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Home Page > Marketing > Social shopping-Leveraging the power of the groups

Social shopping-Leveraging the power of the groups

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Social Shopping-Leveraging the Power of Groups. BY SANJAI VELAYUDHAN

HUMAN GROUPS- A SOCIOLOGICAL INTRODUCTION:

Humans by nature are social and pro-active communicators. Their evolution from nomads to a settled life has been supported by the development of languages that facilitated effective communication between each other. This skill played a crucial role in the formation of societies and civilizations created by co-existing groups-both cooperating and competing ones. Social interactions between humans have established an extremely wide variety of traditions, rituals, ethics, values, social norms, and laws, which together form the basis of human society which is but an aggregation of a variety of groups. Humans with their advanced cognitive capabilities have revolutionized their own socio-technological progress that would not have been possible without intra-group compatibility. For Homo sapiens, Communication is not just a way of life, but a compulsion.

Human nature is marked by inherent contradictions-despite being driven by individualism, living in groups all their lives are one of them. Overcoming strong obstacles of individualism had its strong motivation- survival. Their relatively smaller size as well as the lack of natural defenses like horns, sharp teeth, claws etc. put humans at a disadvantage compared to other animals. It is by coming together and living in groups, that they overcame these deficiencies and survived. As an outcome of living together for centuries, humans have learnt the art of collective decision making as well as influencing each other.

HUMAN GROUPING & HERD MENTALITY:

As discussed above, people tend to form groups or join them as a natural process. This grouping could be voluntary or involuntary. Groups may also be structured or unstructured. The type of group a person is a member of also defines the person.

 Living together in societies for a long time has made humans dependent upon the opinions of its own kind and this has sociological/psychological underpinnings. Its outcome has been studied under the academic discipline appropriated called “group behaviour”. It may be understood as” the behaviour exhibited by people while interacting within groups-large or small”. The dynamic processes of communication in a group tend to be different than between non-connected individuals.  Formation of rules and regulations that operate in a group ensures that a large number of people within a group act in tandem to achieve a goal that differs from what individuals would do acting alone. 

One of the crucial outcomes of people living in groups and societies for most of their organised lives seems to have been the formation of “herd mentality”. It may be described as the way in which people influence and are influenced by their peers to adopt acceptable behaviors & follow popular trends. It implies a fear-based reaction to peer pressure which makes individuals act in order to avoid feeling “left behind” from the group. This necessity to be a “part of the flow” is a very strong factor that continues to influence the behavioural patterns of people.

The results of an experiment conducted by researchers at Leeds University, led by Prof. Jens Krause, brought out the power of herd mentality . They performed a series of experiments where volunteers were told to randomly walk around a large hall without talking to each other. A select few were then given more detailed instructions on where to walk. The scientists discovered that people end up blindly following one or two people who appear to know where they’re going. The published results showed that it only takes 5% of what the scientists called “informed individuals” to influence the direction of a crowd of around 200 people. The remaining 95% follow without even realizing it. “There are strong parallels with animal grouping behavior,” says Prof Krause, who reported his study with John Dyer in the Animal Behavior Journal. “We’ve all been in situations where we get swept along by the crowd but what’s interesting about this research is that our participants ended up making a consensus decision despite the fact that they weren’t allowed to talk or gesture to one another… In most cases the participants didn’t realize they were being led by others.” This is excellent example of how the human brain is setup for social life. Even without a top-down organizer or any obvious rules, society just falls into place. (10)

Mark Earls (11) proposes that each individual does what they do largely because of what other people do or don’t do (even if our brain tells us other wise). In fact Mark Earls turns the idea of thinking then doing on its head and argues that people actually act and then think about it later. He would also argue that there’s not much point in spending too much time, energy or money asking people why they do what they do because, quite simply, they don’t actually know. We like to think that we make individual decisions and that we choose our own behaviour. However, the truth is that most of the time we are heavily influenced by the behaviour of those around us. It is a herd mentality.

