Facebook gifts and its impact on Social Gifting Startups in India

Note: This article originally appeared on Lighthouseinsights.in as Facebook Gifts, Will It Impact Indian Social Gifting Startups? 

Last month Facebook made a quiet re-entry into its previously mildly successful segment ‘Gifts’. Back in 2007, Facebook had introduced virtual gifts which could be sent to a friend for any occasion, these gifts cost anywhere between $1-3. In 2008, Jeremy Liew of Lightspeed Venture Partners had quoted, “Since there were 322 gifts available for sale when we completed our last survey (Jan 8th, 2008), that implies that Facebook is selling just over 270k digital gifts per week. At $1 per gift, that implies an annual run rate of just under $15m.”

This time around, in 2012, Facebook has managed to take the gifting business one step further and facilitate offline gifts. How exactly did Facebook manage this? Besides its vast resources, Facebook has managed to scale Facebook Gifts across its platform by building on the expertise it acquired through its acquisition of Lee Linden and Ben Lewis’ Karma app.

To begin with, Facebook has decided to limit the value of Gifts on its platform to below $50. “Fifty Dollar deals sound like a small portion of the eCommerce market”, says Yariv Dror, StoreYa.com (Facebook store platform provider) CEO, “but our numbers show, that 57% of the millions of products that have been imported to Facebook using our platform match this figure of $50 and below.

In September, I did a post on Social Commerce and where it was likely to be heading.

Facebook Gifts and India

By entering the physical good space, Facebook will not only be competing with retail giants such as Flipkart, eBay and the hoards of other ecommerce companies in India but against a multitude of startups like Badhai, 99presents, Giveter and so on. Badhai allows users to send gifts vouchers to their friends; they have recently added group and social gifting. 99presents helps you find products your friends from across different eCommerce sites like Amazon, Flipkart, Etsy, ThinkGeek, etc. While Giveter recommends gifts based on its own secret sauce and the recipients’ Facebook likes.

For those who want to ride the Facebook Gifts wave here in India, as of now there is no news on when the feature might launch in India but Facebook is accepting proposals from Vendors who might want to sign up to offer products as a part of Facebook Gifts. If you want to sign up as a vendor, you can do so here.

India has a substantial number of Facebook users and the model that Facebook Gifts follows might make it relatively easy for them to penetrate the market rather quickly. Facebook does not have the delivery logistics that Flipkart does. Hypothetically, this could be a possible hindrance for Facebook Gifts to grow. How do they overcome it? They ask vendors to sign up, these vendors already use their own logistics providers, and Facebook only brands the gifts for e.g.

Facebook Gifts branding

[Image credit: Techcrunch]

Facebook gifts hasn’t launched in India, yet. And when it does, instead of looking at its impact on companies in social gifting space in India, I believe it could have a significant impact on all ecommerce segments in India.

Further to its commerce ambitions, Facebook has also launched a new feature called Collections which is currently being tested with certain select brands like Pottery Barn, Wayfair, Victoria’s Secret, Michael Kors, Neiman Marcus, Smith Optics, and Fab.com All Facebook reports that Collections enables Facebook users to not only like, but collect, want, or buy products that brands share through images on the social network.

Would love to know your thoughts about the new features Facebook has recently added.

Social Commerce: Where is it heading?

Social commerce has a simple value proposition, i.e. it makes it possible to measure and manage word of mouth.

Multiple studies into this subject have thrown up some interesting findings

  •  62% of online shoppers have read product-related comments from their friends on Facebook
  • 75% of shoppers who read social sharing comments have clicked on the product link in their friends’ Facebook posts, taking them to the product page on a retailer’s website
  • 81% of consumers who purchase products they learn about through social sharing are valuable social sharers themselves, thus creating a cycle of sharing and buying.
  • 32% of visitors are more likely to stay and shop on a site that shows activities of shoppers who have purchased there.

Read Social Impact Study 2012: Social Sharing as Helpful as Google Search in Shopping

What this study shows is that social commerce is that  social media content can generate strong word of mouth which can be manoeuvred to generate sales.

The power social commerce can be understood using referral economics of word of mouth. Let us take an example of Apple Computers to understand this better

Source: Net Promoter Economics: The Impact of Word of Mouth

Facebook and social commerce

Forrester Research’s Gina Sverdlov has done an extensive study on THE FACEBOOK FACTOR – Quantifying The Impact Of A Facebook Fan On Brand Interactions.  According to her, “Using regression techniques, the study provided evidence to support the insight that your Facebook fans are more your most valuable customers.”

(customer value = purchase value + referral value)  

“Specifically, the study found that fans of a range of brands (the study focused on Coca-Cola, Blackberry, Best Buy, Walmart) are significantly more likely than non-fans to

  • Consider buying
  • Purchase (79% vs 41%)
  • Recommend (74% vs 38%)”

What is equally important to understand here is that boosting the number of fans on a Facebook page (Hilariously chronicled here: Arre Sir, We Will Get You 2250 Fans. That’s Our Headache!) isn’t the solution to exploring the commercial aspect of your page.

While dealing with Facebook fans always remember:

  1. The power of the Like button is not that it creates fans, it IDENTIFIES them.
  2. Your Facebook page is like a honey-laden flower that  ATTRACTS your most valuable customer and lets you target them.

