Q&A: Social commerce in 2016

E-commerce and social media increasingly go hand in hand as consumers grow ever more tech-savvy. Here, Fabian Spielberger, founder of Pepper.com, discusses the state of social commerce in 2016.

Pepper.com is the world’s largest group of social commerce networks that are currently used by more than 25 million users and generate an average of 500 million page views every month. Through partnerships, mergers, and acquisitions, Pepper.com and its partners are already active in eleven countries on three continents. The group includes HotUKDeals in the UK, Dealabs in France, and mydealz in Germany (founded by Spielberger in 2007).

What do you think went wrong with the Twitter Buy Button?

Targeting, timing, and usability are crucial for the success of social commerce, and Twitter failed to come up with a solution for at least two of these issues. The Twitter Buy Button wasn’t easy to use, but oversimplified with just an ad with a Buy Button where consumers would have to sign up to every retailer. Facebook, like Pinterest, gets it right with the option for the complete checkout happening on their own platform. In addition, it doesn’t help that Twitter is also failing at targeting, with ads often out of place for their audiences. Their ads are often so out of place that you have to wonder who in the world would think an English speaker from Berlin would install a Japanese app that is Japanese only.

How important is mobile to online shopping?

From day one at mydealz, my team have constantly heard me talking about mobile commerce. It’s no longer the future – it’s happening now. We can see this when we take a look at our own figures. In the first half of 2016 every second visitor of our eleven social commerce platforms used a mobile device. Of course there are differences between single markets. While mobile devices are already used by 65.6 per cent of all Brazilian and 61.4 per cent of all British consumers, in continental European countries such as France or Germany slightly less than every second visitor used a mobile device. But besides that, I strongly believe that everyone should be using 2016 to focus on perfecting their mobile applications to fulfil the needs of their customers.

What are the biggest mistakes an Internet retailer can make when using social media?

With the rise of social commerce and consumers relying on recommendations from friends and fellow shoppers when making their purchasing decisions retailers need to be more careful and communicate more consistently than ever when using social media. Merchants have to get it right first time online as once it’s live it’s not disappearing. Consumers will remember mistakes by retailers and will discuss it on forums that people use to judge products, deals and retailers to ensure they’re making the right purchasing choices.

I’ve seen retailers talk down to consumers on social media with merchants forgetting how quickly things can go viral – not just on social media platforms but via forums and word of mouth etc. Retailers should see their consumers as equals and should communicate openly and honestly – sometimes people get it wrong and using a negative as something useful is valuable marketing to ensure consumers trust them as a brand. It is of course possible to not be so honest but then you need to be 100 per cent in line on every channel. As this usually doesn’t work, I’d suggest sticking with the truth.

What is the biggest lesson you’ve learnt in the world of social shopping?

Consumers are smart. As more people are talking about products, purchases, and experiences, customers are more clued up on what makes a good deal and this is an important factor that retailers need to remember. It’s no longer good enough to set a discount price and advertise it on a poster or a banner ad. People want to know that it’s not cheaper elsewhere, they want to understand the product and why they should choose that one over a more expensive item. Consumers are not often looking for the cheapest item but for the products that give them the most value for their money.

What factors are most important for e-commerce marketers to reach their audiences?

I don’t want to say that we are already living in a post-advertising age, but there is no doubt that consumer behaviour has fundamentally changed during the last couple of years. Nowadays, consumers aren’t very likely to click on display ads or links in newsletters. They act independently and look for useful information such as reviews instead.

Looking at stats from Similar Web for Q1/2016, the top 25 British Internet retailers were only able to generate 0.16 per cent of their traffic by running display campaigns and 2.7 per cent with newsletters while organic search results and referring websites such as HotUKDeals have contributed 35.5 per cent and 14.6 per cent respectively to their reach.

E-commerce marketers can’t ignore this change if they want to stay successful. Instead of interrupting their customers with display ads, they need to join the conversation and provide consumers with useful information.

What are retailer’s views on deal sharing communities? Do you find they embrace them or are slightly weary of them?

This goes back to my comments earlier about being open and honest with customers and treating them as equals. Retailers that follow this mentality are definitely more open to social platforms such as ours, along with Facebook, Twitter, and Pinterest for example. Some retailers are more controlling in terms of marketing but most retailers understand that these platforms are a place to meet customers in a neutral setting and are embracing them.

We had a great example of a retailer embracing social commerce when a member of mydealz in Germany leaked a 3 for 2 promotion that was happening at SATURN. Instead of being controlling and approaching us to delete the post they produced a viral video on social media with the hashtag #3f2leak in a bid to find out who leaked the sale – was it the old lady, a geeky young guy, or a competitor? As a result, consumers engaged with both the video and the promotion.

Are there any ‘golden rules’ companies should follow to be successful? 

For sure, there is at least one golden rule: respect your customers and make sure that they are happy with your service and products. In a more and more connected world, there is nothing more crucial than a happy customer who spreads the word and recommends your company to other consumers.

E-commerce varies from country to country. Who do you think is leading the way and why?

The U.S has always been portrayed as the e-commerce giant with the size of the country, its developments, and huge sales events such as Black Friday and Cyber Monday dominating the shopping calendar -- but China is the biggest e-commerce market with Alibaba, China’s biggest online retailer, breaking its own record last year on Singles Day with sales amounting to more than 14.3bn. This success can be accounted to many factors including China’s large economy and their digital market, in particular shopping via mobiles.

But actually I think that single markets should not be seen in isolation when it comes to e-commerce. Today, a growing number of consumers order items abroad to benefit from price differences or to purchase items that are not sold in their own country. Take a look at the British online retailer Sports Direct for example. From January to May 2016, 387,500 of its customers came directly from our French platform Dealabs and 186,000 from our German platform mydealz. This is not by chance. Sports Direct and other players such as Amazon or Alibaba think globally and have efficiently aligned their shop, product range and service to customers from other countries. Let’s see what the Brexit and its economic circumstances will bring.

Fabian Spielberger, Founder of Pepper.com

Image Credit: Slavoljub Pantelic / Shutterstock