Opportunity Is in the Bag

Monday, May 3, 2010; 12:00 AM

Earlier this year, Giantnerd, a Boulder, Colo.-based outdoor gear and apparel e-tailer, spotted some consumer complaints on both its website and Facebook page about a unisex day pack it sold. Customers' posts indicated the straps irritated their skin. The chief executive officer of this self-proclaimed "social shopping community powered by love," Randall Weidberg, informed the product's manufacturer. Using the online feedback, the two parties collaborated on how to improve the day pack. The manufacturer immediately modified the item, in time for its next production run.

This story exemplifies social shopping--the convergence of social media and e-commerce--at its best, says Judy Strauss, associate professor of marketing at the University of Nevada, Reno, and co-author of the study "Radically Transparent: Monitoring and Managing Reputations Online."

"Social media creates great opportunities, not just promotion opportunities and opportunities to win business from competitors, but also conversations with prospects and customers in a way that is much more efficient than it used to be and that can help a company grow and improve," she says.

The Mighty VoiceSocial shopping sites--Kaboodle, ShopWiki, ThisNext and others--aim to provide consumers with an online shopping experience that's similar to or better than one they'd have in a store. Each approaches it differently. Giantnerd, for example, lets the online community--through members' comments--determine the products Giantnerd sells, modify the Giantnerd site's design and generate ideas. Giantnerd rewards people for participating on its site (from reviewing products and creating lists to posting pictures and starting discussions), with Nerd Dollars, which can be used toward future purchases, and Social Rank Points toward reaching the ultimate title of "Giantnerd."

When online retailers engage in social media correctly, both they and the online community benefit. Retailers gain ideas for new products or improving existing ones--essentially free market research, Strauss says. Customers receive the merchandise they want, in a personalized way, and enjoy the social shopping experience. They praise, discuss and share the brand, online and off.

Problems, however, can arise when an e-commerce brand doesn't deliver what consumers expect, Strauss says. The online community may vent, expose and criticize, and its cumulative voice is loud and powerful. Negative feedback can lead to companies losing customers, experiencing drops in stock value and even having to close permanently.

"I call social media 'word of mouth on steroids,'" Strauss says. "With the online community, brand experiences spread like wildfire."

For example, in April, a Western Michigan University student created a Facebook dedicated to allegations of illegal practices by a local towing company. In less than a month's time, the group grew to more than 10,000 members.

In another recent example, Greenpeace, via a YouTube video, exposed Nestl for using palm oil in its products, which the environmental group equated with condoning deforestation in Indonesia and destruction of orangutans' natural habitat to meet product demand.

It's becoming more and more difficult for companies to conceal anything, especially as the number of people and businesses engaging in social media climbs. And the evolution of the internet into its next generation, known by some as web 3.0, likely will magnify this phenomenon, says Omaro Ailoch, founder and president of OC IT Services, an Irvine, Calif.-based company that provides open-source web development, search engine optimization, and search engine and internet marketing.

"Anything good or bad that's being posted is going to be much easier for people to find with web 3.0," he says.

Musts for BusinessesBecause of the online climate, it's more important than ever for you and those representing your retail company to be truly authentic, honest, respectful and thankful, and reveal that through your web-based interactions with the online community, Strauss says. Consider sharing your processes and plans, and letting the online public comment.

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