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Curation: Another Surging Trend in E-commerce

7/19/2011

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In continuation on the inspiration of my last blog post (“Luke & The Mechanics – A look at a Growing Trend in E-business” 6-29-11), today I am going to discuss another keen observation that Gilt Group’s Susan Lyne made a few weeks ago during an interview with BigThink.com.  This emerging trend in e-commerce is the concept that has been coined product curation. 

Curation refers to an online marketing and merchandising model in which specific products are carefully selected for a targeted set of consumers.  These consumers typically have registered or subscribed with the online merchant, and have given an indication of their product preferences, tastes, shopping habits, and spending budget.  The merchant then typically uses an  decision-making system to present customers a handful of pre-selected products – or in some cases just one – that match their preferences.  The products are often discounted and positioned as a “special, one-of-a-kind” buying opportunity.

Up until now, the conventional thinking in e-commerce has typically revolved around abundant selection and broad choices.  The benefit of online shopping vs. going to a store was that you were not limited by shelf space.  An online retailer, with its vast warehousing capabilities, could offer thousands of products and take advantage of incremental revenue and profit from the “long tail” – those hard-to-find and rarely sold items.  To be successful in the long tail, merchants needed to focus on site functionality, intuitive navigation and search, and speed.  Shoppers want to quickly load and browse through page after page of product listings and use search to find what they want.  They require detailed product descriptions, specs and photos, clear pricing, reviews, and delivery information.

In some ways, the curation model is the offspring of the long tail in e-commerce and search functionality. Items are searched out and pre-selected from the sometimes overwhelming selection by experts – i.e. “curated.”  These types of sites need to be clever in choosing items in which to feature and sell, and matching the right items to the right customers is paramount.  The cost structure can differ too; more time, effort and investment goes into the front-end process of market research, picking trends, buying and merchandising, and customer acquisition.  

Some companies that have successfully adopted this model include Groupon (one selected deal per day), Sniqueaway (for travel), and Svpply (curated shopping “wishlists”). Curation is popular for fashion sites, with the latest styles being selected and offered on sites owned by Gilt Group, Shoedazzle, Beachmint, and ThisNext. Last week I was speaking with an executive from Beachmint – they run sites are Jewelmint.com and Stylemint.com – and he was excited about the prospects of this model.  He mentioned that leveraging the loyalty and repeat visits of subscribers across a number of related product categories boosts traffic, lowers customer acquisition costs, and improves targeting.

The curation approach is often used in conjunction with other twists to attract and retain customers.  Groupon and Gilt Group utilize game mechanics; Shoedazzle and Beachmint bring in celebrities to curate and endorse items. ThisNext and JustBoughtIt! tap into social networks to enhance the shopping experience, as users share ideas and advice on product picks amongst friends – a niche known as social commerce.  

 These approaches to online shopping are growing fast and they are here to stay.  They are bringing back the fun, social aspect of shopping – one thing that has seemingly been lacking in traditional e-commerce models.  Many consumers love “retail therapy” - being shown the latest trends, getting fawned over by store employees, and the excitement of finding great buys with your friends.  As long as this experiential side of online shopping continues to evolve, these savvy e-merchants will continue to enjoy growth and gain some very loyal customers.
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Luke & The Mechanics – A look at a Growing Trend in E-business

7/1/2011

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Susan Lyne, the Chairman and former CEO of Gilt Groupe recently gave an interesting and insightful interview to the website BigThink.com, in which she identified some impactful trends that are taking place in today’s e-commerce marketplace. She was right-on with her observations (and they conveniently helped underscore and promote Gilt’s business model), and I feel that two of these concepts – game mechanics and curation - are worth discussing further. Today I will focus on game mechanics, and will cover curation in a future post. 

Game mechanics – also known as game dynamics - is loosely defined as any game-play activity incorporated into the user experience of a website for the purposes of driving traffic, enriching engagement, influencing consumer behavior, and deriving fun from online activities such as shopping or sharing personal information. Not unlike popular online games themselves, (World of Warcraft, Farmville, and the Sims come to mind), game mechanics seek to engross participants and distract them from stresses of everyday life. 

Applying these dynamics online has emerged due in part to the psychology powering the popularity of social networking - a shared experience where users find it fun and easy to ask questions of advisors and consult friends for key decisions. By making a game out of activities such as purchasing, registering, subscribing, and sharing information, users can feel as though they have “won” or have achieved something special – status recognition, discounts, or even small prizes. For consumers, this is surely preferable to feeling the pangs of having compromised themselves in some small way by conducting an online transaction.

Web merchants and marketers have realized that successfully incorporating a game into their web presence can cause users to visit their site more often, stay longer, refer others, and complete a transaction with lower chances of feeling buyer’s remorse. In a recent article written for Business Week (“Welcome to the Decade of Games”) Harvard Business Review indicated that simple game dynamics can increase traffic to web locations by 4 times in a matter of days, and the average amount of engaged time consumers spend at a business increases by upwards of 40%.

There are several examples of game mechanics in successful online business models. On E-Bay, you don’t just make a purchase - you seek out what you want, make your bid, and win the auction. E-bay also rates users, so there is pride and benefit to being a good “player.” With Foursquare, the game mechanics of “checking in” at locations and achieving certain titles makes it fun; you forget that you are actually revealing your shopping preferences, brand loyalties and buying habits. Groupon has taken an age old promotional tool – coupons – and made it fun where you rush to check out the daily deal (complete with witty, lighthearted copy), then cheer on your virtual shopping “teammates” to reach the purchase threshold and activate the offer. Established brands have even taken to the web and social networks to turn traditional branding initiatives into games – Pepsi’s recent “Refresh Project” challenged participants to submit ideas online to “refresh the world” and garner support via social networks. Pepsi provided funding to execute the most widely supported projects, earning them hugely positive brand associations, deep customer engagement, and a great PR story.

Game mechanics is a fascinating concept, and I believe it will continue to evolve over the coming years with the growth of social networking and creative online activities. Creative marketers will also push the envelope of game mechanics in their quest to gain the attention of media-bombarded web users. If you are running an online business it is a good idea to research game mechanics – get visitors to your site and let them have some fun! They will be relaxed, excited, more engaged, and ultimately more willing to do business with you.
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    Luke Grant is an experienced marketing and business development executive, with over 15 years of experience in e-commerce, marketing technology, mobile and consumer electronics.

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