Monday Jun 30, 2014

Emotion Contagion

Facebook recently released the results of an experiment it conducted in 2012 on emotion contagion. Social experiments have shown that a person's emotional state can be influenced by those around him.  If your friends are having a bad day, you tend to unconsciously synchronize to their emotions and thus they "bring you down."  Facebook wanted to see if this type of influence thrived in social media, so they manipulated the newsfeeds of almost 700,000 people during a single week. 

[I'm going to avoid a discussion on the legality of this experiment (it was, read the terms of service) and the ethics (definitely a gray area) and simply focus on the the experiment and its potential impact to retail.  Facebook is known for pushing boundaries, getting its hand slapped, then patiently waiting for society to catch up.  In many cases what was controversial five years ago has become mainstream today, either because Facebook waited or it actually influenced society.  But I digress.]

In general, those exposed to more positive posts in turn made more positive status updates.  And the same was true for the reverse.  But it was actually a tiny impact -- something on the order of one tenth of one percent.  Of course when applied to large group (like shoppers) this could have a meaningful impact.  Below is an explanation posted on Facebook by one of the study's authors:

So how might this impact the average retailer?  Retailers already monitor social media using Natural Language Processing to gauge brand sentiment.  This experiment indicates sentiment may be influenced indirectly by exposure to other unrelated posts.  In other words, get your customers in a good mood by posting LOL cats, then slip in an offer to buy your products.  On second thought, manipulating emotions is bound to backfire.  Let's just stick with great deals and superior customer service.

Wednesday Oct 03, 2012

The State of the Internet -- Retail Edition

Over at Business Insider, there's a great presentation on the State of the Internet done in the Mary Meeker style.  Its 138 slides so I took the liberty of condensing it down to the 15 slides that directly apply to the retail industry.  However, I strongly recommend looking at the entire deck when you have time.  And while you're at it, Business Insider just launched a retail portal that's dedicated to retail industry content.  Please check it out as well.  My take-aways are below after the slide show.

[Source: Business Insider]

Here are a few things I took away from the statistics:

  1. Facebook and Twitter are in their infancy.  While all retailers should have social programs, search is still the driver and therefore should receive the lions share of investment.  Facebook referrals are up 92% year-over-year, but Google still does 80% of the referrals.
  2. E-commerce continues to grow at breakneck speed, but in-store commerce is still king. Stores are not showrooms yet.  And social commerce pure-plays like Gilt and Groupon are tiny but worthy of some attention.
  3. There are more smartphones than PCs on the internet, and the disparity will continue to grow. PC growth will be flat and Tablet use will continue to grow. Mobile accounts for 12% of all internet traffic.
  4. A quarter of smartphone sales come from China, so anyone with a presence there better have a strong mobile strategy.
  5. 38% of people have used their smartphone to make a purchase, and many use their smartphones inside stores.  Smartphones are a critical consumer tool for shopping.
  6. Mobile is starting to drive significant traffic to e-commerce sites, especially tablets.  Tablet strategies are crucial for retailers.
  7. Mobile payments from the likes of Paypal and Square are growing quickly.  It will be interesting to see how NFC plays in this area.
  8. Mobile operating systems are losing market share to iOS and Android.  I wonder in Microsoft can finally make a dent?

The internet is being dominated by mobile devices, and retailers had better have a strong mobile strategy to meet consumer demand.

Monday Feb 20, 2012

F-Commerce gets an 'F'

Bloomberg is reporting that Gamestop, JCPenney, and Nordstrom have all closed their Facebook stores.  That's not the best timing with Facebook's IPO just over the horizon, but I don't think this should really be news to astute retailers.  Duplicating an e-commerce store within Facebook doesn't really offer a different experience, and Facebook users are used to punching out to the Web for all sorts of things.  By simply putting a store on Facebook, retailers have missed the point of F-commerce.

In my mind at least, F-commerce should be more about the social aspects of shopping leading up to a purchase, not the actual purchase itself.  You're not going to get much more convenient than today's Web stores, so efforts should not be focused there.  Instead, focus on ways to move the water-cooler conversations about products to Facebook where its easier to influence people into acting on those conversations.

If you've ever seen me talk about the topic, I usually show a slide depicting three approaches to F-commerce.  There's the "tab store", which is how 1-800-Flowers first approached Facebook.  Then there's the "wall store," which is best represented by JCPenney and ASOS in the UK.  And finally there's the "newsfeed store," which has been successful for stores like The Limited.  The newsfeed store highlights a couple products or promotions within the newsfeed, alongside the conversations with all your friends.  It capitalizes on the social aspects of Facebook, and doesn't try to duplicate an entire Web store.