As behavioural scientists have proposed, any behaviour that is constantly rewarded will be re-inforced and those that are not will be extinguished. The large no. of people who pay heavy membership fees to be part of exclusives clubs or gated communities are actually wanting to a part of “their type of people”. To be out of such communities means a loss of reputation and support system. 

Since social behaviour seems to have been re-inforced in humans over a period of time, there has to be obvious benefits of doing so. Some of the benefits may be highlighted thus:

* Security

* Recognition & Status

* Self –esteem

* Power

* Comfort of group decisions & group responsibility

INTERNET AND SOCIAL NETWORKING:

It is a fact that the internet has brought about a radical transformation in the way we interact & communicate with each other. By opening up the possibilities of instant communication, it has affected our social, cultural as well as commercial behaviour.  The rapid sharing of information through online congregations has helped the Internet to become a very powerful tool and pivot of information, recreation, and socialization. It has become a vast repository where people can find information, inspiration, like-minded people, communities and collaborators faster than ever before. New ideas, services, business models and technologies emerge and evolve at dizzying speed in this social media.

The explosive diffusion of the Internet since the mid-1990s resulted in it evolving as a robust platform and brought along technological advances. Advanced digital technology enabled people to create their own content, including images, words, video or audio on the internet. This has been supported by the falling prices of computers, digital cameras, and high-speed internet access. Easy access and widespread availability of free or low-cost, idiot-proof editing software allows people to have a live blog website up and running within minutes of deciding to do so. In fact, among the defining characteristics of social media are the blurring of definitions, rapid innovation, reinvention and mash-ups. Many websites and software developers encourage people to play with their services and reinvent them. Most of the content in these sites are generated by its members themselves. It may be safely assumed that they build, own, operate and manage these spaces resulting in a participatory boom!

Social Networking has made the world a smaller place thus making communications easier. With people connected across continents and this has resulted in instant exchange and cross-fertilization of ideas. Emerging from the net, virtual communities as social aggregations have undergone its share of evolution and started to become alternative to physical interactions. Today’s powerful technologies enable one to do business across continents without any physical movements or have friends across the ocean without having ever crossed it,  create powerful business proposals from two different continents and so on and so forth. Geographical distances are no longer a hindrance and fast becoming a myth.  

As an extension of social activities on the physical plane, online communities have widened its scope and enabled people to reach out to those who otherwise might not have been reachable. Online social networks have evolved from their original purpose of being just virtual meeting places where people can interact with one another to becoming an

important platform for innovation. With the advent of an increasingly stable mobile platform, the development of location based services and the adoption of mobile devices such as smart phones by a wide variety of users, social networks have evolved from “pure-play” web-based applications to hybrid (Web-based and mobile-based) applications and those which are based entirely on the mobile platform.

SOCIAL SHOPPING-THE NEW MANTRA

While the world got flatter and the political borders turned less obtrusive, the emerging lifestyles at least in the metropolitan cities seem to have managed to contract the active social life of many people. Work pressures and tighter deadlines combined with virulent ambition to succeed seem to have left little time on energy with people to meet and mingle with friends and acquaintances after work.  Being social animals by nature this possibly left a void in their lives. For all people constrained of time or wanting instant results, social networking came as a boon. One of the very reasons for its success itself comes from the fact that it was a solution for an existing inherent need.

The explosive growth of internet and its increased usage has naturally enabled people to aggregate on it for socialization and networking. The internet is still growing fast and its constant evolution has been forcing development of cutting edge technologies. Modern web applications had enabled the addition of easy-to-use yet, cutting edge functionalities. Driven by these new functionalities, the web has become more people-friendly and interconnected people like never before. The web is not a one-way street anymore but rather corresponds to the main idea of a participative internet. The fast growth of social networks and the successful concept of attracting previously orthodox activities by people are the central phenomenon of the transformed “social web”.

