Amazon Takes Social Shopping to a New Level

If you use Amazon’s “Price Check” mobile app on Saturday Dec. 10, 2011 to compare the price of an item in a brick-and-mortar store with what you can get it for at Amazon’s website, Amazon will give you a five percent break, up to $5,  if you buy that item from Amazon.com. 

What is interesting is that this is a new application of social shopping, where users contribute feedback, but where the social exchange is that users compare prices, let Amazon know, and then get value the form of discounts. In many other forms of social shopping, people post public reviews and information. 

In this case, Amazon essentially is having shoppers act as "mystery shoppers" to check out and report retail pricing at competitive outlets. Retailers do this all the time.


What is different here is the social angle, the value exchange and yet another use of mobile apps in mobile commerce.


Amazon is giving comparison shoppers a quick-and-easy way to earn up to $15 in discounts, but the promotion is making brick and mortar retailers are unhappy, of course.



The Price Check app is free and works on the iPhone and Android smartphones. To use it, you scan a product's bar code, take its picture or say or type its name. The app then gives you the Amazon price.



If you decide you'd rather buy the product from Amazon, you can put it in Amazon's online shopping cart where you'll get a discount if you complete the purchase within 24 hours.

The discount can be used on three items for a maximum of $5 off each. The deal good on electronics, toys, sports, music and DVDs sold directly by Amazon, not its third party suppliers. .

A product you're price checking also has to be an exact match to what Amazon is selling. Some might note that the promotion, though possibly enabling a shift of some sales to Amazon.com, has other value. It will feed Amazon current pricing on a wide range of products being offered by brick-and-mortar retailers all over the United States.



In fact, Amazon says on its website that the discount is “an introduction to sharing in-store advertised prices with us.”



In some cases, Amazon also will get location information as well. Qualifying products for the promotional period will have a yellow “Get deal” button next to the Amazon offer price. Amazon price check promo Dec. 10, 2011



Though it is understandable that brick and mortar retailers worry about sales volume shifting on one shopping day, they also are worried that Amazon will have a highly-efficient “mystery shopper” campaign running on Dec. 10, 2011 that no brick and mortar retailer can afford to support.



Also, some will argue, shoppers already are routinely comparing prices using their smart phones while shopping. This is just a fact of life these days, and illustrates one more way mobile commerce is being a material factor in the shopping process.

Consumers want 'free stuff' from social, marketers think they 'want to be heard' | Econsultancy

A study from the Chief Marketing Officer Council and Lithium reveals a disconnect between what senior marketers think consumers want from social media, and what people actually want.

According to the 1,300-plus consumers surveyed online globally, there was an expectation that a brand follow, like, post or preference in a social media environment would enable a person to be eligible for exclusive offers (67 percent), have the opportunity to interact with other customers who share the same experiences (60 percent) and gain access to games or contests (65 percent).


In other words, consumers view a social media follow, like, +1 or other "vote" as part of a transaction. Users assent to public support for a brand, in return for value of some sort. 

When the same question was asked to over 120 CMOs, the results were very different. The CMOs saw social engagement is more of a by-product of quality content. They tended not to believe they needed to provide incentives to foster and maintain loyalty among their followers. 


According those surveyed, customers interact with brands because they; want to be heard (41 percent) or are looking for news or information about products (40 percent) Consumers want 'free stuff' from social


It appears consumers view social engagement in much the same way they see TV commercials, namely that it is an exchange of value. In exchange for ad exposure, viewers get free, no incremental cost or subsidized access to content.


Apparently, much the same sort of thinking is at work with social engagement mechanisms. Amazon recently took advantage of that sort of thinking, offering shoppers discounts of up to $5 for checking prices of products in retail outlets, and where Amazon sells the identical item, buying from Amazon, instead. Amazon "Price Check" promotion


That's a value exchange. The user checks a price, lets Amazon know, and then gets something in return if that item is purchased on Amazon. 

Mobile Commerce Provides Lots of Value, and Not Just Transaction Fees

You might think that mobile payments are significant because they represent a potential shift of transaction fee streams from one set of providers to another.