My friend Wade Gerten, CEO of 8th Bridge, said of stores within Facebook, “it was basically just another place to shop for all the stuff already available on the retailer websites.  I give so-called F-commerce an ‘F.’”

I want to be clear that I'm not criticizing these retailers for their efforts.  They did exactly what innovative leaders should be doing: experiment, and if it doesn't work then cut the cord quickly.  Now that lessons have been learned, its time to move on and capitalize on the knowledge gained.

Retailers should continue to use Facebook to communicate with consumers and drive them to stores and e-commerce.  As always, the best results come from managing all the channels together in a unified way, leveraging the best aspects of each without needless duplication.

Tuesday Nov 22, 2011

Reviewing Retail Predictions for 2011

I've been busy thinking about what 2012 and beyond will look like for retail, and I have some interesting predictions to share.  But before I go there, let’s first review this year’s predictions before making new ones for 2012.

1. Alternate Payments
We've seen several alternate payment schemes emerge over the last two years, and 2011 may be the year one of them takes hold. Any competition that can drive down fees will be good for everyone. I'm betting that Apple will add NFC chips to their next version of the iPhone, then enable payments in stores using iTunes accounts on the backend. Paypal will continue to make inroads, and Isis will announce a pilot.

The iPhone 4S did not contain an NFC chip, so we’ll have to continuing waiting for the iPhone 5. PayPal announced its moving into in-store payments, and Google launched its wallet in selected cities.  Overall I think the payment scene is heating up and that trend will continue.

2. Engineered Systems
The industry is moving toward purpose-built appliances that are optimized across the entire stack. Oracle calls these "engineered systems" and the first two examples are Exadata and Exalogic, but there are other examples from other vendors. These are particularly important to the retail industry because of the volume of data that must be processed. There should be continued adoption in 2011.

Oracle reports that Exadata is its fasting growing product, and at the recent OpenWorld it announced the SuperCluster and Exalytics products, both continuing the engineered systems trend. SAP’s HANA continues to receive attention, and IBM also seems to be moving in this direction.

3. Social Analytics
There are lots of tools that provide insight into how a brand is perceived across popular internet sites, but as far as I know, these tools are not industry specific. The next step needs to mine the data and determine how it should influence retail operations. The data needs to help retailers determine how they create promotions, which products to stock, and how to keep consumers engaged. Social data alone does not provide the answers, but its one more data point that will help retailers make better decisions. Look for some vendor consolidation to help make this happen.

In March, acquired leading social monitoring vendor Radian6 and followed up with acquisitions of Heroku and Model Metrics. The notion of Social CRM seems to be going more mainstream now.

4. 2-D Barcodes
Look for more QRCodes on shelf-tags, in newspaper circulars, and on billboards. It's a great portal from the physical world into the digital one that buys us time until augmented reality matures further. Nobody wants to type "www", backslash, and ".com" on their phones.

QRCodes are everywhere. ‘Nuff said.

5. In the words of Microsoft, "To the Cloud!"
My favorite "cloud application" is Evernote. If you take notes on your work laptop, you will inevitably need those notes on your home PC. And if you manage to solve that problem, you'll need to access them from your mobile phone. Evernote stores your notes in the cloud and provides easy ways to access them. Being able to access a service from anywhere and not having to worry about backups, upgrades, etc. is great. Retailers will start to rely on cloud services, both public and private, in the coming year.

There were no shortage of announcements in this area: Amazon’s cloud-based Kindle Fire, Apple’s iCloud, Oracle’s Public Cloud, etc. I saw an interesting presentation showing how BevMo moved their systems to the cloud.  Seems like retailers are starting to consider the cloud for specific uses.

6. F-CommerceTop of Form

Move over "E" and "M" so we can introduce "F-Commerce," which should go mainstream in 2011. Already several retailers have created small stores on Facebook, and it won't be long before Facebook becomes a full-fledged channel in the omni-channel world of retail. The battle between Facebook and Google will heat up over retail, where both stand to make lots of money.

JCPenney and ASOS both put their entire catalogs on Facebook, and lots of other retailers have connected Facebook to their e-commerce site. I still think selling from the newsfeed is the best approach, and several retailers are trying that approach as well. I just don’t see Google+ as a threat to Facebook, so I think that battle is over.  I called 2011 The Year of F-Commerce, and that was probably accurate.

Its good to look back at predictions, but we also have to think about what was missed.  I didn't see Amazon entering the tablet business with such a splash, although in hindsight it was obvious. Nor did I think HP would fall so far so fast.  Look for my 2012 predictions coming soon.

