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                     Smart, Social and Satisfying
                     The Future of Shopping in the Age of Social Commerce

                  - Girish Gopalakrishnan




             www.infosys.com
                           For a trend that came into existence only recently, social commerce has gained unprecedented
                           momentum and is transforming the market dynamic beyond recognition. As social commerce
                           evolves to encompass new tools and channels and ideas, it is reshaping the act of buying and selling.
                           The union of commerce and the Internet had its beginnings in corporate websites with companies
                           putting up information on their products and services, vision and mission, and history and
                           management. The era of Web 1.0 saw one-way communication; if customers and investors needed
                           information they went to the website to gather data. In this scheme of things, the company was the
                           gate-keeper, controlling the messaging and thus the projection of its image. While selling of products
                           made its way to the Internet as e-commerce made its presence felt, the dialogues about companies
                           and their offerings we participate in today were absent.




                           Even as e-commerce took off, we saw the advent of Web 2.0 technologies. Ratings and reviews,
                           video sharing, wikis, forums, blogs, and social networking facilitated interaction among users as
                           peers discussed, critiqued, and recommended everything they saw, did and consumed. These
                           conversations transplanted real-world social interaction into the virtual world as friends, who were
                           sharing shopping opinions face-to-face, moved online. The more consumer behavior changed, the
                           more it remained the same.

                           This is the age of social commerce, as social networks and shopping processes intersect online. While this
                           paradigm shift is creating challenges for companies, it is also offering a range of opportunities.
                           Businesses can leverage social media to understand their customers, learn about their behavior,
                           demands, desires, and motivations. By its very nature, social media allows companies to engage
                           buyers through multiple tools. Buyers use these tools for social interactions, which help them make
                           purchase decisions and attract their friends, thus fostering brand loyalty.

                           However, the social commerce story does not end here. As technology advances to keep pace with
                           buyer demands, sellers can implement new social commerce tools and models to satisfy customers,
                           create advocates and generate sales. To better understand how social commerce will enable
                           business, let us examine how it helps sellers and draw an evolutionary roadmap of social commerce.




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Win-win for
Buyers and Sellers

With an explosion in Web 2.0 technology, customers
have a powerful avenue to communicate, gather
information, and make transactions. The rise of social
media has given them a ready forum where they can
learn, participate, express opinions on products and
services, and influence peers before they purchase.
According to a recent survey, 42% of online consumers
say they have used social media services to evaluate
products or to find deals. 58% of the 1,787 adult online
shoppers surveyed said they follow companies through
social networking sites to find deals, while half (49%) say
they want to keep up to date on products. (1)
Not only do users share purchase information but
they are also influenced by the persuasive buzz of
that information. According to a study, 83% of online
shoppers say they are interested in sharing purchase
information with people they know and 74% of online
shoppers get influenced by friends’ purchase history.
(2) Moreover, 71% of people say they trust reviews from
friends and family members and 45% of people trust
reviews from friends and people they follow on social
networks. (3) As a result, businesses are facilitating these
interactions through their ecommerce websites and
through social networking sites.




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                           The sphere of influence buyers exercise over their peers in the online world is a natural
                           corollary of the social nature of shopping, wherein buyers enjoy social interaction as they
                           engage in the act of purchase. Buyers trust people who are like them - fellow buyers who
                           fit a similar profile and peers who are friends. Online retail benefits most when it lets the
                           buyer interact with such people. With social commerce enabling such social exchange in
                           the virtual world, buyers can make better - and more pleasurable -purchasing decisions.
                           For sellers, in turn, social commerce offers a unique opportunity to increase sales by
                           enabling increased traffic, improved conversion rate and better average order value. Let’s see
                           how that works.
                           Businesses can understand their customers through social commerce, learning about their
                           likes, demands and motivations. Earlier, the expression of interest in a product or a service
                           was an explicit act. Today, with the advent of intelligent social commerce solutions that
                           study and understand customers through their peer interactions and transactions, sellers
                           are capturing implicit shopper preferences and interests. Sellers know what products
                           buyers view, what category they are interested in, what they search, and what products
                           they share with peers. A seller knows what the buyer wants without the buyer expressing
                           herself in an overt manner. Thus, the seller can leverage the information to drive targeted
                           products to shoppers. This ensures a higher probability of converting them into buyers and
                           increasing their overall order value.
                           Moreover, as peers recommend products, sellers gain information they did not have access
                           to earlier - knowledge of potential purchase behavior. For one, a peer’s recommendation
                           helps a buyer decide on purchasing a particular product when she is seeking information
                           to help decide on the product to buy. Additionally, if a person gains information on a social
                           networking site that a friend has bought, say, a particular mobile phone, the knowledge
                           may induce the need for the same product even if the buyer had no inclination to purchase
                           the same.

