Can ‘discovery shopping’ save e-commerce from being boring?

In this guest post, Duke Marr and Gavin McLeod wonder if discovery shopping – the merging of social media and e-commerce – will take off in Australia

When online shopping began in the late 1990s, merchants didn’t really know what the heck they were doing. How should they help consumers find the products they wanted? How should they up-sell or cross-sell as they would in a retail store? How could they convince buyers to type in their credit card numbers?

Then a few pure-play market leaders burst onto the scene—most notably, Amazon and eBay—and everyone eventually copied their user experiences, including traditional Australian retailers like David Jones and Myer. The examples learned from Amazon and eBay evolved into best practices, and adhering to them allowed most online merchants to design and build websites that were familiar to consumers and a steadily growing source of revenue. So much so, in fact, that global e-commerce sales are predicted to surpass one trillion euros in 2013, according to a new report from the Interactive Media in Retail Group (IMRG). That’s an astonishing number given how young the industry is.

In the ensuing years, retailers were well trained about how straying into innovative navigation schemes or one-page checkouts could put revenue at risk. And the downside was that every commerce website out there now looks and works more or less the same, so shoppers simply go to where things are cheapest, which is usually Amazon or eBay.

But an alarm clock has rung out across the e-commerce scene in the US, and it’s called discovery shopping—using real-time feeds to aggregate what products are trending in social media. These feeds dynamically showcase scrolling images of products that are being liked on Facebook, pinned on Pinterest, and tweeted about. This gives consumers the opportunity to discover things they didn’t know they wanted — and likely would not have found any other way.

Seeing what other people want is entertaining, if a bit voyeuristic. They also
place nearly equal importance on sharing as on buying. Discovery shopping has been pioneered by start-up sites like Polyvore, Svpply (owned by Ebay), Fancy, and Wanelo, which all have affiliate business models either already in place or lurking in the wings. Each of these sites drive visitors to e-commerce sites and charge a referral fee. Notably, none of these start-ups has launched in the Australian market.

But it’s only a matter of time, because they all have the means and ambition to expand globally. Nor for that matter have any Australian entrepreneurs copied the model (at least not that we’ve seen so far). Discovery shopping is inherently tied to social networking activity, yet the world still waits for the big social networks to make a successful e-commerce play. As of now, our money is on Pinterest—or something that looks remarkably like it but with a business model attached, which all these discovery shopping sites do.

But should established e-commerce retailers sit on the sidelines and let VC-funded start-ups and the social networks own discovery shopping—and pay them a referral fee for the trouble? The recent launch of discovery shopping features on two leading US-based e-commerce sites raises the question of whether this type of engagement layer has a home directly on a retailer’s site. The Fab feed and Gilt Live are both notable for their mash-up of real-time social activity and sales. They place almost equal emphasis on encouraging customers to purchase products and they do on having them share them to their social networks.

In theory, this will generate new traffic from the social networks back to the sites themselves. More impressive is eBay’s not-so-secret beta launch in the US, which transforms the entire shopping experience into a feed.

Are we witnessing a new “best practice” being born? Assuming we are, there is great opportunity in Australia for both entrepreneurs and retailers alike. It’s premature to ask if building a “what’s trending feed” will drive new revenue, but there is tangible value in the social amplification and brand awareness such sharing can generate. A basic human-powered feed similar to the Fab Feed or Gilt Live is a relatively small implementation effort, and easy to maintain— for it is curated by the crowd rather than by expensive in-house merchandising teams. For this reason, we believe more traditional US e-commerce sites (particularly those in the fashion and design categories) will rapidly copy the what’s trending feed model.

So, Australia, you can either hit the snooze bar on discovery shopping or beat the Yanks to the punch. It’s up to you.

Duke Marr is the managing director, commerce, at R/GA. The article was co-written by R/GA Sydney ECD Gavin McLeod.

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