Instead, reward your fans. Use your page to drive up engagement.

Flipkart’s newest product: Trust

Logo of Flipkart.com
Flipkart.com (Photo credit: Wikipedia)

India’s most famous E-commerce company Flipkart (they aren’t the biggest, that would be mjunction) has been around since 2007. Over the last 5 years, they have emerged as a clear favourite among customers owing to their almost delightful customer service.

Indiamart introduced Cash-on-delivery back in 2001 and then discontinued it in 2003. Flipkart reintroduced Cash-on-Delivery and this feature has now become one of the most crucial payment methods for Indians shopping online.

The point here is, back in 2007, Flipkart started with selling books online. Five years later it has  steadily scaled its business by foraying into categories like computers & peripherals, CDs & DVDs, games, home and kitchen appliances, mobile & accessories, personal and healthcare equipments ( I am sure there they have added more recently, the latest being baby products).

Indians can be frugal by nature, and getting deep discounts with the added benefit of free home delivery drove Indians to shop online. Along the way, Flipkart managed to delight its customers with fast deliveries.

Now in the 3rd quarter of 2012, things look different. Flipkart now wants its customers to shop for a minimum of Rs 300/- to avail of free delivery (Flipkart websiteHow much are the delivery charges? Flipkart provides free delivery on all items if your total order amount is Rs. 300/- or more. Otherwise Rs. 30/- is charged as delivery charges.)

Flipkart is also no longer the cheapest options available online. Below are some screenshots of randomly selected products from Flipkart’s top selling categories:

Books

Mobiles

Electronics

This brings us to an important junction, if people came to shop on Flipkart for price concessions and delivery convenience, why are they still here. The answer to that could very well be Flipkart’s most important product category yet, “Trust”. Flipkart has managed to build a Reputation (dependable and quick), which has created Brand value (reliable and delightful), which over time has built consumer Trust in the brand.

It is this trust in the brand that is being subliminally reinforced by their newest Advertising campaign “Don’t shop it, Flipkart it” (the complete Flipkart Advertising Campaign, August 2012)

Another perspective by Alok Kejriwal – Flipkart ads on TV – are they building the online category at their own cost?

Do share your thoughts.

Google Nexus Q, a Google device in your house!

Image representing Google as depicted in Crunc...
Google

At the ongoing I/O conference, Google’s Project glass and Nexus 7 might be the most talked about devices but there is another device that Google has created that is ready to invade our homes, the Nexus Q. The Nexus Q is part of Google’s Project Tungsten, which looks at incorporating Android into Home devices.

According to Firstpost, “The Nexus Q is a minimally designed, spheroid home entertainment hub, and also functions as a streaming hub with 25-watt amp for external speakers that can link to your Android Smartphone or tablet”.

The device provides a functionality which is something which I have long dreamt of, the ability to let multiple users connect to the same speaker and choose which music to play!

 The Nexus Q will utilize the user’s Google cloud content – PC Mag

Would you use something like this?

The photoshop magic behind McDonald’s advertising campaigns

English: The mdonalds logo from the late 90s
McDonalds (Photo credit: Wikipedia)

Last week a customer from Toronto named Isabel M. got onto a website created by McDonald’s Canada, which allows customers to ask any question they want. Her question was, “Why does your food look different in the advertising than what is in the store?” Looking at this as an opportunity to get some good public opinion going in favour of McDonalds, Director of marketing for McDonald’s Canada, Hope Bagozzi, addressed the question herself.

Bagozzi enters a typical McDonalds and orders a quarter pounder and takes it along with her to the Watt International,the advertising agency, to get it shot. McDonald’s claim is that the only doctoring they do is to make the ingredients visible so the consumer. Towards the end, Bagozzi also adds that the photoshop they use on the final images is only to “enhance the color and any accidents that might happen during preparation, which obviously doesn’t show the product in its best light.”

I am impressed with courage to take the customer behind the scenes. What do you think? Are revealing videos like this a good marketing strategy for McDonald’s? Or is the risk of potentially negative PR too great to consider something like this for your own company?

Microsoft launches Surface, their own Tablet.

A little over an hour ago, in one of the most secretive press conferences ever, Microsoft launched Surface. According to early reports from Engadget, the specifications for the new Tablet are as follows, “Measuring just 9.3mm thick, the Surface for Windows RT is built around an angled, all-magnesium VaporMg case that weighs just under 1.3 pounds, with an NVIDIA-made ARM chip powering the whole affair. Microsoft’s hardware partner has also gone all-out on extra touches, such as a built-in stand, twin 2×2 MIMO antennas for WiFi, and a 10.6-inch optically-bonded, Gorilla Glass 2-covered HD display.” [Update: The full specifications are now available here]

Another impressive feature is that Microsoft is offering the Tab with two types of Keyboards. A Type Cover full tactile keyboard, and a simple Touch Cover keyboard. According to the Verge, “It may seem like a minor difference, but the Touch cover keyboard is an improvement over the standard capacitive touch keyboard, while the Type Cover is a slimmed down version of a true keyboard with actual moving keys.

Below is the official video released by Microsoft

Do you think this will be able to make enough sales to impact the market share that Apple currently holds with their iPad?