Friend’s Recommendation: New Face Of Online Retail

The online purchasing pattern has evolved a lot since the advent of e-commerce. There has been a major shift in the way people decide to buy a product, basing their decision on various sources of information. According to a Nielsen survey, people show only 37% trust in the online banner ads shown on the websites. People are more likely to believe the consumer opinions posted online and the highest level of trust is shown when people receive recommendation about a product from someone they know. The trust level is as high as 90% when our friends recommend us something.

This increase in the Consumer Generated Media has major implications for the online retail stores. Most of us go to online review sites to get the user comments but these comments are not entirely reliable since they are from people whom we do not know. Below you can see the Implications for Retailers and other ways.

What’s New?

The new concept of SocialShopping, where people ask questions regarding their purchase about anything under the planet to get some reliable recommendation from friends on social networks like Facebook and Twitter is gaining momentum.

Let’s say you want to buy a recently launched Windows7 mobile phone. If you go to online review sites, you will get both positive and negative feedback about the phone’s ease of use, graphical display and processor speed. This is bound to make you confused and you might end up giving more weight to negative comments and do not buy at all.
But if you get the reviews from friends whom you trust, you will be able to make a more informed decision about your purchase. As evident from Nielsen survey, this is the reason why people trust their friends more than anonymous reviewers.

---

Implications for Retailers

This provides with new business opportunities in the area of social recommendation by providing users a platform where people can share their purchases with their friends, ask for instant recommendation for a product online or can recommend their recent shopping experience with a particular online retailer. The retailers are also looking to tap this category of traffic to their web sites by collaborating with social recommendation sites like Shop Socially.

Currently, ShopSocially is the only website that allows users to ask recommendations by asking a shopping question. They can ask about a particular product review or ask for recommendations for any particular category of product that they are looking for.

Since friend’s recommendations have the highest trust level, this means that the traffic from friends recommendations to online retailers will convert 2-3X times better than that from online ads. Ignoring social recommendations is no more an option for online retailers. They need to harness the power of social recommendations which goes beyond the paradigm of Facebook and Twitter.

This will help them in 3 ways :

#1 – Generating more traffic : Social shopping can generate relevant traffic to the retailers website. Imagine getting 10-20 clicks extra to your website for every purchase made by a user. This will be possible only if users are provided with a simple and quick way to share their purchases with their friends on social network.

---

#2 Increasing sales: If you are able to generate few extra clicks for every purchase made on your store and keeping in mind the fact that this traffic is a high quality traffic which is more likely to get converted into sales, your sales are definitely going to surge. This is an opportunity that every retail business, whether online or offline, would definitely want to grab since the cost involved is very low as compared to online advertising.

---

#3 Increased product ratings in Search Engines: If your products prominently feature on sites like Facebook and Twitter through sharing channels of social shopping, your products and websites will start showing up prominently in search engine results. And who would hate to have this extra high quality traffic to their website at no additional cost.

So next time you want to go shopping online, don’t forget to share your purchase with your friends;retailers out there, make sure you are not missing this new wave of this consumer generated media.