Innovation at the Frontier

(Blog Owner: I took this article from enterprise innovation site. I think this articles is important for your reference. Have a nice reading)

By Hung LeHong

Let's start with the bottom line: Social networks are getting too much consumer traffic for retailers to ignore. MySpace was the number one Web site, based on page visits in December 2007, according to comScore.

Social networks centre on younger demographic groups - so not all retailers should have social networks at the top of their agendas. However, social networks are expanding into other groups that retailers care about, such as career-based social networks (for example, LinkedIn), shopping-based social networks (for example, Kaboodle), employee groups on Facebook and MySpace, and so on.

Retailers must have a position on social networks. These positions can range from creating their own social community to gather feedback, to creating a marketing presence on large social networks, to doing nothing but observing how brands are discussed and perceived. To help retailers formulate their positioning strategies on social networks, Gartner has created a list of the top 10 things retailers should know about social networks - and what to do.

1. There Are Social Sites, and Then There Are Social Platforms

Any retailer's Web site can become social. Creating discussion forums, consumer reviews - and essentially any vehicle that enables consumers to create their own content, share it with others, and consequently interact with one another - will transform a "normal" site into a social site.

In contrast, a social platform is a large public site that enables users to do the same things as on a social site, but also creates a platform that encourages and eases the development of applications, widgets and mashups. Social platforms provide a set of application programming interfaces (APIs) that give developers access to the very core of what makes social networks valuable: social graphs, profiles, social activity statistics, broadcast capability, events and integration of the "regular" Internet into the social network. In North America, Facebook and MySpace are prime examples of a social platform.

What a retailer is capable of doing on a social network will be determined by the platform's capabilities. For example, Zlio enables members to create their own stores by "mashing up" items from multiple retailers' Web sites. Members get a commission for products that lead to a sale on a retailer's site. Zlio's platform is focused on allowing retailers to make their items available for mashups and leveraging the affiliate network capabilities to manage commissions. Facebook, on the other hand, has a very open platform that allows for a huge number of applications, except for, ironically, managing large-scale commerce.

What to Do

Determine if you need to transform your Web site into a social site, leverage social platforms or both.

The answer to this question is rooted in where your target market resides and which social vehicles you will want to implement. Taking advantage of a social graph will require that you work with a social network. Staffing a discussion forum with expert sales associates who help customers may be better handled by giving community capabilities to your site. Understanding where your consumers are, what "actions" you want to take with these consumers, and understanding which platforms can or cannot do these actions will determine the path that you take. Keep in mind that consumers can participate in only so many communities and social networks.

2 Social Network Sites Span Well Beyond MySpace and Facebook - But the Market Is Starting to Reconsolidate

According to comScore, 207 domains are classified as social networks, while other sources claim well more than 300. In addition to the large social networks such as Facebook, MySpace, hi5 and Bebo, there are a large number of specialized sites such as Dogster (a dog owners community) or LinkedIn (a career-focused site). There are also social networks focused on shopping (for example, ThisNext, Pronto.com, Stylehive, Wists and Kaboodle).

Where does anyone find the time to spend on all of these social networks? Gartner Media analysts estimate that an individual is able to participate in one to three social networks in any meaningful way. comScore noted that, in September 2007, at the 207 sites that are considered social networks, a daily average of 46.7 visitors logged in an average of 22 times a month - which comes to 9.7 minutes per visit.

Because there are only so many social networks one can possibly participate in, we are starting to see consumers shift to the large centers of gravity (for example, MySpace and Facebook in North America). There appears to even be a shift among the large social networks. From January 2007 to January 2008, Facebook increased 305%, and Bebo (which has just been acquired by AOL) increased 76% in total unique visitors, according to comScore. In contrast, MySpace increased only 15% in unique visitors. We conclude that the social network market has not yet settled, so retailers should be cautious with their investments on any one social network.

What to Do

Target your social networks, and expect the fragmented social network space to consolidate. There is no way that a retailer could, or will want to, invest in all social networks, even if it's just for advertising.

If a social network has critical mass in an area that is well-centered on your merchandise or your target customer base, it should be at the top of your list for consideration. As mentioned previously, social networks also have different capabilities, ranging from displaying Google AdWords to hosting platform-caliber application and widget development. The combination of where your customers are or will be, what they are discussing or sharing, and what the social network can do for you will narrow down your list. The safest bets are to invest in the large social networks - one or two in your geographical market.

