What happens when social media meets sales in the ‘long tail’?

Techlicious on LuvocracyHow would you run your business if you could rent shop fronts for free, paid nothing for delivery, and had products that cost nothing to make? Let me introduce you to Web 2.0 selling and leveraging the long tail of sales.

This strategy for success was proposed by O’Reilly as one of the key patterns for Web 2.0. The secret is to use the internet to remove the physical costs of selling, so the amount of inventory and range of products is unlimited and the market is global. This means business’ can avoid chasing the popular high-volume sales at the front of the sales curve, and capitalise on the niche products and the longer selling window of the ‘long tail’ – and Amazon is a classic example. The Internet is perfect for capitalising on the benefits of leveraging the long tail, as O’Reilly explains:

Small sites make up the bulk of the internet’s content; narrow niches make up the bulk of internet’s the possible applications. Therefore, leverage customer-self service and algorithmic data management to reach out to the entire web, to the edges and not just the center, to the long tail and not just the head.

A classic example of the virtual shop and unique product sales is iTunes and ringtones which cost nothing to sell or deliver and very little to make. The idea of selling ringtones was seen as ‘the next big thing’ back in 2001  and although they faced some challenges they are still making money in the long tail of sales – even though you can create your own!

Image: JISC Infonet

The benefits that the internet offer to leverage the long tail are unique:

> Producers can reach a wider audience with new micro-markets built off small sites
> Customers have a wider range of products not just the popular but also the unusual and niche
> Business and customers profit from reduced costs of online commence and internet delivery

So how do you get some share of the money? One recent example is a spin-off from the Pinterest concept, by a new startup called Luvocracy. Their concept is to ‘find people you trust and shop what they luv’…where social media meets sales in the new marketplace!

Curated shopping at Luvocracy

Luvocracy is a great example of O’Reilly’s leveraging the long tail pattern and meets most of the recommended best practices:

* Use the three forces of the long tail to make the tail longer with an unlimited supply of goods highlighting only those for sale, makes the tail fatter by growing the customer size with the social networking, and drives supply and demand by the recommendations of users and the easy purchase options.

* Use both algorithmic data management behind the scenes to bring product sales to the attention of users and uses an architecture of participation to match supply and demand through their users and their followers networking their finds and purchases which leads to curated shopping – where you buy what others recommend.

* Use low-cost strategies to allow both business’ and users to manage their own accounts and use the low-cost advantages of an online site to reduce business overheads.

Luvocracy seems to have successfully harnessed a lot of the integrated strategies identified by research (Lee, 2010) where retention and co-creation, product reviews, cross-marketing and word-of-mouth all rate highly in the new marketplace.

Although this site is only in beta, there has been some push back on possible issues:

*  Lack of attribution to the original content owner is causing some copyright concerns,

* Offers for others to make copies of the handmade originals when they are out of stock seems to breach the original owners rights,

* Opportunities for both the blogger and the product maker to make money is upsetting product makers and opening a new discussion around marketing channels.

So, do you luv it, or not? Let me know what you think.

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More information about the Long Tail:

Hervas-Drane, Andres, Word of Mouth and Sales Concentration (February 13, 2013). NET Institute Working Paper No. 07-41. Available at SSRN: http://ssrn.com/abstract=1025123 or http://dx.doi.org/10.2139/ssrn.1025123

Lee, T. (2010). Head or tail? an integrative analysis of customer value and product portfolio. International Journal of Business and Management, 5(12), 51-61. Retrieved from http://search.proquest.com/docview/821639654?accountid=13380

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What has blogging done for you?

Image: Sean MacEntee

Image: Sean MacEntee

I’m new to blogging and worried that I will make all the mistakes in the book…but I can’t find ‘The Book’. I have found some great sites like ProBlogger  and tips from successful bloggers like Penelope Trunk .

Although there is lots of advice on ‘how to blog’ and ‘how to make money blogging’ they don’t explore what else you get or learn from blogging. So I thought I’d ask you all. What has blogging done for you?

My answer would be about pushing myself. It has pushed me into a public space, pushed me to research and critically consider topics, pushed me to closely listen to others opinions and explain my opinion, and pushed me to do all of this in a professional and respectful way. Being on your best behaviour all the time is exhausting  for me – but character building. So that’s me, but what has blogging done for you?

How does TripAdvisor rate in social media?

