In its second-largest acquisition, Amazon buys the company for $970 million.
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Amazon Giver allows users to share their Amazon.com wish lists. Based on birthdays provided in the demographic information in Facebook profiles, it lists friends based on whose birthday is next in line. It also looks to the “interests” area of Facebook users to generate product recommendations for each friend. So, for a friend who lists The Police as a favorite band, Amazon Giver will show Police albums and books as well as products based on other interests. A user who wants to buy a gift can link to Amazon.com to complete the purchase.
Amazon Grapevine enables friends to check out each other’s Amazon.com social activities. The application notifies fellow Grapevine friends when someone has added a customer review, updated a wish list or tagged a product.
“Gift giving is a fundamental activity for us, so we wanted to make that convenient for all our customers, to give them a simple interface, through Giver, where they are interacting with their friends,” says Russell Dicker, senior manager of community content at Amazon.com, which also has a Facebook page launched in March with more than 1,000 fans. “And for a lot of our customers, writing reviews and creating wish lists is part of their personas and they can show them off using Grapevine.”
In the first month, 2,500 Facebook users added the applications to their pages. To attract users, Amazon.com promotes the applications on its Facebook page, which staffers in the e-retailer’s community department monitor for customer interactions and feedback on an hourly basis. Amazon.com would not disclose what it cost to build the applications, created in house by its community department. Consultants who build social network applications estimate applications on average cost $10,000 to $15,000-though the cost can go much higher depending on functionality.
Amazon.com says the best way to gain users of an application is to ensure an application can speak for itself.
“The most important way to get the word out is to offer a great social networking experience, which moves people to tell each other about it,” Dicker says of applications and pages. “There are excellent word of mouth features that Facebook has built into its system. And at the core of word of mouth is creating the best experience. Social networking is really powerful, but it only works when you have something compelling.”
Some individuals and businesses, though, see hazards in social networks, such as abuse by individuals or groups of individuals. Some are simply nervous about putting too much out there, in a sense getting too involved in what are gargantuan virtual worlds. “Do I want my name or brand floating about networks for millions of people to judge?” is a common question.
“Negative content may be posted whether a retailer has a presence or not, and the decision not to participate in social technology will not mitigate risk,” says Dayna Bateman, senior strategic analyst at Fry Inc., an e-commerce design and services vendor that has started to educate clients on the benefits of social networks. “Establishing a presence offers a counterbalance. You are out there, you are talking and engaging people, and people can draw their own judgments. And if something negative appears, a retailer needs to post a response.”
If a retailer decides to enter social networking, it should not let the possibility of bad press within a social community deter it from doing what it wishes or being bold, experts say.
“If you are getting into social networking, you have to take the word ‘protection’ out of consideration. Anyone concerned with protecting their brand is not going to be successful in social networking because then there is too much concern and wall-building versus reaching out and sharing information with the consumer,” says Valorie Luther, founder and CEO of Creative Concepts Consultants. “Supporters of your brand want something that is real and human, they want a brand that is honest and approachable.”
And retailers who don’t create a social network presence that is honest and approachable do so at their own risk, says Colin Smillie, a partner at Refresh Partners Inc., a social marketing firm. “I have seen many instances where a brand has ignored social networks and the consumers are left creating their own conversations, with the brand left out of the conversation,” Smillie says. “Not being engaged in that conversation is how brands get in a lot of trouble.”
In many ways, social networks are like customer reviews, discussion boards, online forums and blogs: All involve customer feedback. Retailers can delete content generated in social settings on their own sites; they can do the same on their pages on the big three social networks. But shoppers are savvy and can sniff out too much editing. It boils down to this: Retailers cannot delete what social networkers post on pages or in groups that do not belong to the retailers. These posts will appear, like it or not.
“We’re comfortable with the open environment,” says Dicker of Amazon.com. “We’ve done this on our site with customer reviews and discussion boards. We allow people to say whatever they want about their experience with us on the discussion boards. So that is not something we’re really afraid of. We welcome open and honest comments, it helps us do a better job.”
Return on investment
And then there’s the question for which some retailers demand an answer: What’s the return on investment in hard dollars?
“The reality is most retailers are not currently enjoying sales results from their social network efforts, but they are seeing greater customer engagement and increased traffic to their sites,” says Patti Freeman Evans, retail analyst at Internet research firm JupiterResearch. “Driving awareness and engagement is a good thing. But you need to know that is what you will be getting from these things. So if you measure against sales metrics you will be disappointed. But if you measure against page visits and interactions you will see there is value.”