3 Social Networks Are Rich in Word-of-Mouth Discussions About Retailers and Products

If someone spends any amount of time on a major social network, they will quickly realize that word-of-mouth discussion about brands, products and retailers is rampant. Friends discuss with friends what they bought, what they are thinking of buying and what they think about items they never buy.

As a result, social networks are becoming a direct launch point to retailer Web sites. Statistics differ as to how much of the traffic to retail sites originates from social networks. For example, in late 2007, Hitwise stated that Facebook ranked No. 20 in driving traffic to retail Web sites in the U.K. During this same period, Topshop, a U.K. apparel retailer, stated that MySpace sent more traffic to its site than Yahoo search and MSN search combined - and only Google sent more traffic. In contrast, comScore data for the retailers Amazon.com and Best Buy show that less than 2% of traffic came from social networks in January 2008.

The statistics will vary across retailers and countries. Then there are the social networks outright devoted to shopping (for example, Kaboodle, Stylehive, ThisNext and Pronto.com). The whole point of these networks is to define who its visitors are and find "friends," based on what they buy, what they are thinking of buying and what they recommend.

The challenge for retailers is to determine in which social networks to invest marketing funds.

What to Do

View social networks as a lead generation channel just as you would search engines, review sites and price comparison sites. If your target market generates heavy traffic on a social network, invest in marketing vehicles that get consumers to your site or store. Lead generation vehicles range from banners, to search term bidding, to APIs that enable social networks to access your Web content, to affiliate marketing, to creating widgets that enable you to interact with consumers.

Unfortunately, each social network has its own set of "best vehicles to create leads," so no one approach will work universally.

It is also important to decide in which social networks you will invest, because this will decide which lead generation vehicles you will use. If you engage a third party, such as an ad agency, to create lead traffic from social networks, ensure that they include the social network channel as a part of your umbrella multichannel strategy.

4 Social Graphs Make Word-of-Mouth Relationships Known and Usable

Social graphs describe how friends are formally linked to each other on a social network. The term and the concept are far from being new. What is new is the prospect of accessing the social graph - not just for analysis - but for action. For example, Facebook has created an advertising vehicle called Beacon that enables one friend to broadcast to all their friends, as defined on the social graph, that they had just purchased something from an online site. Word of mouth is effectively "amplified" by making the social graph usable by friends and business entities on a social network. An issue of ongoing debate is whether the social networks will control what companies such as retailers can do with social graphs. Currently, social networks favor the retailers. Social networks are building more ways to leverage social graphs, while looking for new revenue sources.

What to Do

The first step is to understand how each of the major social networks allow, or will allow, you to leverage their social graphs. Facebook is much further ahead than MySpace in this respect (Facebook applications also work in Bebo). OpenSocial, a standard set of APIs that are currently being defined, will allow your developers to access the social graph in a number of social networks (for example, MySpace and Friendster).

Then, you will need to decide what to do if you have access to social graphs. Some social networks provide social-graph-enabled services ready for use (for example, Facebook's Beacon). Retailers can also create their own applications. Using social graphs in meaningful ways that lead to commercial ends is unexplored territory.

Finally, analysis of social graphs can be useful in understanding how consumer groups are linked to each other. For example, you might discover that 20% of your target market on a social network is linked to pro-environment-focused groups or individuals.

5 Viral Propagation Is Boosted in Social Networks

One of the earliest marketing initiatives that took full advantage of the social Web's capabilities was viral marketing.

The concept consists of creating content that users consider worth sharing with each other. YouTube videos, games, URLs to sites containing media, and widgets are examples of content that have been virally spread. For example, one of the early successes was Burger King's "Subservient Chicken," which got one million hits the day after it was released and 20 million hits within a week. Traditionally, the vehicles for the viral spread of this content have been blogs, e-mails, instant messaging and, lately, social networks.

However, retailers should note that there is a "boosting" effect with social networks. With a few mouse clicks, members can bring in external content and broadcast it to their networks of friends. These same friends can do the same with even fewer mouse clicks. In the past, links to content (or embedded content) would pass from blog site to blog site or via e-mail from one person to another. The social network equivalent would be consumers that send an e-mail with interesting content they want to share to their entire e-mail contact list - every time. E-mail can do the same thing, but social networks culturally encourage viral propagation.

What to Do

Viral marketing is the most obvious route to take with viral propagation. There are agencies that specialize in creating and seeding the content. Ensure that these agencies are well-versed in the nuances of each of the social networks. Some retailers have created original short miniseries videos or "webisodes" (for example, "It's a Mall World" by American Eagle Outfitters). Others have had their commercials virally spread. Technically, any content can be spread virally.

