Social media cases study: Tesco and social shopping platform Foodie.fm

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You may’ve heard that supermarket behemoth Tesco has signed up for Foodie.fm - a service which has been dubbed by its backers as “the Facebook for grocers”.

Launched by technology firm Digital Foodie, Foodie.fm claims to be the first social network to offer a social shopping platform for grocers via a fully integrated checkout with www.tesco.com.

Having purchased social media company BzzAgent back in May last year,Tesco is certainly not shy about using social media as part of its wider business strategy, and their partnership with Foodie.fm looks like another way of embracing multichannel more effectively.

Foodie.fm, available as free app on iPhone, Android and Nokia applications, as well as via the Web and Facebook, enables users to make friends with other food lovers and to swap cooking tips and recipes. Visitors can create an editable shopping list, based around a meal, by clicking on photos of recipes. For example, if a user was to click on the recipe for beef burgers, the shopping list would consist of  mince meat, onions, salt, etc.

The Foodie.fm site then checks availability with Tesco before the order is placed, the customer pays and delivery is arranged.

At the core of Foodie.fm is a recommendation system that learns from a user’s eating and purchasing habits, and suggests recipes and groceries that match his or her ‘taste profile’. The system takes into account personal preferences like food allergies or intolerance, as well as any budgetary restrictions. This enables users to personalise their profile and allows the site to suggest recipes and groceries to match customer profiles. It is this customised shopping list that will help the consumer plan and budget for a week, or even month’s worth of meals, and the shopping that is needed for it, in one go.

Until now, food retailers and consumer packaged goods were somewhat sheltered from the toughening economy, with 40% of people spending more on groceries than 3 months ago (according to Deloitte) - a result not just determined by inflation, but the fact that the tough current economy means that people spending are more time at home cooking for themselves rather than eating out in bars and restaurants.

However, as Deloitte has pointed out in their recent Consumer Review,  40% of the value of all transactions in non-food retail are now digitally influenced, and it’s hard to believe this influence will not impact food and consumer packaged goods too moving forward.

With this in mind, food retailers would do well to explore options like Tesco’s partnership with Foodie.fm. Given the rise of the connected customer, retailers should look at strategies for integrating social and multichannel into their offering, and should look at ways at becoming an agile and fully engaged social business.

67% of shoppers spend more following recommendations from their social networks (infographic)

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Making purchases directly from within Facebook (a form of social commerce) has the potential to make the social network a place where we spend not just considerable amounts of our time, but also our money.

Social Media Influence has created this infographic which reflects on the past two years of Facebook commerce (known as “F-commerce“).

From the very first purchase ($34 worth of flowers) through to movie rentals and mobile phone credit purchases, F-commerce already has a varied history, and this is just the beginning.

Some key points of interest:

  • 67% of shoppers spend more when they have received a recommendation from their online community of friends.
  • Just 11% of the surveyed UK customers have bought something from Facebook.
  • Only 8% of retailer Facebook pages are able to accept transactions.
  • Predicted value of social commerce is set to reach $30bn worldwide by 2015.

Facebook commerce (F-commerce) infographic

How much is a share on Facebook or Twitter worth in sales?

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Social Commerce

Every time people share an event from Eventbrite with their friends and contacts in social media or by email, they generate $1.78 in ticket sales. This figure comes from a recent study by the event ticketing site which analysed their user data and how shares in social media and by email tracked back to ticket sales. This is a surprisingly powerful number and shows the growing importance of social shopping - using recommendations in social networks and online communities to influence purchase decisions.

Eventbrite is, undoubtedly, a prime candidate to be benefiting from social shopping before others. Events are, by their nature, things which connect people with similar interests - people like you. If you love jazz and connect with people like you in social media, then were you to share a jazz event with you then the chances of this appealing to them is quite high. Events are a prime candidate for social shopping and this study by Eventbrite highlights just how powerful it is.

How much is a social media share worth?

The study by Eventbrite found that, on average, every time an event was shared that resulted in $1.78 in ticket sales. Drilling down into this number shows how valuable different types of share are:

  1. Facebook: $2.52. Facebook resulted in the highest average ticket sales per share with every ‘Like’ on the social network resulting in $2.52 in ticket sales. That this is the most valuable type of share is not surprising - Facebook has grown with events and users are accustomed to inviting people to or accepting events on the platform. Overall this is a very important driver of traffic and sales for Eventbrite - it is the sites biggest referrer of traffic and every ‘Like’ drives 11 visits back to the site.
  2. Email: $2.34. The second most valuable sharing mechanism was not a social media tool at all, but email. This is not surprising - email is likely to be much more targeted as users need to select individual people with whom they want to share the event, rather than just publicising it to all people they connect with in a social network. That this is not the most valuable type of sharing is a surprise and shows the ever increasing power of Facebook and other social networks as a communications and sharing mechanism.
  3. LinkedIn: $0.90. LinkedIn shares are the third most valuable with an average of $0.90 in ticket sales generated every time an event is shared on the social network. This is much less than for shares on Faccebook or via email but is still significant driver of sales.
  4. Twitter: $0.43. Shares on Twitter are the least valuable of all four means, with each share worth $0.43 - almost a sixth the value of a Like on Facebook. This is, perhaps, a sign that connections on Twitter are less focused than on Facebook, or perhaps that on Twitter shares and messages are less engaged with - indeed recent research from Sysomos showed that over 70% of all Tweets get no response. So Twitter messages may be less engaging than those on Facebook, leading to fewer clicks and so fewer ticket sales.

These numbers are impressive and the data from Eventbrite is a great insight into social shopping and how, at least in the event ticketing market, recommendations and shares in social media can lead to significant ticket sales. People are using social media to connect with people who have similar interests and passions to them - this makes for a potentially valuable territory for social shopping. Recommendations from people like you carry a lot of weight - for Eventbrite, each recommendation leads to $1.78 in revenue from ticket sales.

Social commerce - the future of e-commerce?

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shopping_trolley

We’ve written previously about the value of social shopping and how it can benefit online retailers,  and it seems that the issue of social commerce has risen to the forefront of e-commerce strategy discussions again.

Social commerce involves the use of social media, in the context of e-commerce, to assist with buying and selling products and services online. It includes features like customer ratings and reviews, user recommendations and referrals, social shopping tools and online communities.

While social commerce has existed for some time now, with brands like Dell claiming to have made $6.5m (£4.2m) from computer sales via Twitter since 2007, social commerce has become a major point of strategic discussion for online retailers again because of 2 reasons:

  1. Facebook announced it will shut down the Facebook Gift Shop next month in order to prepare for the launch of its virtual currency,  Facebook Credits, possibly as early as September. Facebook Credits will initially allow users to pay for virtual goods such as games, but will eventually let them buy anything. It is expected that Facebook will take a 30% cut of all transactions.
  2. FMCG giant Procter & Gamble (P&G) has started selling its Max Factor brand cosmetics through Facebook .

Michael Nutley, editor-in-chief of New Media Age, rightly points out in his Marketing Week article that these two approaches to social commerce take social media a step further by bringing the ability to purchase what’s being talked about on the social network within the network itself.

Etailers are more than aware of the fact that every page they ask customers to click through to results in a drop-off in numbers of people who convert, so the strategy employed by P&G is a clever one in that it brings the checkout to the potential customer, rather than the other way round.

It’s this ease of purchase, in combination with the persuasive buzz and consumer-driven product discussions that will have been generated on the social networking site, that’s likely to increase sales.

So is social commerce the future of e-commerce? Will etailers move more towards using Facebook or their own branded online communities as a direct space for selling products? It would be interesting to hear your thoughts.