing/general/2014/09/08/why-groupon-inc-stockhas-plunged-40-in-2014.aspx. Write a summary report. 6. Shopping clubs are gaining popularity. Review the list provided at streamrecorder.com/forum/list-american-private-shopping-clubs-sample-sale-t12846.html. Visit these and similar sites. Also visit fivefourclothing.com. Classify the clubs, and list their major features. 7. Ratings and reviews are popular aids in social shopping. Compare yelp.com, angieslist.com, tripadvisor.com, and two other sites of your choice. Concentrate on capabilities. In addition, find the revenue sources of each site. 8. Learn How to Create a Facebook Business Page 2014 (Updated) (17:26 min.)video at youtube.com/watch?v=o9sdy58hbyo. Build a page as a class project.

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