Due to steadily increasing and active participation by its members, social web services have gained enormous popularity in the last couple of years. The launch of social networking sites like orkut, face book, twitter, MySpace, and media sites like Flickr, YouTube came as a relief to most people as it opened up new avenues of interaction with other humans and demonstrate the varied functionalities of social sites.  It has made friends and acquaintances accessible from anywhere creating a wider social arc than ever before. Millions of people are logged-in at any given

point in time seeking their collective social ambrosia. It wasn’t long before organisations identified these voluntary aggregations as potential business opportunities. It wasn’t the organisations that started social shopping but it was an outcome of the current need of the masses. Many people were discussing about products on social sites significantly affecting products or services. Peer-reviews were being generated in large numbers and people lapping them up. Left without interference or influence these reviews had the power to make or mar products and for that matter companies. This trend of using public space to review products, online retail and e-commerce environments had to rapidly adapt to accommodate the opinion of people, its consumers or otherwise. Providing the opportunity to freely discuss within the sacred space of an organisation’s website was a cathartic experience for its customers. It was also the beginning of the process of integrating them within the system. Thus, a modern shop visitor can recommend products, leave comments, rate vendors or publish wish lists. This phenomenon, called social commerce or social shopping, leads to increased customer satisfaction & user participation. Successful exploitation of the social shopping concept has led to a strong demand for innovative social commerce models and concepts like crowd-sourcing, consumer generated content, live shopping etc.

Combining social activities with purchase decisions does not represent a paradigm shift because; shopping has always been a social activity. For the pre-internet generation too, shopping trips to the market were not only for purchasing essentials but also for meeting people. The marketplace thus, has always been a place of convergence. Social shopping is nothing but an extrapolation of the same convergence-albeit over the net. A layman’s definition of social shopping would be “a form of e-commerce that leverages the “wisdom of the crowds” where a large no. of people communicate, share recommendations and aggregate information about products, prices and deals”. Social shopping concept makes sense as “aggregation of information in groups’ results in better decision making and are more valuable than those generated by individuals”. The “wisdom of the crowds” generated among peers has more credibility since people tend to trust product recommendations that come from community members. Credibility of the opinions are established due to its diverse sources within the community. According to a Yankelovich Research, consumers trust friends above experts when it comes to product recommendations (65% trust friends; 27% trust experts).  Social psychology has shown that people tend to develop relationships with those who have similar interests like them, transcending demographics and psychographics. And those who have established a strong relationship with each other have the capacity to influence each others’ behavior.  Social shopping enabled by the internet is one of the most effective business ideas to come out in the recent times. Combining the power of two popular activities among the e-masses-networking and shopping, it is turning out to be the new frontier in e-commerce.

According to a Nielsen report, it has been estimated that two-thirds of the world’s Internet population visit a social network or blogging site and these activities now account for almost 10% of all internet time. ‘Member Communities’ has overtaken personal Email to become the world’s fourth most popular online sector after search, portals and PC software applications. ‘Member Communities’ has taken a foothold in every major market from 50% of the online population in Switzerland and Germany to 80% in Brazil (12). Immensely popular social marketing enables organisations to tap into consumer peer groups who communicate regularly through the Internet and is proving, in most cases, to be even more effective than advertising, by creating loyal consumer bases and providing real time consumer-to-consumer interaction. It’s not just blogs and virtual communities where customers can exchange notes; interactive websites that centre on specific brands are also being created that entice both brand loyalists as well as curious potential customers. “The web is fast moving from a publishing mode to a participation mode. It is a medium where community participants are opinion leaders who help in adopting brand values by sharing personal experience, views and suggestions with other members.

