The popularity of social networking is soaring and retailers want a slice of the action. Katie Kilgallen assesses the benefits
Social networking sites are no longer the sole preserve of the technologically savvy teenager. This online media is rapidly becoming a daily part of an enormous number of people’s lives, be it in the form of discussion forums, networks, video streaming, podcasts or blogging. As the number of Facebook and MySpace fans grows by the day, more and more retailers are jumping on to the networking bandwagon and incorporating them in various guises into their own sites. But to what extent do they add value to a retailer’s online offer?
Many retailers have entered the fray already by setting up communities attached to their existing sites. Earlier this month, Tesco launched its Baby and Toddler Club forum and, already, subjects ranging from weaning to crying babies have attracted hundreds of visitors.
Waitrose was heralded as launching the first Facebook for foodies when it set up its online forums at the beginning of the summer. The supermarket says it aims to satisfy foodies’ desires to swap tips, share recipe advice and generally celebrate food. Features include discussion groups, scrapbooks and personalised cookbooks.
Waitrose marketing manager for internet and e-commerce Fiona Hall says the benefits are wide-reaching. “They give users increased freedom to talk to us – and each other – in an informal, honest and immediate way,” she says.
Sainsbury’s, which launched a similar online community section more than a year ago, says a “strong proportion” of the 1.2 million unique users who visit its web site every year visit the online forum. Sainsbury’s online brand manager Sarah Squire says the involvement of consumers has exceeded expectations. “We want to develop this area of our site further next year,” she adds.
However, later this year HMV will take the social networking idea one step further when it becomes the first major retailer to launch a fully fledged, independent social network (see box). Head of online Justin Moodie believes being focused on a specialism such as food, film or music will be the key to its success.
Warehouse Express chief executive Colin McCarthy agrees that retailers’ online communities work best when they are associated with a specific “product-led hobby”. The camera e-tailer started its own community for photography professionals and enthusiasts at the beginning of the year. The site has received more than 50,000 posts so far. “It shows people were crying out for it,” he says.
In a slightly different take on a social network, Virgin Megastores in the US has adopted the unique approach of mixing its press room with social media through the creation of its Megastore’s Social Mashupmedia Newsroom (SMN). Launched at the beginning of September, the site is for both journalists and customers. It includes the traditional elements of a company press room and combines them with video streaming, audio podcasts and blog content. In an unprecedented move, customers will also be able to contact the company’s top executives directly through a new feedback system.
“Our customers are early adopters and entertainment enthusiasts. We wanted to reach out to them and the millions of online bloggers, shoppers and members of the social web,” explains Virgin Entertainment Group vice-president of marketing Dee McLaughlin.
The company has been experimenting with online and blog ads for some time, but felt it did not go far enough. “It felt like a one-way street. We needed a way for our customers to reach us in a fun and compelling space,” says McLaughlin. The site will be closely linked to the retailer’s e-commerce site when it launches later this year.
Anthony Mayfield, head of content and media at search engine marketing firm Spannerworks believes external social networks such as Facebook, MySpace and Bebo are becoming increasingly important for directing traffic to retailers. However, he warns that when looking at how to tap into the benefits, retailers must be sure it works for their specific brand. “All people see is another media channel, but it is a very complex environment. It’s not just a matter of saying: ‘I need a page on Facebook’. It’s about learning what works. Too often people say: ‘I need a blog’, or ‘I need a shop on Second Life’ and you just have to ask why?” says Mayfield.
Aside from retailers launching their own networking sites, the existence of external sites brings huge opportunities for retailers. Data from internet research outfit Hitwise shows that Facebook, for instance, ranks 20th in terms of delivering traffic to retail web sites. In total, 4 per cent of people leaving Facebook go to a retailer and this number has doubled during this year.
Hitwise research director Robin Goad explains: “First, this is probably because these sites are so popular right now, but second, it’s because people discuss their interests on these sites and people will want to purchase things relating to that.”
