Saturday, October 2, 2010

The Evolution of the E-Retail Store

With the dotcom boom e-retail took the whole world by storm. the only pure e-retailer is doing fantastic business and has changed the retail scenario for good. With the change in the business model for retail, all the brick and mortar stores now have a new dimension to think about: e-retail - how to incorporate cyber shops in their strategies?

Many companies have a presence in both, physical brick & mortar stores as well as online e-retail stores. But there are many companies who can not afford setting up an
online store model. There are many small / regional / national retailers who have to think about going online but either can not afford setting up an online presence on their own or do not have enough knowledge or specialization to set one up. What can these conmpanies do?

The next evolution of e-retailing is outsourcing the job to someone else. A tech company which will setup and run the website is what many companies have thought of till now. But a step further is whats required to be taken.

Facebook and other social networking sites in the past few years changed the advertising scene. A whole new category of 'social media advertising' was introduced, it's one which is still being learnt and understood by the management gurus. Now before its scope and depth could be understood and exploited a new innovation by Amazon and Pampers (by P&G) is promising to take e-retailing to the next level. One which has enormous scope. Amazon and P&G recently launched a Facebook app designed to be a shop on Facebook.

Most of the brands already have fan pages on Facebook, with enormous fan falling generating even greater consumer loyalty. A shop on Facebook allows the company to tap this market better and with greater ease. Now instead of advertising on social media sites, a shop on the social networking site will let you cater to the whole market present on that site. And at very low cost. As more and more people discover the fan page they automatically discover the online shop.

By with tying up with Amazon, P&G reduces its cost of managing the social website store as Amazon will look after it and maybe even develop it. The firm now has to concentrate more on marketing and manufacturing while Amazon handles its online presence and the outbound logistics to the consumers.

Its a match made in heaven. Each company retains and focuses on its core competence, helps each other out and both earn revenue without incurring costs on things it does not have any expertise with.

Amazon has now branched out from only a store to e-retailing services while the selling business (specifically e-retail) has advanced 1 level to the next step.

How good is it you ask??
Its still too early to say whether it will be a success or not, but the simplicity and logical nature of such a store begs to say that this is the next evolution. After all everyone is already logged onto Facebook all day (from their offices, homes and phones). So now they will not have to go to a different website to order they can just goto the Facebook fan page and use the app to order the products.

The general advantages of online store over e-retail are already present. On top of that the customer now doesn't have to browse to other sites. Amazon (or other future e-retail service provider) members can earn points right from Facebook as the shop is integrated and operated by it therefore no new loyalty programs will have to be initiated.

How will this effect social networking media advertising?
The new field of social networking media advertising (which is still in its initial years) has already undergone a new a change. Since the shop on Facebook is a Facebook app, any purchase made there can be exploited to be shown on the wall of the facebooker thereby every purchase becoming an advertisement. All the friends will get the update.

Facebook can also charge a fee for every such advert post increasing its revenue.

Game Apps can also integrate some sort of shops in their apps, where game wins will provide points which can be used to shop with or purchasing can provide points which can be used to play games with et al.

As you can see the application of such a e-retail concept is quite huge, and its a very appealing concept. One that has the potential to generate income for the app devloper / e-retail service provider, the selling firm as well as facebook itself.

The only thing remaining to be seen is how well will the consumers and Facebook users take to such a concept which will ultimately decide on how successful it is after all, as they say:

"Customer is the king"

-> SJ

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