That's true.  AITE Group, for example, in January 2010, it estimated that mobile payments would reach $214 billion in 2015, up from $16 billion in 2010, a 68 percent compound annual growth rate (CAGR) between 2010 and 2015. U.S. Mobile Payments


To the extent that all those payments will involve a transaction fee earned by some entity, you see the upside. But the value doesn't stop there. 

To give you some idea of what that can mean, eBay Chief Executive John Donahoe said otal payment volume transmitted by mobile devices through PayPal's system will be more than $3.5 billion in 2011. That helps PayPal.

But there are other ways value can be created. EBay, which owns PayPal, also uses smart phone apps like Red Laser, which lets shoppers scan bar codes to check prices online and at other retailers nearby. You might wonder what value that provides. For one thing, it allows eBay to do “comparison pricing” that retailers routinely conduct, but more efficiently, since eBay can rely on its users to do the work. PayPal mobile payments volume

Amazon.com is doing similar things, with a twist. On Dec. 10, 2011, Amazon will offer comparison shoppers a five percent discount, up to $5, on any item whose price is checked, in a retail store, using the Amazon “Price Check” app, and which is purchased on Amazon within 24 hours of the price check.

Though you might say this is a test of how much sales volume potentially can be shifted by offering such discounts, it also is a way for Amazon to gather quite a lot of infomation on retail pricing at brick and mortar locations selling the same merchandise that Amazon is selling.

More Social Shopping by Men, than Women?

Though some studies suggest women use social networks more than men when shopping, a study by Performics suggests the opposite, namely that men are more likely than women to conduct five of six social shopping activities.

Contradicting commonly held beliefs about gender and social behaviors, the study showed men more frequently research product information, read reviews, compare products, find product availability and get store information via social networks, shopping and deal sites.

But women tend to search for deals, coupons and specials on similar sites more frequently than men. Contradictory data on use of social shopping

Aside from Facebook, men frequent social networks (at least once a month) substantially more than women.

Other studies have suggested that women use social media more when shopping. Gender differences in social shopping. One study suggests that men and women use social media differently. A study by Empathica, for example, found more men citing looking for information as a primary goal (36 percent) than women (28 percent) when interacting with a retail brand through social channels. 


But the gender split among those looking to stretch their budgets was far greater: 47 percent of women say searching for coupons and promotions is their primary use, compared with 33 percent of men.

Google Offers Partners With 14 Deal Providers

Google has just announced a set of new partnerships with over a dozen niche daily deal providers, which will now be integrated into the Google Offers service, both on the Web and in the Google Shopper mobile applications for iOS and Android.

The new Google Offers partners include Dealfind, DoodleDeals, Gilt City, GolfNow, HomeRun, JuiceInTheCity, kgbdeals, Mamapedia, PlumDistrict, PopSugar Shop, ReachDeals, Active.com Schwaggle, TIPPR, and zozi.


Initially, these deals will be only available to those in the San Francisco Bay area, but this feature will soon arrive to other areas, says Google. Google Offers Partners With 14 Deal Providers 

Some are skeptical about the long-term staying power of "daily deals" services. Certainly not all of the current providers will survive. But if you believe mobile wallet services will succeed, it will be largely on the strength of deals, offers and other rewards consumers receive, as well as the loyalty, retention and customer acquisition retailers benefit from.

$577 Million in Daily Deals Go Unclaimed

"Breakage" is a significant revenue generator in many businesses. Breakage refers to services, goods or value purchase by consumers, but never redeemed.

Nearly 22 percent of deals purchased from Groupon, LivingSocial, BuyWithMe and elsewhere go unredeemed according to a survey from Rice University.

This represents a huge secondary market for re-selling deals, which is precisely what DealsGoRound does. DealsGoRound says such "breakage" represents a $577 million opportunity in the daily deals space.

The study from Rice found that 55.5 percent of businesses surveyed made money on their daily deals promotions, 17.9 percent broke even, and 26.6 percent of businesses lost money.

Keep in mind that 21.7% of their deals go unredeemed, which means the businesses pocket the money.

Almost 80 percent of customers who redeemed deals were new customers, but only 36 percent of them spent beyond the face value of the deal, and the study says that only 20 percent of customers returned to purchase something at full price.

