Facebook vs. Amazon

As of recently Facebook has introduced a new e-commerce feature to their social media platform. Their strategy involves turning your News Feed into an online store by creating a Shopping tab that can be found alongside the Messages and Events tabs. This new feature is Facebook’s attempt at entering new markets and competing with e-commerce giant Amazon. The project is mainly aimed at big brands and gives them the ability to catalogue their merchandise on the social media platform and have customers buy their products directly from the site rather than clicking on an advertisement and being redirected to their own company website. It also provides the opportunity for customers to contact brands and track their packages through messenger, in a similar way that can be done on brand websites.
Screen Shot 2015-11-05 at 2.42.18 PMThere are a number of strengths and weaknesses to this new feature with the first strength being that it allows brands to extend their number of selling platforms, and since Facebook has already established themselves as an effective platform for online communicating and advertising, it makes it very appealing for businesses. Secondly, the feature is free for companies; therefore they are paying nothing for something that will most likely increase their profits. User experience on the mobile application will also improve because unlike traditional advertisements the Shopping feature will have products managed in the same way as photos, which will make them easily accessible and more user friendly. As for Facebook, it means that people will be spending more time on their site rather than users transferring to other websites and; in a positive for Facebook, it will mean that they have greater data collection on their users than anyone else.

However, there are also a number of weaknesses to the feature with the first continuing on from the last point made in the previous paragraph. Facebook will have a significant sized data storage of millions of users, which to everyone else is seen as a major privacy concern. As the feature continues to grow Facebook could also begin to start charging brands for the service and subjecting them to all kinds of rules that could prove to be less beneficial for the companies.

Screen Shot 2015-11-05 at 2.42.06 PM

An interesting question though is what does this mean for amazon? At the moment the feature seems promising and Facebook is clearly a well-established business with a large community, giving it a good starting advantage. However, there are also several other competitors that have moderately successful similar features, but have not come close to taking over amazon, including Google, Twitter and Pinterest. As well as that Facebook has had several failed attempts at entering foreign markets for instance, when they tried to compete with LinkedIn as a professional networking service.

Personally, I do not like the idea, not because it is not a good one, but if Facebook becomes a leader in eCommerce, what’s to stop it from entering other markets. Although there was a failed attempt at competing with LinkedIn as a professional networking site it does not mean it will hinder any plans of Facebook to correct issues and try again. Even then there are many ways Facebook are trying to keep people on their sites for longer, even by introducing hot topic articles. Who is to say that Facebook won’t be the place where you can connect with friends and connect with work or potential employers, shop for clothes, groceries, appliances, catch up on news, internet banking, eventually start doing everything in one place. Where are the boundaries?

Facebook is a business and although I am only one user out of a billion. The idea that everything I need will be in one location; which in theory is convenient. The fact that there is no longer a separation between these different parts of my life is unsettling.

References

  • Facebook introduces new shopping features. (2015, October 12). http://money.cnn.com/2015/10/12/technology/facebook-shopping-feed/index.html
  • Facebook is taking on Amazon with shopping pages. (2015, July 16). http://money.cnn.com/2015/07/16/technology/facebook-buy/index.html?iid=EL
  • Parker, R. (2015, September 22). Facebook’s New Shopping Features, and What They Mean For Your Brand | Return On Digital.

    http://www.returnondigital.com/blog/facebooks-new-shopping-features-and-what-they-mean-for-your-brand

  • Yoffie, D., Slind, M., & Achsaf, N. (2009). LinkedIn Corp., 2008. Harvard Business Review, 1-19.
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Pewdiepie

I guess you’ve all heard of the YouTube celebrity Felix Kjellberg A.K.A. Pewdiepie. If not, he is the most subscribed YouTuber with an astounding 40 million subscribers, mostly playing ‘indie’ or unpopular videogames while live commentating the event. In 2015, his annual income is estimated to be 4 million dollars a year and his net worth is estimated around 16 million dollars. And he’s only 25 years old! (Net Worth 2015)
Where does all this money come from?

