Opportunities and challenges for e-commerce in 2011

Is there anything left online without the word “social” in it? 2010 was the year social media exploded, transforming all of our online activities. Brands have started to allocate increasingly bigger parts of their budget to integrate social media into all aspects of their business from marketing campaigns, to customer service and of course, sales.

The evolution of traditional commerce to social commerce for small, mainstream and luxury brands has made its baby steps in this past year, but seems to be growing at an impressive rate. Customer experience is personalized and customers themselves are the new media outlets. Although we’ve seen the retail landscape change drastically in 2010, it seems like, with the fast growth of mobile and the deep influence of emerging technologies in our day to day lives, that what we’ve witnessed so far is merely a preview of the exponential changes that await us.

According to a recent report by L2ThinkTank on GenY affluents’ digital habits: 63% use social media to engage with brands, more than 50% say that Facebook, blogs, and brand videos affect their opinions about products, while websites are as influential as physical stores in shaping Gen Y sentiment, second only to friends’ opinions. So what trends and challenges lie ahead?

Avoiding the Old Media trap: Social Media offer an amazing opportunity to listen to customers and engage with them, building strong relationships. In order to do that though, companies need to adapt their culture to the spirit of conversation in Social Media, as traditional marketing tactics won’t cut it anymore. After all, there is no point in buying a Ferrari if you intend to drive it like a Matiz. No matter how innovative a communication platform is, it is nothing but a tool, waiting to be utilized. Social Media acts like a Swiss army knife of communication tools, but it won’t change  your business if you use them solely as a loudspeaker to promote your products and offers. Having sponsored celebrity tweets or payed blog posts raving about awesome products is not that much different from a print advertorial campaign. The challenge, apart from listening and learning about your customers, is to find creative ways to engage online creators, like DKNY did with #CozyStyleOff breakfast, where 15 influential fashion tweeters like fashionista_com, nitro_licious, and YuliZ participated in a style competition. The concept was to give them access to the entire store in order to create a head-to-toe look that incorporated DKNY’s “Cozy” cardigan wrap sweater. Photos of the completed looks were posted on DKNY’s Facebook page and a week’s “likes” showed the winner of two shopping sprees. Another example is the 4AM Finds at Alice + Olivia’s e-shop, a column where they ask people like Jack Dorsey to curate their own set of finds. Will social escape the traditional media fate in the coming year?

Providing a unified shopping experience: Social commerce integrates social media into e-retail sites and adds e-commerce functionality to social networks. We often see one of these two happening, but not very often both. For instance Levi’s has integrated Facebook into the Friend’s store but doesn’t have a Facebook store, (referred to as F-store), while JCPenney has a fully functionable F-store, but hasn’t integrated Facebook connect on its e-shop. E-tailers have also been experimenting with alternative platforms to market and sell their products, like Tumblr and YouTube. Taking into account that multichannel shoppers spend 82% more in each transaction than those who only shop in store, retailers face the challenge of achieving the same feel in each one of these facets of the customer’s experience, by using single logins (not having to login and out every time they change a shopping channel), providing great customer service, fast checkout and customized payment pages.

Privacy: It’s true that Facebook’s constantly changing privacy rules and instant sharing through mobile has made people, especially younger generations, more open to sharing, but privacy still matters to most, with more than 71% of social networking users ages 18-29 changing their privacy settings to limit what they share with others online. The latest hacking wars with high profiled victims like Gawker Media, McDonald’s and Mastercard, as well as accidents like the Blippy “leak” of credit card numbers on Google, have only raised more concern over personal data safety. Trust over customer’s data will be hard to gain and retain over 2011, the more information focused brands ask customers to share through social features. Provide your customers with a well written and easy to comprehend privacy policy, so they know what they share and with whom, and privacy options so they can opt-out from sharing certain levels of private information. Information wars will be a hot topic in 2011 with multinational brands taking the heat, so be prepared.

Customer Engagement: As social networks supersize, brands will need to find ways to rise above the noise and keep an ongoing dialog with their customers. The plethora of social networks will not only confuse the consumer, but also the e-retailer. Brands will have to monitor social media platforms and define which ones fit their message best, as a lot of them with drastically different philosophies seem to thrive equally in popularity. For instance group bartering Groupon, and exclusive Gilt Groupe target different demographics but both do exceedingly well. A trend that soared in 2010 are flash sales, limited time offers and pop up stores, for which the real time feeds of social media seem to be the perfect match, like in the form of pop-up F-stores. Also e-retailers need to provide their online fans with exclusive access to unique content like Michael Kors has done on Facebook, by producing click-and-shop videos for the holiday shopping.

Mobile Commerce: As competition heats up in the smartphones and tablets market, mobile commmerce is getting a bigger piece of sales. eBay has emerged as a leader in mobile commerce for 2010, reporting that on Cyber Monday, it saw a 146% increase in mobile transactions compared to last year. Amazon has also found success on mobile with more than $1 billion in sales for its second quarter, which ended on June 30, 2010. Best Buy also has a very popular app that can scan 2D bar codes in store and and provide product info, offers and rewards. Fashion brands like DVF offer mobile shopping as well, with DVF’s exclusive promotions for its mobile shoppers.

The challenge of 2011 will be utility apps. Users are deleting more than half of downloaded apps within the first month, so e-retailers have to focus on functionality in order to engage their customers in the long run. Mobile should act like the “glue” between the offline and the online world, as many shoppers use it while shopping in store to discover product information, read reviews and compare prices and offer an intimate and personally relevant customer experience.

Crowdsourcing: In 2010, crowdsourcing was used in marketing campaigns, like Doritos maker Frito-Lay’s competition for its Super Bowl advertising, and also for product development, like Rebeca Minkoff’s challenge to Polyvore’s community to redesign the next Morning After Clutch. Most of all, crowdsourcing has become integral part of companies’ cultures making them social to their core, a great example of this Toyota’s invitation for suggestions on how the brand’s technology can be used for good in unexpected ways, My Starbucks Idea and LEGO click. In 2011 brands will have to figure out ways to leverage crowdsourcing in product design, while maintaining a strong brand identity.

Get into the Game: 2010, with the rise of Zynga, V-commerce (the commerce of virtual goods) and the popularity of Foursquare badges, was also a banner year for the school of “gamification”, a number of entrepreneurs and marketeers used game mechanics to engage audiences and bring on behavioral change. Most recently, indie fashion retailer Moxsie, created custom Facebook badges to promote #BuyerChat event and entice their followers to act like virtual buyers. Late this year the launch of Microsoft’s Kinect, a controller-free gaming device that senses the space, movements, faces and voices in front of it, has already made a big impact on the market and businesses are already competing on finding innovative uses for it, like Chevrolet’s test-drive “Kinect Joy Ride,” Sprint’s co-branded retail experience “Kinect Adventures” and T-Mobile’s product placement throughout “Kinect Sports”. Looks like 2011 is game on for e-commerce!

What do you think will be the hottest trends and biggest challenges for e-commerce in 2011?

This article is supported by Dell