How Online Retailers Can Benefit from Social Shopping

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Online retailers are doing relatively well in the current economic climate. Whilst spending is down across the board, online retailers are doing either significantly less badly than their traditional competitors, or they are actually performing strongly. Both ASOS and Vente-Privee are seeing relatively strong performances in a weak retail market.

There are many reasons for this – online-only business models have lower overheads and are potentially easier to scale (up or down) depending on demand). They also allow the retailers to stock smaller amounts of more products, allowing them to have a larger portfolio and to cater for a wider range of goods.

But these structural reasons only tell part of the story. The real reason why online retailers should be, and in many cases are, performing better than their traditional counterparts is because of what online lets you do. It’s not just taking an offline concept online, it’s about doing completely new things in completely new ways.

One of the real benefits of online retail is the ability to personalise the shopping experience and to recommend additional items that an individual shopper is likely to want. In the offline world, this is possible with a well-trained and experienced assistant who will identify what a shopper is likely to want and what suits them. They can then help to guide and recommend items that they think might appeal to them. Online we can use something a lot more powerful: people like me.

We know that people trust people like them, will make purchase decisions on what they say and recommend. It’s why online ratings and reviews are a significant influence on purchases. In online retail there are a number of ways in which you can use ‘people like us’ to recommend other products to shoppers.

  1. Use aggregate data from the shopping experience and from previous baskets to predict what people might want to buy. You can then present related items and other popular items based on previous purchase patterns.
  2. Use ratings and reviews from other shoppers to advise people on what products they might like and what people think about them.

Both of these can be quite successful when offered as standalone elements in the e-commerce system. But they take on a significantly more powerful role when integrated with an online community. Rather than just recommending products based on previous shopping habits, you can show people who have bought that product before, the other things they buy, the discussions they take part in, the things we know about them or that they are willing to tell us. And rather than a set of isolated reviews from other shoppers, we can show these reviews as just part of the content that somebody has added to the community, alongside the questions they may have asked or answered in the forums and photos of them in the galleries.

We know that people trust ‘people like me’, and that they are influenced heavily by people with whom they feel a connection, shared interest or other similarity. Online retail benefits most when it lets you see such people. You can find out not what people who may have bought one particular product have also bought, but, perhaps more importantly, what people who you feel an affinity with have bought. This doesn’t mean you will buy the product too, but it does increase your likelihood to do so. When you start to relate with people and identify with them you trust them and their choices more. You are influenced by them.

Online retail can do things that are just not possible offline. Whilst you might go to a store with a friend and get their advice, online you can tap into the thoughts, reviews and decisions of many thousands of people that you might identify as being people like you. Even if you don’t know them.

This is true social shopping. And online retailers can benefit from this in a way that is just not possible offline.

Image by net_efekt via Flickr

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