$577 Million in Daily Deals Go Unredeemed

33% Of All Groupon Clones Have Been Shut Down Or Sold

One of the most common Groupon critiques is that the business is easily replicated. Yes, some might say, there are few barriers to entry. But there appear to be many barriers to success.

According to data from deals aggregator Yipit, 33 percent of daily deals sites have been shuttered or sold so far in 2011. That's 170 out of 530 deals sites overall. Growing operating costs appear to be an issue. 

Groupon spent about $7.99 to acquire each subscriber who actually redeemed a daily deal in the first quarter of 2010, according to regulatory filings. By the second quarter of 2011, that figure had nearly tripled to $23.46.

Overall, Groupon spent $378.7 million in marketing initiatives in the first half of 2011, up from $35.5 million in the same period a year earlier, according to regulatory filings. Many smaller websites don't have the war chest to compete, you might surmise.

At the same time, daily-deal sites also increasingly have to hire more salespeople to line up coupon offers from local merchants. Operating costs grow

Yes, there are few barriers to entry, but there appear to be significant barriers to success.

33% Of All Groupon Clones Have Been Shut Down Or Sold

Consumers Are Not Tired of Deals

A survey of nearly 1,000 U.S. online users by Utpal Dholakia, professor of management at Rice University finds that they are not yet tired of daily deals. Quite the opposite: Shoppers who tend to purchase the most daily deals continue to remain enthusiastic about them.

Only 13 percent of experienced and heavy daily-deal users agreed with the statement: "I buy daily deals less often than I used to," according to the study, published in conjunction with Cornell University. Only eight percent agreed with the statement: "I have lost interest in daily deals over time."

BAI/Kelsey, a local media and ad research firm, also has raised its forecast for daily deal revenue. U.S. consumer spending on deals, including daily deals, instant deals and flash sales, will grow to $4.2 billion in 2015 from $873 million in 2010. While the bump in its 2015 projection is only up slightly, the projection for 2011 revenue was revised to $2 billion, up 66% since the March estimate.

Think Consumers Are Tired of Deals?

10% of U.S. Mobile Users Redeem Coupons, 20% of Smart Phone Users

Research firm eMarketer now estimates 19.8 million adults, or 9.5 percent of U.S. mobile phone users over 18, will redeem a mobile coupon in 2011, including coupons or codes received using text messaging (SMS), applications and mobile web browsers; quick response codes for redemption online or offline; and group buying coupons purchased via mobile.

In 2012,  the number of U.S. consumers who redeem mobile coupons will rise to 28.7 million, or 13.5 percent of adult mobile phone users, eMarketer estimates.

By 2013, the number using such coupons will nearly double, and 16.5 percent of all U.S. adult mobile phone users will redeem a coupon.

Led by smart phone owners, the number of U.S. mobile coupon users will increase by 80 percent  between 2011 and 2013, eMarketer predicts, climbing from 19.8 million to 35.6 million.

Outside of the US, mobile coupons have likewise proven popular among consumers, although adoption is far from uniform. Mobile users in Asia-Pacific, particularly those in Japan and South Korea, constitute something of a vanguard, while in Western Europe usage is most extensive in the United Kingdom.

Among smart phone users, penetration is significantly higher. In 2011, nearly one in five smartphone owners ages 18 and older will redeem a mobile coupon, representing annual growth of 117.6 percent.

Triple-digit uptake rates will be short-lived, but by 2013 almost one-third of smart phone users will be redeeming discounts on the go.

Mobile coupon demand

Local Mobile Marketing Spend to Grow 2.5X by 2015

Total U.S mobile promotional spend in 2010 shows a pronounced focus on national., rather than local, campaigns, according to Mobitrove. Almost $2.9 billion of $3 billion worth of "promotions" spending was for national promotions, or about 97 percent of mobile promotional dollars spent in 2010.

One suspects that is going to change over the next several years, as social shopping capabilities and focus starts to grow. The changes might be quite gradual for the first four to five years, as typically is the case when a new business segment gets traction.

After five years, growth is likely to be substantial, as retailers learn how to use local promotions with location services and social networking.

Mobile Marketing Spend to Sextuple 2010-2015:

Social Shopping: What's the Big Deal?

Google Gets into Social Shopping

Google gets into the social shopping space with Groupon and LivingSocial.