News
 Prepare
for Social Commerce
Consumers became increasingly Web savvy in 2006 to
advertising and not as susceptible to basic
cross-sell and upsell techniques. In response,
targeted marketing became the standard as blast
marketing faded into oblivion.
"The ‘mass’ is no more - the more national your
brand, the more we have learned to speak to specific
identities, tastes, and demands," Ken Goldstein, CEO
at Shop.com, Monterey, CA. "We are learning to
respond to the voice of the individual much more
through collective understanding than loud
undifferentiated promotion."
And even as mass marketing cools, online shopping is
becoming more prevalent than ever. "We found that
online purchasing is no longer a fringe activity,"
said Maria Reiling, director of fashion and sports
at eBay, San Jose, CA. "It is mainstream."
This theory proved true as Cyber Monday saw the
biggest e-commerce sales day to date with $608
million spent on post-Thanksgiving, back-to-work
shop day. Overall, online retail spending reached
$11.7 billion for all of November 2006, up 24
percent from 2005.
In 2006, major retailers like Nike and Wal-Mart
revamped e-commerce sites with rich media for faster
functionality and a more interactive experience.
Next year, retailers expect to continue to empower
the customer with controlled choices, leveraging
digital technology to make shopping easier, branded
and more entertaining.
"In 2007, retailers will start experimenting with
Web 2.0 technologies to follow early leaders like
the Gap and Nike, who both realized early on that
customer experience matters," said Joe Chung, CEO of
Allurent, Cambridge, MA.
"Shoppers will come to expect rich, interactive
shopping online and retailers have to move quickly
to catch up to early leaders," he said.
According to Ian Davis, director of product strategy
at e-commerce software firm Art Technology Group,
Cambridge, MA, e-commerce is at the beginning of a
radical change. Eighty percent of consumers have
broadband at home and 90 percent have it at work,
with some version of flash installed on 96 percent
of PCs.
"Legions of companies are rushing to take advantage
of this and as a result customers are getting
amazing experiences online like 100MM videos are
downloaded a day from YouTube.com," Mr. Davis said.
"This is changing consumers’ expectations for what
an online experience should be like, shopping or
otherwise," he said. "And yet the online shopping
experience remains largely unchanged. E-tailers who
realize this and offer more compelling experiences
to their consumers will be rewarded."
In regards to legal action this year, e-commerce
giant Amazon.com, Seattle, was involved in two major
suits that could change the way e-commerce firms
operate.
Toys "R" Us, Paramus, NJ, sued Amazon, alleging the
breach of exclusive rights to supply specific toy
products on the Amazon site. A New Jersey superior
court judge in July ruled in Toys "R" Us’ favor.
Amazon is also being sued by IBM Corp. The software
giant is alleging infringement of five IBM patents
that are core to the online retailer’s platform,
like the presentation of applications in an
interactive service, the storage of data in an
interactive network, the presentation of advertising
in an interactive service and the ordering of items
from an electronic catalog.
If Amazon is found guilty, every e-commerce site
will be faced with how to merchandise anew. Next
year holds the cards to a key decision. 2006 also
saw the rise of the social network reach beyond its
initial purpose, as sites began to influence
consumer behavior with a substantial impact on
e-commerce.
The Fox Interactive Media Inc.-owned social
networking giant MySpace site added a download music
option through a partnership with digital licensing
and copyright management services company Snocap. It
challenged Apple’s iTunes music store, the online
leader in the space.
Bands can now add songs, music videos and pictures,
and spread the word through viral marketing with
"friends," a revolutionary platform for music groups
with no major label deal.
Expect more merging between e-commerce and social
networking in 2007. "This ‘social commerce’ is
creating new and more meaningful ways for retailers
to interact with customers," Mr. Goldstein said.
"Search, communication and community have the
potential to have an even more powerful impact on
commerce when closely tied together."
Personalization and customization were key words for
e-commerce firms in 2006 year, as consumers took
ownership of online shopping experiences.
- Dianna
Dilworth is Associate Editor of DM News/ecommerce.
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