Social networks’ market power and their mass of potential customer, are forcing a mutation of existing shopping concepts & social commerce has become the synonym for the next generation online commerce and is significantly affected by a fast preceding social networking. Up until recently, Internet shops were largely a replica of traditional stores – departments and categories that largely were produced for the convenience of the shop. However, people don’t shop online in the same way as they do in a traditional retail store. Social shopping websites develop their own distinct personalities and are redefining e-commerce by influencing customers. Shoppers can find out the best deals and the best items for specific purposes. E-shopping sites are responding to the online behaviour which is much more social. Affected by changing customers preferences, enormous popularity & expansion of social networking, conquest of niche markets, online sellers have created a new generation of business and sales concepts within the past few years, which differ fundamentally from conventional e-shops.

Social shopping as a venture has evolved over time. As online shopping gained steam in the early days, pioneer e-merchants like eBay and Amazon gained control, and remain very much in that position, of the market. Companies are using social shopping to increase membership, empower & engage community members, stoking buzz, engaging influencers, nurturing brand advocates; network listening, market research, product development, offer enhanced customer service and thus, develop a two-way communication channel between the community and the decision makers of the company. Although essentially companies create online communities to strengthen their emotional connection with consumers, they’re obviously not eliminating the idea of a potential sale. After all, the greater the engagement with the brand, the better the chances of positive action.

FEW BENEFITS OF ENABLING SOCIAL SHOPPING:

(1) Ability to influence consumers at the point of decision: Most customers visit social sites to check for peer reviews and recommendations about items they want to purchase or check the same on e-commerce sites. Influencing participants to positively review products help in affirmative shopping decisions.

(2) Increased Web traffic- One of the selling points for retailers social shopping is its collaborative nature. Shoppers can invite one or more friends, increasing the number of site visitors. The more time the website can engage visitor’s attention—the more likely they are to buy.

(3) Driving Immediate Purchases- While some online shoppers may only research products but not necessarily buy; positive reinforcement from a friend or family member could convince them to make the purchase at that moment.

(4) Increased Conversion Rates/Multiple Purchases- Friends often share common denominators and preferences. If a shopper shares their prospective purchase with another, both may be likely to buy the product.

(5) Enabling Shared Discovery: Each of us has a finite attention span and different aptitudes for finding the right product. In some cases shared discovery simply means your friend puts products in your basket. In other cases ideas start flowing and build off one another: One may find a good pair of jeans but not a party shirt to go with it. One may seek the help of a friend to choose a good one. Thus, a perfect outfit may be selected by involving close ones.

(6) Providing Purchase Validation: On the simplest level, shopping with a friend provides a style check. As shown by Barry Schwartz in The Paradox of Choice, the incredible range of styles and products available generate a plethora of choices, which makes it difficult for shoppers to choose the product that is right for them. Shopping with friends can provide validation that one would, in fact, look good in a short denim skirt.  

(7) Making it Fun: Young people go to the mall together virtually every weekend, even though the stores are generally the same, the merchandise doesn’t change that often and they have little money. The process of shopping together provides a framework for their social interaction. Every visit to the mall results in conversations with friends, discovery of new products and a unique experience. Up to now retailers have been at best marginally successful imbuing the online experience with peer-to-peer interaction.

 CONCLUSION:

The universe has been evolving since its formation and along with it everything that survives on it. As the saying goes “change has been the only constant”. Evolution affects everything-animates and in-animates. As far as humans are concerned despite our resistance to any change, we have been forced to change constantly.

Internet has brought about a renaissance in human way of life. It has moved on from being a practical communication tool to something that has the capability to profoundly influence large no. of people’s beliefs and perceptions. The power of the “Net” has become too important to ignore and due to the large no. of people interacting on it, one can only ignore it at ones peril. The Net has been cast very wide and its popular has been on the rise. It has radically affected modern society and influences the lives of billions of people, and that number keeps growing rapidly. It has also become a powerful business engine capable of changing the dynamics of every industry from banking to retailing. Over the last years, a boost of innovative developments pushed the social web, an environment where users collaborate and participate online. The spectrum reaches from smaller social media networks to more complex multi-blog communities and fully integrated social commerce platforms.