                           Therefore, sellers need to enable and are enabling social interaction on their websites,
                           encouraging existing buyers to interact with friends and recommend products. This helps
                           attract friends of buyers, and help convert them into buyers. The seller can gain indirect
                           access to the buyers’ friends network and set in motion a multiplier effect on site traffic.
                           However, the type of interaction promoted by the seller needs to be focused, determined by
                           the type of product being sold. Thus, a grocery chain need not enable the same type of
                           interaction, as say, a manufacturer of consumer durables. For, a person may not seek the
                           opinion of peers when buying provisions but may need active input from friends when
                           purchasing a high-consideration item like an LCD television.
                           Information gleaned from such interactions contains a lot of insight that can be leveraged to
                           effectively promote targeted products and serve customers. As your business gains greater
                           insight into the drivers of customer behavior, this helps attract more buyers, satisfy customer
                           requirements, and increase conversion rates and dollar spend.
                           Above all, happy customers help build brand loyalty and create brand advocates. Prospects
                           become customers and existing customers visit and buy again, and promote your products
                           among peers. This implicit advocacy has a multiplier effect on traffic as your buyers bring their
                           friends to your business, creating a loyal community for your business and giving an impetus
                           to the virtuous cycle of buying and selling.




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Future Trends
Customization and
Convenience
In this, the age of instant and individualized
gratification, customers are always asking
for more: personalized products, greater
responsiveness, and convenience. Satisfying their
desires is paramount for sellers in an era of hyper-
competition and low margins.
Sellers are steadily gaining greater insights
into individual customer behavior, interest and
preferences through social commerce tools by
understanding social interactions and online
social shopping patterns. Thus, they will be able
to offer appropriate products and sell the right
product to the right customer at the right time
- meeting specific requirements. As technology
evolves, it will play a critical role in enabling the
seller to understand and, thus, satisfy the buyer
through social commerce. This can make online
shopping a much more immersive, customized
and intuitive experience than what we are used to
at this point in time. The effects of improving the
online shopping experience can lead to increased
consumer loyalty, greater conversion rates,
enhanced customer satisfaction, repeat business,
and higher profits.
The buyers’ need for customization and
convenience and the ability of the seller to fulfill
the same through social commerce tools will
define the way forward for the online shopping
experience. Over the next one to three years,
buyers are likely to be able to interact with peers
within the ecommerce site, without detaching
from their purchase activity to fulfill their need for
social shopping.




