Social Shopping: Concepts, Benefits, and Models Chapter 6 Social Shopping: Concepts, Benefits, and Models

Learning Objectives Describe social shopping and discuss its drivers. Describe the framework for social shopping, its major participants, its components, and various models. Define group buying and flash sales and explain how they work together. Describe shopping together, shopping communities, and shopping clubs. Describe social recommendations, marketplaces, and other shopping aids. Provide examples of other innovative shopping models. Discuss shopping for virtual goods.

Opening Case: Groupon— Will the Company Prosper? The Opportunity Groupon is a start-up that offers special highly discounted deals, mostly via e-mail The Solution Groupon is basically a flash (daily or longer) discount deal business and an operator of a marketplace The reason merchants are willing to offer a 50% to 90% discount to volume shoppers is that the merchants’ marketing and overhead costs are lower, while their market share increases due to the attraction of new customers

Figure 6.1 The Business Model and Process of Groupon

Opening Case: Groupon— Will the Company Prosper? Benefits and Expansion The major benefits to customers Steep discounts (50% to 90%) Discovery of new/specialized services and products No need to search for deals; Groupon organizes them for you The major benefits to merchants Can sell larger quantities and liquidate merchandise. Save on advertising and marketing expenses Get repeat customers Lower customer acquisition cost. Knowledge of, and collaboration with, vendors in a close geographical area

Opening Case: Groupon— Will the Company Prosper? Limitations of the Model Some of Groupon’s deals can become too large for vendors to fill Some businesses may not make money on the deal and may possibly even suffer a loss The Competition Hundreds of Groupon clones exist Factors in the Competition Groupon still controls more than 50% of all daily deal markets

Opening Case: Groupon—Will the Company Prosper? The Results The company went public on November 4, 2011, raising $700 million Groupon lost money until the first quarter of 2013 The share price slowly began recovering in late 2014

Lessons Learned from this Case Groupon’s initial business model included group buying, which is a social activity Later, it changed this model, concentrating instead on daily deals Group buying is a powerful social shopping model but it is difficult to implement

Definitions, Drivers, Concepts, and Benefits of Social Shopping The Drivers of Social Shopping The large number of people visiting social networks attracts advertisers Changing customers’ shopping habits The increasing number of recommendations/suggestions made by friends and the ease and speed of accessing them The pressure from top management to increase effectiveness and efforts to improve overall efficiency of marketing in general

Definitions, Drivers, Concepts, and Benefits of Social Shopping Concepts and Content of Social Shopping Where Is Social Shopping Done? Video: “How to Create a Facebook Store Even If You Are a Beginner” at youtube.com/watch?v=UWRNVzXXYIM Why Shoppers Go Social Communal shopping* People’s Roles in Social Commerce Connectors Salespeople Seekers Mavens Self-sufficients Unclassifieds

Definitions, Drivers, Concepts, and Benefits of Social Shopping The Benefits of Social Shopping Benefits to Buyers Get super deals via group buying, daily specials, and more Socialize while shopping and receive social support and rewards Discover products/services you never knew existed Interact directly with vendor (brand) representatives easily and quickly

Definitions, Drivers, Concepts, and Benefits of Social Shopping Benefits to Sellers Improve overall sales unit productivity Increase revenue growth per customer Gain feedback from new customers Learn from customers Increase customer loyalty and trust Quickly liquidate overstocked or obsolete merchandise

Components and Models of Social Shopping What Components to Expect in a Social Shopping Site Visual Sharing Online discussions How to use products Guides

Components and Models of Social Shopping The Major Social Shopping Models Traditional E-Commerce Sites with Social Media Additions

Figure 6.2 The Major Categories of Social Shopping The heads are inconsistently set as cap/lc vs initial cap (i.e., Group Buying vs Shopping communities). Please make consistent one way or the other. Thanks. Figure 6.2 The Major Categories of Social Shopping

Group Buying and Deal Purchasing The group buying model describes a group of people who come together to get a quantity discount Group Buying in China How Group Buying Is Done in China Group Buying and Flash Sales on Facebook The Future of Group Buying Deal Purchases (Flash Sales, Daily Deals)

Shopping Together: Communities and Clubs Online Social Shopping Communities Common Features in Communities and Forums User forums User galleries Idea boards Examples of Shopping Communities Polyvore (polyvore.com)

Shopping Together: Communities and Clubs Kaboodle -- A Unique Social Shopping Community Some of Kaboodle’s Capabilities Private Online Shopping Clubs and Retail by Invitation

Recommendations in Social Commerce Social Shopping Aids: From Recommendations, Reviews, and Ratings to Marketplaces Recommendations in Social Commerce Ratings and Reviews Social Recommendations and Referrals Illustrative Examples of Recommendation Sites crowdstorm.com buzzillions.com Concerns about Social Reviews and Recommendations

Other Shopping Aids and Services Social Shopping Aids: From Recommendations, Reviews, and Ratings to Marketplaces Other Shopping Aids and Services Yelp: The Shoppers’ Best Helper Collaborative Reviews Filtering Consumer Reviews Dealing with Complaints

Social Marketplaces and Direct Sales to Customers Social Shopping Aids: From Recommendations, Reviews, and Ratings to Marketplaces Social Marketplaces and Direct Sales to Customers Social marketplace* Examples of Social Marketplaces craigslist.org us.fotolia.com flipsy.com storenvy.com shopsocially.com

Innovative Shopping Models and Sites and Virtual Goods Examples of Innovative Social Shopping Ideas and Sites Getting help from shoppers via TurnTo Networks Find what your friends are buying Wanelo Additional Examples of Social Shopping Helping Sellers and Bloggers Sell Products Event Shopping

Innovative Shopping Models and Sites and Virtual Goods Socially-Oriented Person to Person (P2P): Selling, Buying, Renting, or Bartering P2P Lending P2P Sharing (Also Known As Collaborative Consumption) Facebook’s MyStartUp: Examples “Wine Condom” Bottle Stopper Divas Snow Gear

Innovative Shopping Models and Sites and Virtual Goods Shopping without Leaving Facebook and Other Social Networks Shopping for Virtual Goods in a Virtual Economy Virtual goods* Virtual economy* Why People Buy Virtual Goods

Innovative Shopping Models and Sites and Virtual Goods Real-Time Online Shopping Auctions In Social Shopping Tophatter B2B Social Networking Virtual Visual Shopping

Innovative Shopping Models and Sites and Virtual Goods Social Shopping in the Near Future Video: “The-Future-of-Shopping at youtube.com/watch?v=0VII-xdg5Ak&feature=related Instagram Marketing Facebook’s Plans Twitter's Activities