Spiral Marketing: The More You Know, The More You Can Know

January 25, 2009

Social Shopping Centers

A question came up recently concerning social shopping sites such as Kanoodle, and how an ecommerce site gets traction on these “social shopping centers.”  I think the metaphor underlying these sites is the “online shopping mall” we saw in early internet companies in the mid-90s.  The problem with this metaphor is that the shopping mall was created because of a physical imperative, rather than an informational imperative – with the move out of large cities with a heavy density of retail options within walking distance of where one lived, and the rise of the suburban “bedroom communities,” people didn’t want to drive all over town to get their shopping done; thus, the rise of shopping malls.

Contrast that with the internet, where there are no physical barriers in moving from one site to the next, which leads me to question the need for the aggregation of ecommerce sites into a single portal.  I think there are a couple of arguments for such sites: 1) they aggregate multiple shops selling a certain item at a single point – but I suspect this will become more and more the province of search engines; and 2) they provide a congregating point for shoppers to share information and reviews / recommendations.  I think there is legitimacy there, and certainly there is plenty of evidence that reviews and recommendations from friends can increase conversion rates, average cart value, etc.  But I also think that more and more this functionality is being included in individual ecommerce sites, and the search engines will continue to co-opt and aggregate that information.  I also question whether an individual ecommerce site will or should, in effect, choose to compete with many other sites that sell similar merchandise in a straight up comparison, which in most cases will devolve into a price war: it should be no surprise that of those “online shopping mall” sites of the mid- to late-90s, the functionality most used on those that have survived is a price comparison feature.

So the real flaw in this concept, in my opinion, is that for this model to be effective, each of these sites has to become its own social network, get and keep its own audience, and compete with every other social network.  I think that this compartmentalization of interests is bound to fail beyond one’s “personal” social network and “professional” social network, because we don’t compartmentalize our interests to that degree in social intercourse.

These sites won’t go away completely – I just think we will see, as we did in the past, that those sites in virtual space predicated on metaphors that evolved from physical world constraints ultimately will have a much more limited reach than one would think based upon looking at the reach of personal or professional social networks.

I think, therefore, that it is up each ecommerce site to develop its own social content – primarily reviews and recommendations – and then determine how to place that content on the broader social networks (and you still can’t ignore the search engines) to draft off of their much larger, much more active user base.

My two cents worth . . .

Kevin

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