ImageThe TripAdvisor website is a popular site that allows users to read, raise questions, and provide comments on travel experiences. It was an early adopter of user-generated content and produces ratings on travel destinations and providers based on user content. They are successfully ‘managing the human cloud‘ and utilising a ‘virtual workforce’ – but how are they doing it and why is it successful? 

Companies have increasing opportunities to tap into a virtual, on-demand workforce.

To give some framework, I’m using the pattern  “Harnessing Collective Intelligence” from ‘What is Web 2.0: Design Patterns and Business Models for the Next Generation of Software’. This concept of ‘harnessing the crowd’ means that others outside your organisation provide information to your business that can become a ‘powerful asset’. So, in the spirit of user reviews, this post explores “how does it rate?“.

1. Reward the user first: TripAdvisor allows user to achieve their objectives by either accessing other people’s reviews and comments or  posting their own questions or comments. Their users seem happy, based on their recent milestone of 100 million reviews and opinions. (My rating: 5/5)

2. Set network effects by default: Network effects are critical for TripAdvisor who need a good supply of content and reviews to attract and retain their users. The network effects start to show when TripAdvisor ratings are quoted on other travel booking sites. (My rating: 4/5)

3. Involve users, explicitly and implicitly:  TripAdvisor clearly has explicit user participation covered through their user-created content, and guessing by their advertising they would not be losing the implicit user information around user actions and preferences.  The site has attracted a strong user base and there are good indicators of this increasing. (My rating: 4/5)

4. Provide a meaningful context for creation: The TripAdvisor context of travel is an easy attractor, but I think the loose structure  means posts can end up in the wrong location and “findability” is currently not great. Some users, may be happy to ‘wander a while’ as they plan their trip, but it seems TripAdvisor has identified some improvements with new search functionality  in the pipeline.   (My rating: 3/5)

5. Trust your users:  A true Web 2.0 application must trust the users to provide content and to share control. TripAdvisor allows users to  provide comments, start new threads, and provide advice to other users on where their thread should go. The users also seem to trust each other since the majority of users won’t book a hotel that has no reviews.  (My rating: 5/5)

6. Software design that improves with more users : The goal here is to ensure more users produces more value and benefits not more mess and chaos. Their large user base also gives TripAdvisor credibility in the competitive landscape and means their ratings are actually quoted on other travel sites. (My rating: 5/5)

7. Application that facilitates emergence : This is all about giving the application enough flexibility to change to suit the emerging needs of the users. It means not presuming all features up-front, but instead adding extras in as required. TripAdvisor has some new innovations with stats and infographics for businesses,  advice for hoteliers to increase user engagement and  support for providers under attack. (My rating: 4/5)

So, according to O’Reilly’s pattern of “Harnessing Collective Intelligence”, TripAdvisor should be on your “must see” list of social media sites. But is this the whole story?

There are some issues around the “Harnessing Collective Intelligence” and TripAdvisor has experienced a few of them.

Privacy and liability for individuals: The anonymous posting allowed under TripAdvisor leaves few risks to the posting individuals. However, there is still a chance that individuals associated with the provider could be at risk based on negative reviews or comments.

Privacy and liability for providers: This seems to be causing the most challenges for TripAdvisor. Their policy of accepting all anonymous posts has led to legal battles in Australia and the UK from providers who believe they are the target of untrue, malicious, or adverse commercial attacks. 

Quality, not just quantity, matters: At the end of the day, the site content needs to be credible and reliable. Some comments suggest that if TripAdvisor develops strategies for verifying posts and checking the credentials of posters, then the quality of this site will strengthen.

So, how does TripAdvisor rate as a social media site? According to the Web 2.0 pattern of “Harnessing Collective Intelligence” it gets top-marks.

Their founder journey is a great story about ‘Harnessing Collective Intelligence’ and also explains how they had to fight to retain the value they had built up against big players like Google.

Disclaimer: Bronwyn is not associated with TripAdvisor but she does have a love of travel and is a frequent visitor to their site.

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Related Posts:

How TripAdvisor is using ‘Innovation in Assembly’ – blog by Matt J Low

How TripAdvisor is ‘Harnessing Collective Intelligence’ – blog by Monique Alvis

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Related Articles:

Using the crowd as an innovation partner – HBR.org

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Updated 12/4/2013 – added Related Article on ‘using the crowd’