Some Facebook aficionados have set up their own network groups dedicated to their favourite retailers. River Island has a strong following on the social networking site, with several dedicated groups, including “Addicted to River Island”. As a result, Facebook is the 10th most popular site visited before River Island’s web site and the amount of traffic it sends there has increased five-fold during this year.
At the last glance, Facebook group the “Primark Appreciation Society” had 83,746 members. Discussion topics include: “Get Primark a five items or less queue”; “Where there should be a Primark but isn’t yet”; “When will Primark do plus sizes?” and even: “I don’t care who suffers. I love clothes!”.
Mayfield cites fashion retailer H&M as an example of a brand that is capitalising on the opportunities. Its sponsored page on Facebook has 20,467 members. It features video podcasts, a virtual dressing room where users can create a model of themselves and try on the latest collections. It also features promotional material for its Sims2 H&M Fashion Stuff computer game, which allows players to update their Sims wardrobes with H&M clothes, create their own retail boutiques and catwalk shows.
“The Sims is an amazingly popular widely played game and it has sparked a lot of interest in communities who talk about it,” says Mayfield. He believes retailers need to follow their example and think about how they can be more relevant and useful to customers. “A lot of retailers are focused just on point of sale. It should be about being relevant and useful – playing the long game.”
Tuning in to discussion boards can give retailers a good insight into what their customers are doing and talking about. Goad says: “It’s an authentic voice of customers. In some ways it’s better than a focus group because they are always a bit artificial.”
However, simply focusing on the large general sites such as Facebook can distort what is happening out there. As Mayfield says, it’s not about the size of the site, but those which your customers visit. The Money Saving Expert forum, for instance, is not as talked about as Facebook but is very vibrant online. Almost half of the Threshers vouchers being circulated last Christmas came from its web site.
Mayfield says that everyone is “trying to get their head around this new fast-paced, exciting environment”. He adds: “Some retailers are behind the curve. Others aren’t and are probably just a little bit ahead.”
Years ago, many retailers were sceptical about whether e-tailing would work at all. They have clearly been proved wrong. As Moodie says: “Social networking is here to stay, but it’s in its infancy.” Those who were slow to realise the scope of online retail will hopefully have learnt their lesson.
Case Study: HMV
HMV’s social networking site, due to launch in November, is one of the key initiatives laid down by chief executive Simon Fox to help reinvigorate the business. HMV believes it will be one of the first, if not the first, to launch a social network dedicated to film and music enthusiasts. When Fox assumed the helm of the retailer last September, he came to the conclusion that HMV had effectively been running a social network for people in its stores for 80 years. He challenged everybody in the business to look at what that meant for the group’s future. HMV head of online Justin Moodie explains: “Many people’s first memory of music was coming into an HMV store – that’s a powerful tool for us. The future of that is social networking.”
The site will operate independently and be focused on film and music. “It’s powered by HMV,” says Moodie, “but it’s for our customers and focused on the things they love.”
HMV has recently rebranded the company, changing the logo, strap line and the look and feel of the store. Moodie says: “It’s all part of getting closer to music, film and games and social networking fits with that. It’s about taking the social network we had in stores and putting it online, creating a place where people feel good about HMV, where they can get closer to us and we can get closer to them too.”
He adds: “People can use Flickr to upload photos, Facebook for arranging to meet up with people but, in terms of film and music fans, there’s a gap in the social network offer that we think we can fill.”
Moodie says it will have all the basics of a good social networking site – the ability to add friends, talk to people and set up meetings – but will also feature “totally unique” elements. “We are keeping a lid on that, but it will allow people to talk about the films and music they love in a completely new way,” says Moodie.
Marketing-wise it will be a soft launch, followed by a hard campaign at Christmas. There is no set time for phase two; it will be a case of finding out what users do and don’t like and adapting accordingly. “We know that social networks need to evolve to survive,” explains Moodie.
The retailer is working on a name for the site, which will be run by an independent group within HMV that effectively manages itself. There will be no direct links to the e-commerce site, but Moodie admits that HMV will have “preferred partner” status.