It was a very good year for e-tailers, as comScore Networks reports that online retail spending in 2006 reached $102.1 billion, a 24-percent increase from 2005, with holiday sales up 26 percent to $24.6 billion.
As Web shop owners regroup after the rush, it makes sense to start planning to capitalize on trends that will roll over into the New Year. These include the popularity of luxury items as the market matures, the success of niche sites as search-engine marketing becomes more sophisticated, allowing shoppers to find obscure or highly specialized products, and the influence of social networking sites such as MySpace and YouTube.
In fact, one of the biggest trends to emerge in 2006 was the impact of social computing on online sales, sometimes called social commerce. Let's review: Compete Inc. reported back in October that social site members listen more to peer feedback than to any other source of information. The marketing research company found that, "S-commerce innovators are using one of six strategies to integrate consumers into their sales and marketing efforts: Branded micro-sites, customer reviews and ratings, online customer forums, peer-to-peer transactions, product-focused blogs and community-created products."
Meanwhile Hitwise USA in December showed that Web shops were getting 6.2 percent of their traffic from social networking sites, up from 2 percent during the same period the year before. Bill Tancer, HitWise general manager, called it the "most remarkable trend we've seen" during the holiday season.
High Five: Social Computing and eBiz Basics Apparently, online merchants are paying attention to the buzz. Social commerce was tapped as a "client choice" topic by Forrester Research Inc.'s customers, resulting in a report titled "Five Ways Social Computing Can Boost eBusiness" released yesterday by e-commerce doyenne Sucharita Mulpuru.
"A slew of venture capitalists and investors jumped onto this trend, helping to create an explosion of Web sites based on a community-driven component — PowerReviews, Prosper Marketplace and Yelp are just three of dozens," says Mulpuru. "This begs the question about the role that tools like blogs, tags and wikis play in the business, particularly online selling."
The report summary concludes that these tools can help in product development, market research, competitive intelligence gathering, search engine optimization, and most importantly, revenue generation.
Product Development The two biggest advantages of engaging customers, according to the research, is that it generally involves the most loyal shoppers and can be cheaper than rating, testing and even creating a product on your own.
"For example, eBags gathers information from its tens of thousands of customer reviews and incorporates this feedback into vendor scorecards, which are then used to guide improvements in product design," states the report.
In another instance, a retailer uses a virtual store in the online role-playing game world called Second Life to test new product releases. Of course Amazon has been using feedback from shoppers to contribute to product descriptions for some time.
Market Research For online merchants, the feedback customers provide on blogs or at a site's review page is valuable because it is more honest than what you would garner from focus groups or surveys, says Mulpuru.
Competitive Intelligence In regard to keeping an eye on the competition, information that is freely available on the Internet amounts to what the analyst calls "the equivalent of surreptitiously procuring the questions in advance of a major exam."
Blogs and message boards such as Engadget and Slashdot are cited as examples of sources for breaking news on dates and venues for product launches, shifts in management and even research and development ideas in the pipeline of both large and small businesses.
SEO "Relevant product user-generated content, be it in the form of customer reviews, tags or blogs, has the ability to improve the amount of valuable information on a page (e.g., the content-to-HTML-code ratio) that search engines are more than likely to spider," according to the report.
Revenue Generation Though by its very nature social computing is a form of marketing that puts control in the hands of customers rather than vendors, it can still be used to add value to a site, which in turn, should increase traffic and enhance the overall relationship with the brand, hopefully resulting in a boost to your bottom line.
Michelle Megna is managing editor of ECommerce-Guide.com.
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