Boundaries are blurring in many industries. For an example see our article “Who’s Looking After You?” which focuses on how industry boundaries are blurring in the health and wellness value space. Value in this case being defined from the consumer perspective.
Put a lot of consumers together and you find communities of choice emerging, often enabled by social networks. And we are spending increasing amounts of time on these networks and in these communities. Nielsen estimates that nearly 70% of online users globally visit social network sites, and that social networks/blogs now account for one in every four and a half minutes online — or 22% of total time spent online worldwide. The average visitor spends 66% more time on these sites than a year ago, almost 6 hours in the month of April 2010 versus 3 hours, 31 minutes last year.
Where there are lots of consumers, there are also significant marketing and sales opportunities. Reaching these communities is a key priority for big brands, although navigating the social media landscape has proved challenging as the communities are fluid, it requires interactive conversations rather than one way advertising, and a prerequisite for such dialogues is trust. Trust and peer to peer information sharing is at the heart of many of these communities — and trust in businesses is low and declining in recent years. However, many brands have overcome these hurdles and started to build a strong presence in social media, for example building fan bases in the hundreds of thousands on Facebook, the leading social network with an estimated 540 million unique users worldwide (April 2010).
A fan base is one thing but turning this into revenues and profits is another. Many business models have been tried, but as one recent high profile example suggests, e-commerce in the social media environment is likely to turn into the next big battleground. Proctor & Gamble has partnered with Amazon to launch the Pampers web store on Facebook, an e-commerce tab on the fan page which offers consumers a way to shop for diapers and other baby and personal care products without leaving the comfort of the site. Amazon’s webstore e-commerce platform powers the store, with consumers able to use their existing Amazon account details and able to rely on Amazon’s tried and tested review, payment and delivery capabilities.
While this is certainly not the first e-commerce platform on a social network, with three such heavyweights involved, the odds are that this will be the first of many such webstores to come. This raises some interesting questions: Will consumers who have participated in creating a community around brands such as Pampers embrace or reject the idea of “commercializing” the community? What does this new channel mean for retailers, who are being cut out of the equation? Will they attempt to fight back via social networks or in other ways? Is there real value to the consumers in shopping in a “piecemeal” way among categories of products or do they just want to get all the shopping from food to diapers done in one go? Even if piecemeal shopping is not the big money-spinner, does being present, innovative and active enhance the brand?
This is an experiment to watch for all brands, retailers and internet services companies. We will follow with interest. And do feel free to let us know about other examples you come across.
P.S. P&G is not the only company look to generate sales from social networks. In checking out a conference I noticed that the organizers had created a linkedin group where possible and actual attendees could meet and exchange ideas. Bringing like-minded people together clearly has advantages as the discussions in this group are very active (though we shall see post-conference) — and from the sales email with a VIP code that I received after joining the group, it certainly generates good leads.