I finally got around to seeing the Social Network this weekend and it sparked me to start thinking about how social networks are going to change the way we buy everything from cars to diapers. Facebook in particular has been adopted at an unprecedented rate globally and everyone knows that word of mouth is the most powerful tool in moving someone from consideration to purchase. How does word of mouth evolve as social media becomes part (and probably the most influential) of the purchase process? Here are some questions that I want to answer before the map the future of social commerce can be drawn:
What lines will be drawn from a privacy perspective? You obviously don’t want all of your personal purchases shared, what is fair game and what is not, who decides?
What role will mobile devices play in this? This is where the real innovation is occurring with bar code readers, NFC chips embedded in the next iPhone (speculation), geo-location applications (foursquare, WHERE, SVNGR, etc.) that can tailor offers and experiences to your specific locations, and traditional credit card processing companies being challenged by new players like square this all has the potential to disrupt the way people shop in a big way.
What platforms or tools that do not currently exist and are yet to be born that will become the glue that binds all of these processes together? Will it be Facebook? As social networks and the web in general evolve into something that is an important piece of every bit of our life and not something done from a desktop or laptop screen what is next? How will the rapid deployment of 4G wireless networks that promise wi-fi speed everywhere change the way people shop in-store, on the go and at home?
Everything is pointing to mobile payments as the next frontier that Apple will conquer with the introduction of the next iPhone. They have been awarded several patents for mobile commerce and rumors from suppliers support the idea that they will adding a NFC chip to the next iPhone. Here are the reasons I think this will be a massive game changer for mobile and social commerce:
Apple already has 160 million credit cards on file for iTunes, they will set up a system somewhat like PayPal where transactions are directly debited for your checking account to pass over the 2-5% fee charged by the credit card providers.
Retailers hate the current credit card providers, ask any small business or restaurant what they hate most and this will be at the top of the list. If Apple delivers a simple, transparent, user friendly system – watch out American Express and MasterCard, hello iBank.
NFC is not new technology, it has been used in Japan, South Korea and throughout Europe for a long time, the payments are often collected by the phone service providers (you better believe Apple will cut them out of this). It is used for subway and bus passes over here, etc. Apple wil come to the table with a simple system that will empower even Mom to link up her iPhone to her bank account.
I think the possibilites this business will spawn are seemingly endless. They could push to replace all of the frequent shopper cards stacked in your wallet or purse with a simple loyalty system across all of your purchases. This would allow them to set up something similar to dunnhumby.
There will a huge amount of competion for this space from the current card providers, upstarts like Jack Dorsey’s Square , Facebook and their Points currency, and Google. How will it all shake out is anyone’s guess. I would probably place my early bet on Apple for two reasons – the iPhone is wildly popular and the device most ready to make it a good experience and Apple’s ability to take existing technology and bundle it into a seamless user friendly experience.
Best Uses: Wet Weather, Hiking and Camping, Casual Wear
Describe Yourself: Casual/ Recreational
Was this a gift?: No
This is a great four season jacket. Constructed of very light PacLite but durable enough to take a beating with the Gore-Tex Pro Shell reinforcements. It is useful for just about any activity where weather is windy, rainy or snowy. I wear mine four seasons out of the year. In winter I layer it with an Arc’teryx Apache or Covert fleece and there is plenty of room. I am 5’11 and 185 lbs. and the large fits great.
The battle for the next generation operating system is getting a lot of buzz these days from geek fanboys. Everyone can agree that lightweight systems that can run a variety of devices from smart phones to netbooks that run apps and web based tools are the future of information access, interaction and engagement. The two leading platforms today are Apple’s iOS which runs the iPhone and iPad and Android from Google that runs a variety of devices from their manufacturing partners. Pundits are obsessed with arguing over which one of these platforms will become the dominant platform, likening the battle to Microsoft versus Apple in the 1980s. In my opinion it doesn’t really matter what is the dominant platform is. Neither Apple nor Google make money off of selling their mobile OS to the consumer. I have an iPhone iPad and was playing with some Android phones this weekend and the web browsing experiences are pretty similar. I think that in the future there will be a move away from specific apps to web based experiences. The app store on Android is still evolving but it is going to copy the Apple model in the end. So the question then becomes who will be the big winners in all of this from a financial windfall perspective?
