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Hitwise Intelligence - Sandra Hanchard - Asia Pacific
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Web 2.0 Retailing
November 30, 2006
A study I've been working on this week shows there is an opportunity for Australian retailers to incorporate Web 2.0 features online such as social networking to increase traction amongst consumers.
According to Hitwise, visits to social networking websites have increased steadily since the beginning of February 2006 to account for 2.2% of all Internet visits for the week ending 25 November 2006. Shopping & Classifieds websites accounted for 6.17% market share in visits in the same time period. There are far less social networking websites however compared to retail sites, indicating the sheer pull of social networking amongst Australian Internet users which retailers could be tapping into.
Market Share of Visits to Shopping & Classifieds (left-axis) vs Social Networking Custom Category (right-axis)
Retail Websites with Web 2.0 Features
In the Shopping & Classifieds - Rewards & Directories industry, there are several price comparison websites that offer Web 2.0 features such as user ratings and reviews. ninemsn Shopping which was the leading site in the category for the week ending 25 November 2006 with 14.8% share of visits to the category, allows users to post comments linked from their hotmail account, leveraging their significant user-base.
Another Australian example is MyShopping.com.au, ranked as the 5th most popular local website in Rewards & Directories, that allows users to store product and review information as part of their membership. Social shopping websites are beginning to extend this concept such as US start-up, Kaboodle. Kaboodle is developing search technology that summaries users' collected shopping information that they can easily act on at purchasing times. Kaboodle also allows users to share their collectibles, a feature of their partnership with eBay.
Benefits of Linking Retail to Social Networking
In addition to price-comparison websites, retailers may also partner with social networking websites that have the advantage of an established user-base with local marketing, such as MySpace. Retailers may also partner with social networking sites that attract users with a propensity to shop online. According to Hitwise Lifestyle data, users in the "Fashionably Wired" Group, who are characterised by high-disposable incomes, were three times more likely than the online population average to visit Google's social networking website, Orkut. Retailers may tap into this local audience to target their desired consumer segment. These are some tactics that will be needed to lift visits to local Shopping & Classifieds websites which in Australia account for 68% of visits, compared to 85.7% in the UK and 98.3% in the US.
There are some positive local trends such as classifieds website, Cracker, operated by Fairfax Digital. Similar to US website, Craigs List, Cracker offers both free discussion forums and classifieds ads tailored to local user groups. Cracker ranked at 2nd position in Shopping & Classifieds - Classifieds for the week ending 25 November 2006 and 21st in the parent shopping category.
What's Ahead?
In 2007, we can expect increased levels of online engagement by Australian users with the rise of consumer generated media. The increasing sophistication of search engines with personalised information and summaries based on commercial intent will make the Internet an increasingly relevant channel for shopping. Retailers in the Australian market need to start incorporating Web 2.0 into their marketing and online distribution strategies.
Posted by Sandra Hanchard at 11:59 AM
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Comments
Hi Dejan, thanks for your thoughtful comments.
I agree that the element of 'control' over marketing and business strategy in relation to web 2.0 is a tricky element. The way I see it working is for online consumer feedback, including negative commentary, to be absorbed into the product development cycle, with the objective that it leads to products better-matched to consumer expectations and to fuel innovation. Full transparency would however require a cultural shift and is perhaps too idealistic a position. For the status quo, as consumer decisions are strongly influenced by the voice of their peers, for a retail business not to maintain some degree of control would be hazardous. I think some editorial moderation is an OK concession - without jeopardising the integrity of honest consumer feedback.
Posted by Sandra Hanchard | December 5, 2006 05:32 PM
Hi Sandra,
I stumbled across your blog entry and it was certainly provided an educational read from an Australian perspective.
I agree with your comments regarding finding the happy medium between giving a user carte blanche to enter/edit information and a heavily moderated website. I believe that in the US, Yelp is a website that has successfully managed the needs of both its users and businesses by finding an optimum balance between the two.
Yahoo Local (US) has recently become more wiki-like, providing users the ability to add/edit the information on a business listing (I discuss this further in my blog here ).
I think once Australian retailers get over the initial fear of having an online 'reputation', they will soon seen the benefit of these consumer feedback websites.
Cheers,
Mark
www.raveaboutit.com.au
Posted by mark | January 18, 2007 07:44 PM
Hi Mark,
Interesting website you have there at raveaboutit.com.au. Integrating consumer WOM into business directories will have the potential to give specific listings a premium value (depending on the feedback!). It'll be interesting to see when some of the major AU directories / classifieds integrate reviews to build user traction.
Posted by Sandra Hanchard | January 19, 2007 12:07 PM
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Hi Sandra, I find your articles very interesting and have your page bookmarked so whenever I find time I drop in to see what's new. Web 2.0 retailing sounds like a logical step in the evolution of the web, however I don't see it fully integrate with e-commerce or stop there either. I imagine its influence rather as a 'light brush' which will then morph into something else. Hypothetically let's say an online retail company fully embraces the web 2.0 philosophy. How could they then say that they are in control over their marketing and business strategy? It sounds more like leaving yourself in the hands of a randomly moving cluster of individuals. Google did that very successfully however we're talking about retail industry here. On another point, concepts such as Wiki have been imagined with best intentions and unfortunately got exploited to the point where we now have Wikipedia who is most strictly moderated by designated editors which takes it one step backwards as far as the concept goes. The reason I mentioned Wiki is that I find the whole area too chaotic to be controlled and predicted. Maybe the solution is in the light symbiosis of the web 1 and 2...
Posted by Dejan Petrovic | December 5, 2006 03:46 PM