Be careful, because viral propagation can benefit and hurt your brand. For example, a pricing or promotion mistake on your Web site that makes an item ridiculously inexpensive can propagate very quickly in social networks. Already, discussion forums and blogs are quick to communicate pricing mistakes. Similarly, a strong criticism of a product or retailer can very quickly attract a large critical mass. Formal viral marketing efforts are typically tracked, but negative press that is virally spread is much harder to capture. Your public relations firm will need to be well-versed in the social network channels.

6 Applications for Social Networks Are Easier to Build - Opening Up a Whole New Way for Retailers to Interact With Consumers

The latest push in the social network world has been the focus on creating a platform that will enable individuals and companies alike to build applications (sometimes called widgets) that are designed to run on the social network.

Facebook has been particularly aggressive in this arena, resulting in more than 15,000 applications being developed in six months and 400 million installations by members. OpenSocial is an initiative by companies such as Google to define standard APIs that they hope will be used by many of the social networks. The idea is that these standards will enable applications to be developed once and then used on any social network - instead of having to build an application for each social network. OpenSocial has had some success with MySpace, Bebo, Friendster and others agreeing to adopt the standard, but

Facebook has yet to join. Another concern about these applications is that they still need to be built specifically for a social network if that application is to truly use the full capability of a social network's platform - a situation that is similar to building applications for mobile phones.

Some retailers have also eagerly adopted the application- or widget-building trend. For example, Topshop offers Fashion Fix, which allows members to vote for designs. Wal-Mart and Target have also created applications both coincidentally focused on helping students pick furniture. Amazon.com offers APIs that enable members to mash up content, such as applications that can display a member's Amazon.com wish list on the member's profile.

What to Do

Consider building an application for your retail brand as a way to more actively engage your target market. An application is also a way of creating a presence on a social network without directly creating a group or profile that attracts member comments and criticisms. For example, one of Wal-Mart's first entries into social networks was an official corporate "group." Members of the social network used the group as a place to broadcast their criticisms of the large retailer. Wal-Mart has since used an application to maintain a presence on social networks without directly exposing its brand.

The purpose of the application can go well beyond a game or branding front. Consider applications that have real shopping functions, such as customer service (for example, checking the delivery status of orders), multichannel sharing of content (for example, displaying an Amazon.com wish list), product selection guides and feedback mechanisms (for example, Topshop's Fashion Fix).

7 Social Networks Are a Huge Source of Consumer Data, but Retailers Cannot Easily Access It - And Privacy Will Become a Major Issue

In addition to the social graph, social networks contain a huge amount of data that members put into their profiles.

Beyond the usual demographic data, there is information on likes and dislikes, political and religious affiliations, sexual orientation, and the list goes on. In addition to this content are the messages and discussions that members create. However, retailers cannot easily access this data. Friends can view their friends' detailed profiles, but outside access to this data can be tightly controlled by each member.

Privacy concerns are appropriately huge as well. Some people are starting to regret having put so much information about themselves and their friends on the social networks. Access to this information should decrease over time. Access to consumer data will be dictated by a combination of the social networks and the members on that network, and perhaps eventually legislation. Social networks could provide anonymous and aggregated data to work with the privacy concerns. Members can opt in or out of data sharing, depending on who is viewing the information.

What to Do

First, familiarize yourself with the type and amount of data each of the social networks you are interested in will make available - this will range from no data to some data. Second, realize that you can access some of this data on your own by building applications or widgets and requiring that members agree to share some of their data with you in exchange for using your application. As with loyalty cards and search engines, we have found that consumers are willing to give up a bit of privacy in exchange for a valued service or discount.

8 Communities, Groups and Networks Can Be Created by Anyone and Are Impossible to Fully Control

Social interaction and community building are at the heart of social networks. Many of these sites were "built by the people, for the people." Sometimes called the "other Internet," social networks are places that people go to as an alternative to the controlled "corporate" Internet. The notion that the corporate world would control the content and services of a social network is unacceptable to some. Social networks know this and try to maintain the balance heavily in favour of their grassroots beginnings - while they simultaneously strive to build a revenue model. Retailers should expect that the "people" will always be in control of the content. If a social network provides corporations too many capabilities in interacting with members (for example, advertising and selling), there is a risk that members will leave the social network.

What to Do
Build your social network presence on content produced by social network members.

For example, sponsor a group that discusses topics central to your merchandise or your company brand. Create applications that engage members in providing feedback on product design (for example, Topshop's Fashion Fix and Threadless Plus). The best approach is to create a forum or application that will create value for other members and friends and to remain objective - all the while promoting your brand.