Traditionally, retail and CPG industries are known to be slow changers. Yet today, the dynamics of the industries are shifting extremely fast driven by the changing demands of the rulers-Shoppers! E-commerce has evolved dramatically since its emergence in the mid-1990s as a retail-driven, transaction-focused channel, completely separate from a merchant’s “real” stores. By embracing technology faster than most retailers, the consumers are driving retailers to enhance their support of social shopping.  This adoption is resulting in a consumer-technology-driven retail transformation.

Contemporary social shoppers have a broad array of online tools at their disposal to exchange advice and opinions about products and services. No longer shackled to email or instant messaging, social shoppers write reviews, comment on those reviews, post blogs, and even create and post videos—if not on the retailer’s site, then on a variety of comparison sites ensuring its rapid transmission.

Enabling social shopping has become an important criterion for sellers because; social interaction plays an important role in the buying process. Peers can help each other find products of interest, and in decision making whether to buy and also make the shopping experience more fun. Social validation is a foundational piece of a shopper’s decision to buy a product. In the online world, shopping has largely been a solitary experience. This has prompted online stores to change their focus from being purely transactional to becoming experiential. These changes indicate a radical shift in power-from the sellers to the buyers re-affirming the power of online communities.

Social shopping is a win-win opportunity for its users-members as well as organisations. It offers the opportunity for everyone to acquire or disperse information about products they intend to buy or sell. As technology develops more robust methods for online social interaction, consumers will expect this social software to flow into their online shopping experiences. To be successful, online retailers should facilitate the types of opinion gathering, collaborative discovery and social shopping experiences we see in the offline world.

Consumer engagement within social networks has the potential to change the way consumers are targeted, not just through the digital medium, but through all forms of traditional media. By supporting the key decision points in the shopping process consumers are more engaged and get the affirmation they need to click the buy button. Social or collaborative shopping is not only helping retailers boost sales, but it has many short and long term benefits for online retailers, creating the opportunity to impact the shopper mindset and increase lifetime value.

REFERENCES:

(1)     http://www.statistics.gov.uk/pdfdir/ecomnr1108.pdf

(2)     Morgan Stanley, 2009

(3)     The Economist Intelligence Unit, 2009.

(4)     comScore, February 2009; IMRG Capgemini, March 2009; TNS Infratest, November 2008; FEVAD, January 2009.

(5)     JP Morgan, January 2009.

(6)     ITU World Telecommunication/ICT Indicators Database, 2007.

(7)     Internet Retailer Survey, September 2008.

(8)     Rosetta, January 2009.

(9)     Econsultancy, March 2009.

(10) Vito Rispo, Understanding the Human Herd Mentality, http://www.adsavvy.org/understanding-the-human-herd-mentality/

(11) Mark Earls, an expert in human behaviour, communications and strategic thinking has explored the link between human behaviour and successful and effective strategies probably more than anyone. He is the award-winning author of several books on the subject including Herd – How to change mass behaviour by harnessing our true nature.

(12) Global Faces and networked places, A Nielsen Report on social networking’s new global footprint, March 2009.

(13) NCR research.

© Sanjai velayudhan

Endnote: The author would like your feedback-both bouquets & brickbats. Write to me- sanjai.velayudhan@gmail.com.

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Sanjai Velayudhan -
About the Author:

A behavioural trainer by education and a loyalty specialist by profession, Sanjai has PG qualifications in Training and Performance management from CLMS, University of Leicester.

Sanjai is a compulsive writer and has recently chosen articlebase to put his thoughts together. He also writes papers on loyalty programmes and the psychology behind it. To read some his papers, please visit:
http://www.itcinfotech.com/Loyalty-Solutions/Home.html.you can also watch his talk on loyalty-www.24framesdigital.com/winningedge/260608/you can also write to him on sanjai.velayudhan@itcinfotech.com

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