Friday Oct 07, 2011

Non-Retail Change Agents

During my OpenWorld presentation earlier this week, I pointed out that four men and their associated mega-companies have had a huge impact on the retail industry without being traditional retailers.  Obviously Amazon is a retailer, but when they started they were definitely not considered a traditional retailer.

Arguably Amazon set the standard for pure-play e-commerce and have been a leading innovator for online shopping, including early pushes into user created content, mobile commerce, and personalization.  And don't forget they are putting lockers in malls and on campuses for easy pickup of their products.  Some might call that a small step toward a physical store.

Apple stores have been the king-of-the-hill with the highest sales-per-square-foot, one of the best customer service models, and innovative features such as the genius bar, mobile POS, and iPads with product information.  Their bigger contribution has been moving commerce to mobile devices, which is a channel that will continue to grow.

Now no one will mistake Facebook for a retailer, but they continue to influence how consumers talk about brands and products.  The forthcoming "want" and "own" buttons will make it easier for people to express their relationship to products, and probably spur conversations that result in purchases.

Then there's Google, which has been helping consumers search for products, show them off with haul videos, and more recently introducing a new payment method.  But the big story here is Google's foray into physical stores.  They are starting small with their Chromezone store-within-a-store concept for selling Chrome-based netbooks.  With their purchase of Motorola, I can see them adding mobile phones, GoogleTV boxes, and other consumer devices in the near future. Isn't that exactly how Apple got started in their quest for stores?

Its tough being a retailer, especially when these four companies keep changing the rules.

Tuesday Jun 14, 2011

Marks & Spencer on Facebook

Father's Day is coming, and if you're in the UK you can surf to the Marks & Spencer Facebook page to get some gift ideas. There, Zibaba has created a storefront showing lots of products appropriate for dads.  You can browse the products and "like" the ones that stand out.  If you click on the "shop now" button, you'll be taken the product page on the Marks & Spencer e-commerce site.

It seems the page can be easily updated for future events, so Father's Day is probably just the beginning.  Although Zibaba claims to handle orders, M&S decided to send the customer to their e-commerce site to add the product to the cart.  I guess this reduces the need for integration, and also allows the customer to purchase additional products not shown on the Facebook page.

I'm just not sure their 300,000 fans will really use the page.  Recreating a shopping page within Facebook just doesn't seem to attract shoppers.  If you want to catch up with friends, visit Facebook; if you want to shop online, visit e-commerce sites.  The best way to engage shoppers in a social setting is to post to their walls.  Even when I liked a product on the M&S page, I didn't see anything in my newsfeed.

Facebook isn't a place for shopping -- its a place for conversations.  And yes, some of the conversations can be about shopping, but that is better suited for the newsfeed.  I just don't think M&S hit the mark with their Facebook page, but I guess time will tell.

Monday May 23, 2011

News Feed Optimization

Although the term "news feed optimization" has been around since 2007, I didn't realize its importance until talking with Wade Gerten of 8th Bridge.  Getting people to Like your brand is only the first step.  Next the brand must leverage that relationship, typically via the news feed.  But without some work, those fans will never see what's posted in their news feed.  That's where news feed optimization comes in.  NFO is to Facebook as SEO is to Google.  

You'll notice at the top of your Facebook page there are two choices for your news feed: Top News and Most Recent, with Top News being the default.  Facebook uses a secret ranking system, called EdgeRank, to determine which stories belong in your Top News, and of course many people have attempted to reserve engineer the algorithm.

While the exact algorithm is not known, Facebook has shared the basics of EdgeRank, the algorithm behind Top News.  For any story, there are three things that determine its score: affinity, weight, and recency.  The affinity is based on the closeness of the reader and the poster.  Every time you like or comment on an item, that increases your affinity with that item and/or person.  So if you comment on Bob's postings a lot, Bob's postings will score higher and be more likely to show on your news feed.

Posting types are weighted differently based on their level of engagement.  Photos tend to be weighted higher than shared links or status updates because they have a higher engagement.  Ever wonder why Coke posts tons of images?  Things that have more comments are weighted higher than things with lots of Likes.  It takes more time to read a comment, and thus the engagement level is higher.

Of course no one wants a stale news feed, so as postings age their rank decreases.  But something that has very high engagement may linger on your news feed as people continue to comment, for example.

Just as retailers have learned how to manipulate PageRank to move up in Google search, they need to also think about EdgeRank so their social media efforts in Facebook pay off.  That means using more images, getting fans to engage with comments and not just Likes, and keeping the posting fresh and relevant.


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