9 Social Networks Are Not Capable of Commerce - Yet

Large-scale commerce capability does not exist on social networks. There are applications that leverage the affiliate network click-through revenue models. There are applications that facilitate the movement of money. Zlio is a social network that enables members to create their own stores by mashing up content from retail Web sites into a member's own custom storefront. Social shopping networks such as Kaboodle do the same types of mashups.

Will there be commerce capabilities on social networks? The biggest threat to commerce on social networks is the perception that a social network has "sold out" to the corporations. That means the social network has simply become another channel by which retailers can sell products.

What to Do

Do not be an early adopter of commerce capability on social networks. We predict that one of the major social networks will launch a commerce capability - a gamble that other social networks and retailers will watch very closely. As an early adopter, you risk being part of a movement that may drive away social network participants because of the perceived commercialization of that social network. Being a "fast follower" is a better strategy if you are intent on using social networks as a commerce channel. Another advantage of waiting is to better understand how commerce engines will work with social networks. Will one engine give you access to many social networks, or will you have to invest in each one separately?

10 Social Networks Are Merging Into the Real-Time World - For Example, Making It Onto the Mobile Phone

The pervasiveness of social networks is reaching out beyond the desktop or laptop computer. The ability to access social networks from mobile phones is being promoted by the wireless carriers. At one extreme, some members are "reporting" where they are and what they are doing to their networks of friends on a real-time basis via mobile technology. Social network sites such as Twitter have been designed from the start to support this type of real-time social network usage.

Facebook and other social network sites are now available in a mobile format - making these sites "real-time" capable.

Although nothing major has manifested itself in the retail world, it is easy to see that consumers armed with a mobile version of a social network application can broadcast to their friends what they are shopping for. Today, those same consumers can access any number of retail price comparison and review sites from a mobile phone. With a mobile social network application, they can also "ping" their networks of friends for advice - while they shop. In some ways, the ability for consumers to ping their social networks while shopping is only slightly different from consumers simply calling their friends on mobile phones (or using instant messaging). The difference, of course, is that reaching out to their entire networks is made very easy.

What to Do

Watch this trend. For now, there is nothing to do immediately, because this is an emerging consumer practice. Consumers who would use such capabilities need a mobile phone and a generous mobile data account and use social networks - not the average consumer. For example, just as Facebook's Beacon broadcasts Internet purchases to friends, a similar capability could exist for physical store purchases. For example, consumers could receive a discount or loyalty points if they take a picture of an item, UPC or signage, and they broadcast it to their friends on a social network. A limited-time in-store-only promotion could be broadcast to friends in hopes of driving more traffic to the physical store - somewhat like a modern Web 2.0 version of Kmart's blue-light specials. The future holds all kinds of possibilities.

FURNITURE PRODUCER ASSISTED BY SENADA RECEIVES VLO CERTIFICATION

Djawa Furni Lestari, a Yogyakartabased furniture producer that is one of the firms SENADA is facilitating to obtain VLO certification, was recently the first firm to successfully receive VLO certification for its procurement of raw materials.
VLO stands for “verification of legal origin” and third-party VLO certification is becoming increasingly essential for access to international markets, thanks to the demands of environmentally conscious consumers.
SENADA is facilitating the efforts of 40 firms in East and Central Java and Yogjakarta to achieve VLO certification based on international standards accepted by key western markets. SENADA collaborates with Rainforest Alliance/SmartWood, TUV and SGS as third parties for the certification process.


SUSTAINABLE INDONESIA WORKGROUP INITIATE S “ECO EXOTIC” CAMPAIGN

SENADA facilitated a workgroup that chose the name “Eco Exotic” for a campaign promoting sustainability of the furniture and home accessories industries in Indonesia. The workgroup, Sustainable Indonesia, consists of four furniture producers and five home accessories companies in Central Java and Yogyakarta.
This campaign aims to increase the competitiveness of Indonesian furniture and home accessories producers, especially in the growing market segment of sustainable, ecofriendly products. Key to achieving increased competitiveness is obtaining improved access to and regular participation in international exhibitions, especially “sustainable” or “green” trade exhibitions in the West (i.e., the U.S. and Europe). By the end of March the group met three times to prepare its members for the Las Vegas international trade show to be held at Las Vegas, Nevada, U.S. in July 2008.

