Why Facebook and Twitter Icons Can Decrease Online Sales by 25 Percent

Adding Facebook and Twitter icons next to your product online affects whether consumers buy it in the first place, says a new study.
That's because – not surprisingly – people think about what other people will think of their purchases.
According to "The 'Conspicuous Purchase' Effect," as the study is called, if the product was one someone would be proud to trumpet (such as sportswear for women or a cool fragrance for men), the presence of the Facebook "like" button and the Twitter "tweet this" button made people 25 percent more likely to buy it. When the product was not one most people would want to be public news (for women, Spanx bodyshaping underwear; for men, acne products such as Clearasil), the presence of those same social media buttons made consumers 25 percent less likely to buy it.
The study – from the University of Miami School of Business Administration, Empirica Research, and StyleCaster Media Group – asked some 200 people, age 16 to 45, to rate their likelihood of buying items as presented on a mocked up shopping site. Participants randomly were assigned to see product pages that included Facebook or Twitter icons or did not. Researchers then measured intended purchase behavior. According to the study, the impact on intended buying behavior "emerged regardless of whether people had any memory of having seen the social media icons." Consumer age and internet usage level made no measurable difference.
Said Claudia Townsend, an assistant professor of marketing at the University of Miami School of Business Administration: "Our study finds that the mere presence of social media icons on a web page where we shop appears to cause us to feel as if our purchases are being watched by our social network, and we adjust our buying decisions accordingly.
She added: “Marketers should be aware that the placement of these symbols in their web design strategy could have a major impact on buying behavior.”
Another thing to consider: Whether the social media icons make people feel stalked.
Study author David Neal told The Wall Street Journal that even those not invested in Facebooking or tweeting every little detail of their existence could be “shaped” by the vague prospect others – parents, girlfriend from junior year, widowed aunt – might learn they purchased Clearasil or something spandex from Body Glove. Neal suggested the buttons tend to leave users feeling they are under some sort of surveillance.
Do you have Facebook or Twitter icons next to products for sale on your web site? Do you think they have they affected sales?

11:34 by Robert dawne · 0

Bringing Luxury to the Masses

Wouldn’t it be great if there were a place where you could buy designer clothes and accessories at prices up to 90 percent off? If you’re like me, you’ve dreamt of this place for a while. It wasn’t until recently, though, that I found out it actually exists, and not just in my dreams.
It’s called Gilt Groupe, and it's a members-only e-commerce site that offers merchandise like women's sweaters, men's socks, kids' booties and home decorations—all at price points that don’t induce fainting spells. The best part: The site boasts wares from runway designers such as Zac Posen, Carolina Herrera and Valentino, to name a few.
Friends and fellow Harvard MBAs Alexis Maybank, 37, and Alexandra Wilkis Wilson, 35, launched Gilt Groupe in 2007 as a way to bring the New York City sample sale to the masses. The caveat: Those who wanted in had to be invited (today you can ask to be invited), thereby increasing the exclusivity and excitement around the venture. The plan worked beautifully, and today the business boasts $500 million in revenues, more than 900 employees and offices around the world. This year the duo will release a book documenting the company’s meteoric rise, titled By Invitation Only: How We Built Gilt and Changed How Millions of People Shop.
We got in touch with Maybank and Wilkis Wilson to find out how they managed to successfully change an entire industry.
Could you tell me about your backgrounds?
Alexis Maybank (pictured, right): I grew up between Charleston and central New Jersey. I met Alexis while at Harvard undergrad in a Portuguese class. We were a couple years apart and became great friends. After college I worked in Silicon Valley through the first wave of the technology boom. I was an early employee at eBay, when there were just 40 people. We both ended up going to business school at Harvard. While there, I did an independent study with Zac Posen.
Alexandra Wilkis Wilson (pictured, left): I grew up in New York City and after school worked in investment banking in London for a few years. After business school, I switched gears into retail and luxury goods and worked for Bulgari.
How did you come up with the idea for Gilt Groupe?
AM: In 2007, I was coming off an opportunity, and Alexandra was ready for a new challenge. We would often go to sample sales and had family members from around the country that would ask us to pick up items for them. Sample sales really weren’t available to people outside the tri-state area, so it dawned on us to think of a way to bring those sales to a mass-market audience. We started meeting and talking about how to launch the perfect concept.
AWW: Alexis started working on the site full time, and I stayed at Bulgari for a little while longer. She managed the building of the site while I started reaching out to brands.
How were you able to secure funding?
AM: We started talking with VCs about three weeks before we launched and were successful with AlleyCorp, a group started by Kevin Ryan, one of our co-founders. Dwight Merriman, the founder of DoubleClick, was also able to help us. That funding provided us enough to hire a few employees and rent office space.
When did you launch?
AWW: We consider Nov. 13, 2007, our official launch date because that was the day of our first sale, a Zac Posen sale. Two weeks prior, we did a membership launch where we teed up thousands of e-mail addresses to invite them to join Gilt Groupe.
How many members signed up out the gate?
AWW: We got over 13,000 members to sign up, but we didn’t know if that was a good number or not. We were trying to aim even higher and encouraged friends to invite friends with the incentive of a $25 credit.
What challenges did you face starting out?
AM: One of the first challenges was building a team. After two months we realized that we were hiring people just like ourselves, bright-eyed optimists. It didn’t make for a balanced team so we brought in executive coaches to help. About five months in, we hired an excellent woman out of Ralph Lauren. She brought a really measured approach to the business and made decisions based on experience and facts and not as much on intuition.
We also focused a lot on open communication. Seeds of distress can really tear apart startup teams when they aren’t addressed, so we made communication a priority.
How did you survive the recession only a year after your launch?
AWW: While the recession was a terrible thing, it ended up actually helping our business. Many brands were dealing with excess inventory and having a hard time selling things at full price. Plus, a lot of customers still wanted to shop for designer goods but didn’t want to walk around with big shopping bags; they wanted to be discreet. We ended up growing our membership faster than forecasted during that time.
How are you able to offer such slashed prices?
AM: There are two things that help us with pricing. First, we don’t have overhead or pay rent on Fifth Avenue. Second, we work in an industry that has seasonal inventory, so things need to turn over.
What does the future hold for both of you and for Gilt Groupe?
AM: We’ve talked about taking the company public, but at the same time don’t want to lose sight of providing the best possible customer experience. We will discuss the option of going public this year. [Wilkis Wilson reports the company received a $1 billion valuation in spring 2010.]
I love Gilt and couldn’t think of a business I’m more loyal to. I’m happy right now and just had a baby boy two weeks ago. I also have an 18-month-old daughter at home, so raising a family is a big part of my future plans, as is continuing to be involved heavily with Gilt Groupe.
AWW: I really enjoy mentoring young entrepreneurs and am now a mentor at TechStars. As for my future, I love Gilt so much and am still personally learning.
Could you tell me about your book?
AWW: The book is coming out in April, and it really focuses on our early days, getting the company off the ground. We worked on it for about two years, meeting every Thursday at 8 a.m. to brainstorm and go through anecdotes. We are really proud of the final product and hope it inspires other entrepreneurs.
What advice can you give budding entrepreneurs?
AM: Figure out if now is the right time to launch your company. Who is doing it already? If there isn’t anyone doing it, is there a reason why?
Also, execution is so much more important than the idea itself. Get your product out there and get feedback from your customers. The earlier you can get feedback, the better. Don’t over-invest before you know more from your customer base.
AWW: You really need to trust the people you go into business with. If you have any red flags or don’t know the person well, pay attention. It is easy to get sucked in by excitement and adrenaline. Invest time in reference checks.
If you are starting a business and throwing out ideas to consumers and investors, it is important to listen to criticism. That doesn’t mean you should back down on your ideas, but take that feedback to heart and think of how you can apply what people are saying to your business model.
Photo credit: Courtesy company