Here is my list of winners:
Apple – folks are buying up their mobile devices at a feverish pace and they have the highest margins in the consumer electronics business. It will also be interesting to see how the iAd mobile advertising platform is adopted by both brands and the consumer over the next year.
Google – search will evolve on mobile and some of their great web based services such as YouTube, Docs and GMail will become cash cows from relevant ad placement. They win on Apple or Android in my opinion because they make great products and services.
Mobile carriers – consumers are dying to give you guaranteed over two years an extra $15 – 30 per month for data service that sucks…nice business.
E-commerce incumbents – Amazon and EBay have a great understanding of the mobile space. Last week EBay acquired RedLaser a mobile bar code reader made by a company called Occipital which allows you to scan a barcode on your mobile device. Here is how Steve Yankovich vice president of eBay Mobile summed up the reason for the acquisition “The goal is to think about where consumers are when a product becomes of interest — buy or sell. My contention is that most of the time when inspriation strikes us around being a consumer, we are not sitting in front of our laptops”. The company says it expects to see $1.5 billion in gross merchandise sales volume through its mobile apps this year.
Social networks – mobile devices are the grease that really makes the wheels of the social space turn. Easy access from millions of new devices will only increase the number of people on twitter, Facebook, foursqaure, etc.
Microsoft – the consumer is being to conditioned to get what you make all of your money on for free. That won’t work out well for their business model in the end.
Legacy PC brands – Dell, HP, Lenovo can’t keep up with flat manufacturing business models employed by companies like HTC in the mobile space and netbooks and laptops are soon to be declining categories as mobile devices become more powerful and the preferred tool to consume web content. Similar to what happened in flat screen TVs with Vizio becoming the #1 brand.
Retailers who don’t get the web – it has revolutionized the shopping experience, customer service and empowered the consumer, most retailers still don’t get it.
Research in Motion – They understand mobile email, not much else. Have you ever tried to browse the web on a Blackberry? It sucks.
In China it is the year of the White Tiger, in the United States it is the year of the consumer. Both are highly endangered species with generations of poachers taking out the White Tiger and the perfect storm of a housing value implosion, credit market freeze, and record unemployment taking out the global ATM formerly known as the US consumer.
How does a consumer brand go to battle these days? With social media becoming more ubiquitous every day there is no where to hide. How does a restaurant get a better Yelp rating and reviews? The same way a restaurant became a hit in the ’60’s, 70’s or 80’s:
Great food at a fair value
A nice host and knowledgeable waitstaff
Something unique on the menu that changed often to bring the dining customer back
No bullshit, ballons for kids or Kobe beef tartare for $75 that tastes like Manwich. No magic social media pixie dust, just a spot where folks felt looked after that made them want to return next week or month and tell their friends about their nice dinner out.
What can consumer brands do to make the consumer feel special? Make a great product and act like you give a shit about the post purchase experience. Rocket science – no, hard work, hell yeah.
I leave you with this from about 2002, some posters??….I fell for it, they cared:
I needed a new pair of boots this weekend after the Boston area was hit with an unexpected two day snow. I wanted to get some classic LL Bean “Bean Boots” I checked their website and they are sold out until March 14th. Luckily I went to their new store in Dedham, MA and they had one pair left that were returned as a wrong size earlier in the day. The store associate said they had been sold out of most boots and slippers since a couple of weeks prior to Christmas. The store was packed on a snowy Sunday two weeks after Christmas. What does this say about what Americans are willing to spend their money during the tail of the great recession?
Brands that back up their products with service and reliability (think Apple and Patagonia as well).
Here are some of the promises that L.L. Bean makes to consumers:
Brands with a unique offering that you cannot find every where and does not go on sale.
This is why I will not be surprised if Macy’s files for bankruptcy in the coming months. What do they offer that is special or what old department stores used to? They are too far down the “we stand for noting” path to return in their current state.