The following is a guest contributed post from Himanshu Sareen, CEO of Icreon Tech.
Could social eCommerce sites replace the need for an online storefront? Not exactly. But they can certainly increase the success rate of emerging brands and market leaders alike.
Forget about Facebook or Pinterest. Specifically for the up-and-comer, social eCommerce and curated shopping sites such as Wanelo, Fancy, and Storenvy are able to level the playing field for smaller brands. Upon first using Fancy or Wanelo and scrolling through the countless high-definition photos of intriguing products, there is a common characteristic to the site: the absence of logos or brand imagery.
While you are able to find products’ brands after clicking their respective images, the fact that products within a social eCommerce newsfeed are logo-free allows for non-biased discovery by consumers. With eCommerce sales having exceeded a major $1 trillion sales milestone in 2012, some would think the space is done maturing and evolving. Yet the infusion of social media is set to open up a new niche for new and smaller brands competing in a market dominated by Amazon and other big box retailers.
Most all brands struggle to establish their notoriety and name recognition, which is often a barrier to wider success. By utilizing a channel that grants zero preference to one brand or another, new businesses can have an easier shot at reaching their target market.
Although relatively modest in terms of sales at the moment, Gartner Research forecasts that sales initiated via social eCommerce will grow to $30 billion a year in 2015. Representing less than 3% of total online transactions may be miniscule for behemoths such as Walmart and Amazon,but social eCommerce is an advantageous channel that serves as lucrative low hanging fruit for smaller brands searching for an open niche.
Prior to social eCommerce sites curating products, companies could only expose their brand offerings alongside international competitors through non-trivial investments in ad-spending and marketing. For market leaders such as Gucci or Nike, their name recognition is often responsible for their ongoing popularity. Bernd Schmitt at of the Columbia Business School at Columbia University agrees that brand association has a major impact on consumer buying decisions:
“In the realm of consumer psychology, consumers can form emotional attachments to gifts, collectibles, places of residence, and, in particular, brands.”
By incorporating social eCommerce tactics into their overall business strategies, smaller brands can gain placement right alongside billion dollar corporations in a newsfeed. Thanks to the brand-agnostic display through newsfeedson leading social eCommerce sites, brand association is effectively neutralized. In the past, up-and-coming and independently owned brands were stifled by the need to spend capital on digital marketing, television spots, magazine ads, and billboards. With social eCommerce as a viable alternative, small brands and independent makers can economically reach target consumers.
Storenvy founder and CEO, Jon Crawford, describes his socially-infused eCommerce platform and website as designed for “makers not marketers.” His view encapsulates the idea behind social eCommerce: that you’re brand will succeed through quality goods that are virally shared by consumers. Rather than depend on cookies and digital footprint analysis for tracking down customers, smaller brands can have products sell themselves through social sharing, discovery, and recommendations.
Today’s shoppers aregrowing continuously desensitized to traditional digital marketing tactics such as banner ads, retargeting, and display network pop-ups. Social recommendations by educated buyers and viral consumers can garner greater appeal and initiate conversions where banner ads and other tactics fail. In fact, a recent Market Force survey found that 81% of US consumers involved were influenced by recommendations from friends via social media when making a new purchase.
However, the new model for reaching social consumers can act as a double-edged sword. While larger brands are less affected by flopped products they launch, an emerging startup has far more to lose. Social consumers, inherently activist, don’t take lightly the faults of your product if you rush to market without a strong value proposition.
As the leader of an IT consultancy partnering with Fortune 500 retail brands promoting their goods through digital strategy, it has become increasingly apparent on our end that social is melding potently with eCommerce. Whether it’s promotionally micro-blogging about an individual product, incorporating social eCommerce widgets into existing online stores, or using social logins to create more knowledgeable customer networks – it’s evident the trend of curated shopping is expanding.
With the maturation of sites and platforms such as Wanelo, Fancy, and Storenvy, there are more options for fresh brands to obtain market share. Pundits may say that Amazon is crushing the future of smaller businesses, but social ecommerce (an area where Amazon lacks influence) can serve as a crucial channel for up-and-coming brands to combat the dominance of Amazon type companies. And ultimately, when products are suggested by customers rather than marketing budgets, it works out for the brand and consumer alike.