First, let me freshen up your memory by explaining the phenomenon called ‘Social Commerce’. “Simply defined, social commerce is the fusion of social media with e-commerce or basically the concept of word-of-mouth applied to e-commerce.” (Marsden 2010)
So, in the case of Pewdiepie’s channel there are some signs of social commerce. For example, every month Pewds gets a package containing several collector items which are all related by theme, like ‘Villains’. He unboxes the items on screen and comments on them. At the end of the video he advises people to also buy these ‘Loot Crates’. The video below is one of the examples of this word-of-mouth on his channel.

Another important way companies gain a lot of awareness is when Pewdiepie plays their game. Then, the so-called Oprah effect comes into force. The Oprah effect is the effect that an appearance on a famous show can have on a small business. (Investopedia 2015) Because Pewdiepie nearly has 10 billion views, a recommendation can have a significant influence on the game developers.

Not a lot of people know that Pewdiepie actually is signed under Maker Studios, a company owned by Walt Disney, which produces videos for channels on YouTube. (Maker Studios 2015) The funny thing is, Pewdiepie says in his videos that he never gets paid to promote the videogames he plays. (YouTube 2015)

Is he telling the truth? Or is he lying and exploiting all of his subscribers? That making money is his main motive?
What do you guys think?

References:
– Investopedia (2015) Oprah Effect http://www.investopedia.com/terms/o/oprah-effect.asp
– Maker Studios (2015) Makers http://www.makerstudios.com/makers
– Marsden, P. (2010) Social Commerce: Monetizing Social Media, Hamburg: Syzygy.
– Net Worth (2015) Pewdiepie http://www.the-net-worth.com/2015/05/pewdiepie/
– YouTube (2015) Pewdiepie https://www.youtube.com/user/PewDiePie/

Loyalty is a marketing myth

Yesterday I went to IKEA to buy something for my kitchen. At the cashregister I was asked for my Family Card. Guess what: I didn’t have it with me. It must be in the kitchendrawer that I use for irregular items like elastic bands I might want to use in future, loose buttons, plastic bags, half a tube of glue and what not. I did have a loyalty card with me from Steps though, a shop I visit maybe twice a year.

I fear the marketers of IKEA and Steps will not consider me a loyal customer. Nor will all the other brands whose loyalty cards I have accepted and I don’t use.

Marketers introduce these cards because they want to create brand loyalty. Customers must feel valued and welcome within the brand community or family. The word Family Card is indeed very well chosen by IKEA . If I would have had the card with me yesterday I would have been able to get a free coffee with all the other Familymembers (do I really want to know them?) and could have benefited from several special offers (products I don’t need)

IKEA Nederland does incorporate social media in their marketing strategy. The company created a Facebookpage (127.842 likes) and answers questions from customers posted on FB in the same tone of voice as used in their publicity campaigns: straightforward and friendly. IKEA Nederland also has a Twitter-account (@IKEANederland). The account doesn’t seem to be very active. Except for announcements of their new campaign and promotions it shows tweets of people who use @IKEANederland, but no friendly responses. In fact, there don’t seem to be any two-way-communication between customer and company here. Complaints from customers of missing items are not answered and even the tweet of an influential member like Jan Dijkgraaf (more than 80.000 tweets, more than 7400 followers) who states the interviews in IKEA-magazine are fake doesn’t get an official comment.

Still, IKEA must belong to the 33% of companies that succeed in creating some kind of lasting relationship with its customers. Most brand loyalty campaigns however fail according to an American study because “companies often have dangerously wrong ideas about how best to engage with customers.” The study involving more than 7000 consumers states marketers hold on to three myths.

#1.Customers want to have relationships with brands.
77 percent don’t.
“It’s just a brand, not a member of my family.”
What consumers really want is to get discounts

#2 An increase in interactions is always the answer.
Many marketers are only adding to the information bombardment consumers feel as they shop a category, reducing stickiness rather than enhancing it

#3 Loyalty comes from regularly engaging with a brand.
Brand loyalty is built on shared values.
Pedigree Dog Food’s shared value is a belief that every dog deserves a loving home. Southwest Airlines’ shared value revolves around the democratization of air travel.

I do wonder, does anyone share a value with IKEA other than they sell cheap stuff ?

http://blogs.hbr.org/2012/05/three-myths-about-customer-eng/