ROI Impact of Social Retail Victoria Bracewell Lewis Senior Analyst Forrester Research 1 May 2008

3 Entire contents © 2007 Forrester Research, Inc. All rights reserved.

4 Theme Social retail is creating new opportunities for shopping... and selling

5 Entire contents © 2007 Forrester Research, Inc. All rights reserved. Agenda What is social computing? The realities of social retail Mapping the social retail trendsetters Influencing the influencers: How to harness the value of social retail

6 Entire contents © 2007 Forrester Research, Inc. All rights reserved. Social Computing RSS Open Source S/W Blogs Wikis / collaboration Tagging Social networks Search enginesC2C CommerceP2P file sharing PodcastingComparison shopping User review portals

7 Entire contents © 2007 Forrester Research, Inc. All rights reserved. Technology is moving away from firms

8 Entire contents © 2007 Forrester Research, Inc. All rights reserved. Technology is moving away from firms

9 Entire contents © 2007 Forrester Research, Inc. All rights reserved. Creators Publish a blog Publish your own Web pages Upload video you created Upload audio/music you created Write articles or stories and post them Critics Post ratings/reviews of products or services Comment on someone else’s blog Contribute to online forums Contribute to/edit articles in a wiki Collectors Use RSS feeds Add “tags” to Web pages or photos “Vote” for Web sites online Joiners Maintain profile on a social networking site Visit social networking sites Spectators Read blogs Watch video from other users Listen to podcasts Read online forums Read customer ratings/reviews Inactives Not using any social technologies The ladder of participation

10 Entire contents © 2007 Forrester Research, Inc. All rights reserved. Online shopping has grown rapidly in the past few years, particularly in Sweden and the Netherlands U 23m 31m 16m 4.5m 7.2m 4.4m 6.7m Germany and the UK still account for 60% of Europe’s online shoppers Base: At least 22,102 European net users (16+) Source: Forrester's Consumer Technology Adoption Study, 2004 to 2007 “Have you bought any products or services online in the past three months?”

11 Entire contents © 2007 Forrester Research, Inc. All rights reserved. Shoppers use of social computing is on the rise Base: EU-7 online shoppers Source: Forrester’s Consumer Techno graphics, Percentage of online consumers who use these technologies monthly or more often

12 Entire contents © 2007 Forrester Research, Inc. All rights reserved. Agenda What is social computing? The realities of social retail Mapping the social retail trendsetters Influencing the influencers: How to harness the value of social retail

13 Entire contents © 2007 Forrester Research, Inc. All rights reserved. What is impact on eCommerce? Social networks drive more site traffic than search: Topshop.com Source: Spannerworks / Topshop. Data compiled from Hitwise site traffic.

14 Entire contents © 2007 Forrester Research, Inc. All rights reserved. Consumer reviews drive hard conversions Highly reviewed products receive more attention from both consumers and retailers, ultimately leading to higher sales 10 to 24 1 to No reviews Source: Bazaarvoice. Data compiled from Bazaarvoice customers. Impact of review volume on conversion

15 Entire contents © 2007 Forrester Research, Inc. All rights reserved. Reviews also achieve lower product returns Returns can reduce a manufacturer’s profitability by an average of 3.8% Source: Bazaarvoice. Data compiled from Bazaarvoice customers. Impact of review volume on returns

16 Entire contents © 2007 Forrester Research, Inc. All rights reserved. Many retailers haven’t got there yet Base: 22 European leading multichannel retailers “Do you use a recommendation engine?”

17 Entire contents © 2007 Forrester Research, Inc. All rights reserved. Many outright ignore this trend Base: 122 European luxury brand retailers “In what ways do you currently use Social Computing Web 2.0 technologies?”

18 Entire contents © 2007 Forrester Research, Inc. All rights reserved. Agenda What is social computing? The realities of social retail Mapping the social retail trendsetters Influencing the influencers: How to harness the value of social retail

19 Entire contents © 2007 Forrester Research, Inc. All rights reserved. How you should think about these social retail engagement tools Channel indirect sales Low Direct to consumer sales High Technical Complexity Customer ratings and reviews Podcasts Recommendation engines Virtual worlds Blogs Wikis Social networks Niche Communities – User Generated Content Personal Assistants RIA Crowd Sourcing Mobile Location Services Searchandising – Faceted Search

20 Entire contents © 2007 Forrester Research, Inc. All rights reserved. Ratings and reviews: The top-rated shopping paths drive direct sales Bass Pro Shops customers that browse top- rated products have a 59% higher conversion rate and spend 16% more than the average shopper.

21 Entire contents © 2007 Forrester Research, Inc. All rights reserved. Searchandising, Faceted Search, Recommendations Implemented July ’07 – 40% of searches result in correct product placed at top of site. Overall hard conversions increased over 10%. Source: ComputerWorld UK report on Smart searching, Nov 19, 2007

22 Entire contents © 2007 Forrester Research, Inc. All rights reserved. User-generated content and products drive ROI directly and indirectly User-generated = constant NavPix product replenishment Links with social networks increases product awareness Navman’s NavPix library and tool kit; launched May 2006 Partnered with Lonely Planet and flickr Build cost: £550K 23 million NavPix images generated 3,612 press pieces resulting in Navman as No. 2 for brand awareness

23 Entire contents © 2007 Forrester Research, Inc. All rights reserved. Agenda What is social computing? The realities of social retail Mapping the social retail trendsetters Influencing the influencers: How to harness the value of social retail

24 Entire contents © 2007 Forrester Research, Inc. All rights reserved. What should you do about this? Define clear business goals There is little point marketing or merchandising with social technologies unless you know what you want to achieve Traffic to your Web site (What for?) Registrations (What will you do with them?) Advertising/eCommerce/subscription revenues (How much?) Customer relationship management (How will you manage the data?) Market and social retail mapping research (Where and who for?) Media publicity and PR (How will you measure?)

25 Entire contents © 2007 Forrester Research, Inc. All rights reserved. Development Support Sales Marketing Research ObjectivesRoles Listening Talking Energizing Supporting Embracing Key roles and objectives

26 Entire contents © 2007 Forrester Research, Inc. All rights reserved. Why? Data indicates you will increase conversions, plus enhance... Cross-sell and up-sell Basket size Loyalty Service levels Satisfaction Positive experience and word of mouth Brand presence

27 Entire contents © 2007 Forrester Research, Inc. All rights reserved.

28 Entire contents © 2007 Forrester Research, Inc. All rights reserved. Victoria Bracewell Lewis +44 (0) To download this presentation, go to: Thank you