EXECUTIVE DEVELOPMENT PROGRAM AIMS TO ENHANCE GARMENT INDUSTRY’S COMPETITIVENESS

The Garment Partnership Indonesia (GPI), initiated by SENADA, conducted six trainings that started in February and ended in early March through an Executive Development Program. Nearly two hundred participants from companies in the Jakarta and Bandung areas attended
trainings that covered topics including quality assurance, productivity improvement, merchandizing, labor incentives, social accountability and fabric sourcing.
The Executive Development Program aims to upgrade factory workers’ competencies and develop new management practices, giving the needed mindset and skills to senior level supervisors and management. GPI is a capacity-building program driven by a network of participating partners representing brands and retailers, garment producers, associations, business service providers, and international development institutions.
The partnership initiative is part of an effort to improve business practices and manufacturing standards in Indonesia’s garment industry as means to enhance its competitiveness.

One of the newest banking opportunities sweeping through the region has a potential market of more than 100 million people in Indonesia, if only the traditional institutions of financial services are willing to take their call.
M-banking, the mobile phone-based system of accessing banking services, has been around for several years in Indonesia, primarily in the form of additive services for existing bank customers. The real potential, industry pioneers say, lies in opening up banking services to the millions of people living beyond easy reach of banks, ATMs, and Internet.
“All it would take is a progressive forward-thinking bank to grab the opportunity,” says Brian Richardson, managing director of Wizzit Bank in South Africa. The company is a celebrated innovator in M-banking, delivering financial services to the rural and lower economic strata populations that have gone unnoticed by the traditional banking institutions.
In its simplest form, M-banking allows a customer to use a mobile phone to make basic bank transactions such as balance inquiries. More complex systems allow transfers of payment, stock trade and direct purchasing using virtual money stored on the phone. With a simple SMS or, increasingly, software that allows for data encryption, an M-banking customer carries both
a wallet and a bank in his phone, accessible anywhere within a company’s cellular coverage, reducing the need to carry cash, operate within banking hours, or travel to banks and ATMs.
In countries where widespread access to banks, ATMs, and Internet are taken for granted, customers see M-banking as a convenience and banks see it as a service for existing customers – a good thing, but not exactly earth-shattering. In Indonesia, where only a sixth of the population holds a bank account but nearly half will own mobile phones by the year 2010, the ramifications
are potentially far greater.
The International Finance Corporation, a private sector arm of the World Bank, in March 2008 held an M-banking seminar in Jakarta to discuss precisely these ramifications. At the very least, speakers said, M-banking has the potential to increase productivity in terms of time management, especially in the rural areas where traditional banking demands an investment in time and travel expenses that makes it unworkable. Beyond this, a new population is given access to all the benefits of savings: security, loans, and wealth generation, plus the psychological benefits of membership in a nation’s financial community.
Add to this the technology’s potential to bypass wire service fees in transferring some of the approximately $5 billion in remittances annually sent home by overseas Indonesians, and M-banking looks all the more attractive here. The Philippines – the regional leader in M-banking
and a country whose remittances last year hit a record $14.4 billion – has already seen this, with more than 4 million of its overseas workers sending money home by mobile phones. One of the country’s most successful M-banking companies estimates its customers alone send home
$50 million every year. The added revenue can be a significant driver for economic growth.
Where does Indonesia fit in all this? Behind, but not woefully.
Most large banks in Indonesia offer some form of M-banking, be it an SMS based service to make account inquiries, or a downloaded (and increasingly preloaded) program to allow activities of the kinds you’d expect with Internet banking. The problem is that most of these services are
aiming at the wrong target.
“One would have to call what they are doing (with their M-banking services) ‘additive’ rather than transformational,” Richardson says, adding that part of the reason Indonesia hasn’t yet seen a revolution in Mbanking is that traditional banks have never believed it could be designed with revenue in mind.
Wizzit is trying to prove that wrong. Now in its third year of operation in Johannesburg, it looks on schedule to meet its goal of breaking even within four years of opening its doors, and it’s considering expanding to other countries through local partnerships. Of the Indonesian market,
Richardson says a Wizzit model would likely achieve operational breakeven within two years.
“You have the typical urban/rural dynamic spread over thousands of islands together with an existing banking industry that is focused on the upper and middle income groups as well as the corporates – not the SMSEs or the ‘unbanked’ population. The cost of banking [the latter] using traditional bank thinking makes it prohibitive, so our view is that our solution is ideal for
Indonesia.”
“The potential is enormous, and the need is definitely there.”

Ben Otto
Contributor
(Source: Innovation at the Frontier - SENADA bulletin)