08:50 by Robert dawne · 0

Social Commerce [VIDEO]

"Social Commerce" is the new phrase that describes the blending of digital trends of social media and e-commerce. We caught up with some industry experts at the forefront of this emerging market at Business Insider's Social Commerce Summit. Find out how discovery, community and adaptability are helping small business maximize on social commerce.

07:03 by Robert dawne · 0

How to Find Online Success Anywhere in the World

Let’s face it—we are only beginning to scratch the surface when it comes to the possibilities of Internet commerce. Every day businesses launch new products, programs, and platforms that they hope will be the next big thing. With the Internet touching so many lives, in so many places, it’s never been easier to run a business online. And in many ways, it’s even easier to run an online business from beyond the United States.
Low startup costs
Whether you’re starting an online drop-shipping business, launching an online system for business owners to use, or plan to build a popular design blog that functions just like a traditional business, startup costs are low on the web.
Here are the basics you’ll need to start an online business:

• Internet service
• Computer equipment
• Website domain and hosting
• Lots of time

The cost for each of these things will vary depending on where you live and the value you put on your own time, but generally speaking, you’ll spend less if you live outside of the United States.
Culture curiosity
It doesn’t matter where you live—people who don’t live nearby will find your life and business fascinating, so be sure to sprinkle that aspect of your life into your business.
Consider the gourmet sweet shop Ladurée, whose very name prompts fan girls everywhere to swoon with visions of delicious macaroons nibbled at romantic Parisian cafes. This company uses its beautiful roots to paint a strong brand image—from its website to the product photography—that people around the world know, trust and love.
You can do this by sharing a “day in the life” post on your blog, capturing your favorite local spot and sharing it on Facebook, or by going further and allowing the country you live in to influence the products you create and sell. Allow your fans and customers to get a glimpse into your wonderfully cultured life, and it’ll make them more eager to follow your company through and through.
If you live somewhere with ready access to great products people living elsewhere can’t get their hands on, why not set up an online shop filled with these goodies? South Korean company Jewelrism International set up an Etsy shop to promote and sell its products worldwide. In just two and a half years, they’ve racked up over 130,000 Etsy sales reselling craft supplies they source locally.
And if you’re a blogger with hopes of sharing your culture and building a blog business, Lucas Kleinschmitt of German Efficiency has written a must-read that explains Why International Bloggers Have an Unfair Advantage.
Affordable resources
Living in another country also means you’ll be able to tap into more affordable resources than those living in countries like the U.S. and Canada, such as lower employee costs and cheaper rent.
For example, recently I hired a small web developer for a short-term project, and I was stunned to learn that he had a team of five employees. When I asked how he was able to charge such a low rate for the project while covering his expenses and earning a profit, he explained that in India, where he lives, it only costs him $1,500 a month to pay five full time employees and rent space in a prestigious downtown building.
Is the developer running a sweatshop? No. He’s paying his employees standard wages for their city and is able to grow his business by concentrating on building clientele. If you live in a similar part of the world, consider hiring someone part time to help you tackle tedious parts of your business, so you too can grow the way plenty of other small businesses around the world are growing.
Justine Grey is a web entrepreneur who writes Work Life Joy for frazzled business builders who long to work vibrantly and live beautifully. You can find her on Twitter at @JustineGrey chatting about life, work and her pop culture obsession.

American Express OPEN Forum

10:55 by Robert dawne · 4