                                           Infosys - View Point | 5
                           With technology allowing greater customization of products
                           at a reasonable price, in the future buyers will be able to design
                           products - such as apparel or jewelry or furniture - online, connect
                           with their friends online through the site to get their opinions and
                           inputs, and place an order for a truly unique product.
                           The device that will possibly enable the greatest customer
                           satisfaction in the age of social commerce is the mobile phone.
                           As the reach of the always-on mobile phone spreads, it is also
                           revolutionizing the way the always-connected buyer shops. With
                           almost five billion connected by cellular telephony, this is a device
                           companies can ignore only at their peril. Offering the convenience
                           and speed of on-the-go shopping to customers who are often on
                           the move, it is expected that in 2015, $119 billion worth of goods
                           and services will be purchased via a mobile phone. (4)
                           As smart phones supporting social commerce become more
                           commonplace, the mobile device will ensure that its user is aware
                           of her peers’ purchase activity instantaneously through alerts
                           without having to log in to a site on a computer. Location-based
                           apps in the buyer’s social network can inform her about sales and
                           events specific to the area in which she finds herself.
                           Far from being a rational economic transaction involving buyer
                           and seller, shopping is an emotional activity evoking a positive
                           state of mind in the shopper. To attract and retain customers,
                           sellers are giving paramount importance to creating a pleasurable
                           experience for shoppers. As people like to interact with peers when
                           shopping, sellers will, in the near future, replicate the experience of
                           shopping in a real-world store by enabling satisfying and effective
                           group shopping activities through Web 2.0 technologies.
                           Brick and mortar stores have been tapping the power of collective
                           buying through sites like Groupon. As technology allows it, online
                           sellers will start leveraging the power of social commerce. This
                           will include both co-shopping and group buying activities. In the
                           former, technology enables people at different locations to shop
                           together online - seeing the same product, communicating with
                           each other and sharing opinions, thus mimicking a real-world
                           shopping experience. Group buying refers to the capability to
                           purchase a product jointly in an ecommerce site, discuss, share
                           ideas and purchase the product through individual contributions.
                           Thus, in the near future, an engaged online shopping website will
                           give shoppers the option to interact with friends over varied devices
                           and purchase products. This has the added advantage of giving
                           sellers an insight into customer opinions and behavior, allowing them
                           to further improve the online shopping experience by enhancing
                           customer satisfaction levels.




6 | Infosys - View Point
                                                               Five Years On
                                                               Intelligent Devices, Informed Sellers
                                                               As social commerce becomes smarter with the application of
                                                               advancing technology, sellers will be able to gain customer
                                                               information from beyond their ecommerce site. Perhaps five
                                                               years down the line, sellers will be able to learn about the
                                                               buyer’s preferences, interests and community from their
                                                               interactions on other sites and from intelligent devices. All
                                                               aspects of a buyer’s digital life would be connected to every
                                                               other aspect. As a result, the targeting of products and
                                                               services will be much more focused and intuitive.
                                                               Soon in the future, sellers may be able to get information
                                                               related to a buyer’s interaction - across multiple devices
                                                               - with a particular brand/product. Through enhanced
                                                               intelligent applications and customer information-sharing
                                                               standards, a seller can gather information about customers
                                                               even without the latter having visited the seller’s site.
                                                               In addition to having better and focused information about
                                                               existing customers, sellers will have information about
                                                               buyers who are not yet their customers. Such information
                                                               can help sellers target and contact buyers proactively with
                                                               customized products, allowing them to increase sales.




Conclusion                                                                                            References
                                                                                                      1. 2011 Social Commerce Study,
Social commerce no longer inhabits the land of theory and supposition. It is a                           by Shop.org, comScore and
market reality that is driving the future of buying and selling. As sellers are better                   Social Shopping Labs
able to plot their buyers’ interests, profiles, and friends, the brave new world of                   2. Manage Smarter survey,
social commerce allows them to offer targeted products, satisfy their customers,                         September 2009,
attract their friends, and generate loyalty.
                                                                                                      3. Speak Now or Forever Hold
The information sellers can glean about customers through their social                                   Your Tweets, Harris Poll, Harris
commerce interactions and transactions will ensure that in the matter of a few                           Interactive

years, we as buyers need not search for products. Instead, the products will find                     4. Mobile commerce to grow to
us. Even as social commerce increases the challenges found in the marketplace, it                       $119bn by 2015, ABI Research

provides a means to build customer satisfaction and loyalty - both of which are
very elusive and valuable for the seller.




   About the Author
   Girish Gopalakrishnan works as a Product Manager within Infosys’ Business Platforms team. He has experience in social media products
   for enterprises related to communities, widgets and mash-up. He was instrumental in conceiving the idea and also developing the
   social commerce product for the InfosysEdgeTM platform.
   He has overall industry experience of around 10 years, with more than half of it in the product management space. His product
   management domain experience range from personal finance to social media. He holds a bachelor degree from The National
   Institute of Engineering, Mysore and an MBA from Indian Institute of Management, Calcutta.




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