Wall Street Journal on Social Commerce

Article (archived below) from Wall Street Journal about social shopping tools that use Facebook Connect to allow shoppers to shop together online. Mentions TurnTo and Fluid’s Fluid Social as two services providers helping brands off social shopping experiences via Facebook Connect.  Sees such social shopping tools as natural progression of publishing customers reviews.

JUNE 2, 2009
E-COMMERCE

Shop Talk

Retailers see the potential for new business by linking to popular social-networking sites
By JENNIFER SARANOW SCHULTZ
http://online.wsj.com/article/SB10001424052970204038304574149191666838018.html

Retailers routinely post customers’ product reviews online, hoping that favorable comments will boost sales. But there’s a more powerful influence on shoppers that retailers have yet to harness: the advice of friends.

Many retail sites have email-a-friend features, which make it easy to ask friends what they think of a product by sending them a link to the page it’s on. But that approach has one big drawback: Shoppers are unlikely to get immediate feedback while they’re still at a retailer’s site, so their decisions may be delayed, putting sales at risk. Some retailers have also tried unsuccessfully to launch their own social networks.

Now, retailers are exploring ways to link their sites to social-networking sites like Facebook, MySpace and Twitter, among others. The biggest networking sites have developed tools that make it possible for a member shopping on a retailer’s site to get immediate feedback in the form of any reviews friends have left there, as well as a history of friends’ purchases on the site. Meanwhile, networking sites and third parties have created tools that allow shoppers on a retailer’s site to post information and opinions about products on a number of social networks, or to chat on the retailer’s site with any friends who happen to be available. And some retailers are making software code available that anyone can use to develop applications that link the retailers’ sites to social networks.

Seeing Results

Last July, Facebook Inc. launched a beta version of Facebook Connect, which it made generally available in December. When the most powerful version of the tool is installed on a retailer’s site, it allows shoppers with Facebook accounts to see product reviews their Facebook friends have posted on the site and a record of purchases friends have made there (if their friends have opted to share such information). Shoppers can also share their own activity back on the Facebook site. So, shoppers can see what their friends have been up to on a retailer’s site without having to leave the site, and Facebook members can see what friends are buying without having to visit a store’s site.

News Corp.’s MySpace has developed a similar tool, called MySpaceID, and is working on adding features including the ability to share activity at a retailer’s site back to MySpace. (News Corp. owns Dow Jones & Co., publisher of The Wall Street Journal.) And this spring, Twitter launched a tool in beta with some somewhat similar features.

Charlene Li , founder of technology consulting firm Altimeter Group, suggests retailers start testing the new offerings. “I recommend companies think about where [customers] being able to contact and interact with friends would make sense in their user experience and then start experimenting with Facebook Connect” and similar tools, she says.

While these new tools are free, the most powerful versions aren’t simple to install; there is a lot of work involved in integrating customers’ accounts with outside accounts. So, companies are popping up to help retailers perform that task. New York-based TurnTo Networks Inc., for example, which was launched in September, helps retailers link their customer accounts with social-networking accounts and email accounts using Facebook Connect and other tools. TurnTo charges retailers a percentage of the revenue from sales attributed to the system.

A new tool from Fluid Inc. called Fluid Social provides two ways to bring friends into the shopping experience. Fluid Social allows shoppers to chat with any available online friends within a retailer’s site (users invite their friends to talk through chat or email applications or through social-networking status updates) and, if they log in to a retailer’s site with their Facebook user name, to see their friends’ reviews and comments within the retailer’s site. Fluid charges retailers a base fee of $1,000 a month plus usage fees.

Tea retailer Teavana Corp. is a TurnTo client. Jay Allen, Teavana’s vice president of e-commerce, says the conversion rate—a measure of how many shoppers make purchases—for people who use the application is 20% higher than the rate for others, and their average orders are slightly more expensive.

TurnTo founder George Eberstadt says preliminary data for the company’s first 20 clients show that using TurnTo tends to increase conversion rates 20% to 50% and builds traffic to retailers’ sites. Some 700,000 new users, for instance, have come to computer retailer CompSource Inc.’s site through its TurnTo application since July. TurnTo is “a lot better than average” in terms of price per new customer compared with pay-per-click advertising, says Dean Bellone, CompSource’s president.

Facebook says sites that use Facebook Connect have seen increases of 30% to 200% in site registrations and 15% to 100% in the number of reviews and other user-generated content.

Options for the Wary

Still, many companies are reluctant to invest the time needed to install and maintain the tools offered by the networking sites, or the money to pay someone else to do it, until they can be more certain of the return. In part that means they want to be more certain that the popular social-networking sites of today will continue to thrive, and that this first round of integration tools won’t soon be obsolete.

Such retailers can still try to leverage the power of social networks. One way is by offering the most basic version of Facebook Connect and similar tools on their sites, says Tim McAtee, senior analyst at MarketingSherpa Inc. That means simply placing icons (think “Share on Facebook” or “Share on MySpace” buttons) on product pages that shoppers can click on to share product information and reviews back on social-networking sites; they won’t be able to share information on the retailer’s site. This is “a good first step,” Mr. McAtee says.

While Dick’s Sporting Goods Inc. is evaluating the more advanced version of Facebook Connect, the retailer is pushing ahead this summer with letting users share product information and reviews on Facebook and other networking sites. “Given how fast the technology is moving, our concern is making sure we don’t spend a lot of time developing something complex and then by the time we launch it, technology has leapfrogged ahead,” says Jeffrey Hennion,Dick’s chief marketing officer.

Drugstore.com Inc. is evaluating how it could best use Facebook to connect with customers. Meanwhile, it allows customers to share product links on about 40 networking and other sites with technology provided by Clearspring Technologies Inc.’s AddThis unit. AddThis decides what sites to include, based on popularity and other factors, so drugstore.com doesn’t have to track those sites’ membership figures, other analytics and changes in integration technology. “We don’t have to worry about where the tide is shifting,” says David Lonczak, the retailer’s chief marketing officer.

Relying on Freelancers

Industry experts also suggest retailers make freely available the software code that enthusiasts need to create applications that link the stores’ sites to social networks. One advantage of this approach is that it saves retailers the effort of creating and maintaining such applications.

EBay Inc. created an application for Facebook two years ago that allowed users to promote what they were buying or selling on eBay within Facebook. But the application no longer works, because eBay hasn’t been able to update it fast enough to keep up with technological changes on its site and on Facebook. EBay now relies on third parties to develop and maintain applications for the networking sites.

“We discovered over time that the best way to provide for marketing on channels like social networking is to provide the platform and the tools and let the buyers and sellers use them the way they would like to use them,” says Jim Griffith, marketplace expert at eBay.

–Ms. Saranow Schultz is a writer in San Francisco. She can be reached at reports@wsj.com.