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VOL 12 NO 1
2014
Infosys Labs Briefings
Social Media in the
Retail Industry
By Suraj Nair and Deepak Kamboj
The business environment is volatile,
companies must capitalize on ubiquitous
technology for sustainable operations. Web 2.0
or the ‘social-read-write web’ enables users
to interact, collaborate and share content/
ideas, and companies to improve sales and
marketing [1].
The retail industry was an early adopter
of Web 2.0 business models to better serve and
engage with customers. Retail stores realized
that technology recreates the in-store experience
while saving money for customers. They
provided alternative shopping channels such as
e-Commerce stores, mobile applications, kiosks,
and call centers.
Retailers have also incorporated social
computing in their sales strategy. A majority
of retail brands have a social media presence
via Twitter, Facebook, ShareThis, or Pinterest.
Social networks help retail brands create a
close-knit relationship. By listening to the ‘voice
of customer’ and eliciting opinions, complaints,
reviews, and suggestions from customers, retail
businesses improve service, while increasing
selling opportunities due to repeat purchase
and enhanced customer loyalty.
Apart from social interaction forums
such as Facebook and Twitter, retail businesses
are stoking customer interest through expert
opinions via blogs and wikis.
Figure 1 demonstrates how technology
savvy customers have migrated from retail
stores to online channels. It provides an
opportunity to influence purchase decisions
through social media.
DRIVERS FOR SOCIAL COMMERCE
Evolution of Web 2.0
Web 2.0 has enabled businesses to build
an immersive and collaborative experience
for customers. Engaging customers online
is as important as designing a superior in-
store experience to ensure customers make
purchases. The ability to perform online
what they do offline drives people to shop
online.
Retailers can leverage social commerce to
build a successful brand

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The primary marketplace is online
Retail outlets were traditionally established in
areas that were densely populated. The online
equivalent of this strategy is to develop online
stores as the number of users on popular social
platforms grows exponentially. Facebook has
more than 1.15 billion monthly active users.
Retailers must capitalize on the business
opportunities presented by the social media.
Peer influence on purchase behavior
Advertising enhances brand equity but social
networking drives purchase. Customers are
more inclined to rely on their peers for knowing
what to buy than get swayed by advertisements
and promotions. Social networks enable
customers to evaluate what peers and experts
have to say about the products that they intend
to purchase.
Branding
Customers have more say than marketers in
the brand equity of a product. Today, they
define a brand by creating awareness about
their experiences. In fact, consumers trust
like-minded consumers more than marketers.
Recommendations from consumers (via ’likes‘
on Facebook) are more effective in building a
positive brand image.
Figure 1: Migration to online channels Source: Infosys research
Spreading the good word
People are more connected in the virtual world
than the real world. Retailers can create urgency
for discounted items with a limited period offer
and drive sales by sharing news across a bigger
network in near real time. Gap registered sales
of US$ 11 million in one day by partnering with
Groupon, a group-buying site [5].
TRENDS IN SOCIAL COMMERCE
Proliferation of mobile applications
Mobile applications with social networking
components are common place. Applications
such as Wikets enable customers to recommend
products (from partners or retailers), share
information with friends, and get rewarded
in the form of redeemable virtual points.
Best Decision from LEAP Commerce is an
application that allows shoppers to seek
opinions from friends in their contact list before
purchasing products through online merchants
and merchant databases [6].
Ratings and reviews
Customer rating and review platforms have
contributed to the success of e-Commerce
by providing retailers the ability to view
ratings, reviews, opinions, and feedback of
customers. Customer reviews of products
Multi-channel Customer
Touchpoints
Ways people shop...
SocialCommerce
Influencers
Shopping Baskets
Social Connect Social Analytics
Communities /
Blogs / Forums Social Rewards
% Social
Engagement
%
Review & Ratings

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per person [7]. Retailers use social network
platforms to target relevant ads based on a
customer’s demographics, age group and/
or interests. The use of celebrities to promote
products on social networking sites is driving
brand recognition and conversion.
Using social and interest graphs
Social graph is the network of relationships
and connections between people on a social
networking platform. An application with a
social graph enables shoppers to know what
friends recommend, facilitates communication
and delivers a personalized experience. At the
same time, marketers obtain meaningful
information from a social graph analysis.
From the perspective of a user’s interests, it is
imperative to use interest/ taste graphs. Interest
graphs are based on interests irrespective of
personal connections. They enable targeted
advertising and product development based
on the learnings of conversations among
strangers/ experts with mutual interests.
Interest graphs provide marketers with a
better opportunity to generate revenue than
social graphs [8]. Websites such as Pinterest
are of social significance to retailers due to their
ability to target an audience based on specific
interests. eBay’s acquisition of Hunch (a taste-
based recommendation engine) is a step in this
direction [13].
Location-based services
Retailers can avail of ‘check-in’ services using
the geo-location functionality of a mobile phone.
People ‘check-in’ for multiple reasons – to
earn points, to inform their friends about their
location, to maintain a timeline, etc. Retailers
can use the information to create special offers
and promotions for registered customers.
A well-executed campaign triggers impulse
and other aspects of the purchase process
help improve service and increase customer
engagement. Mature social rating and review
platforms are available on vendor websites.
Platforms such as Bazaarvoice, Viewpoints,
MouthShut, and Tripadvisor help retailers
integrate customer feedback, reviews, Q&A,
and community features into their websites.
Social connect
Online retailers enable customers to login
to their sites using social credentials such as
Facebook and Twitter. Besides reducing the
account registration process to a few clicks,
retailers collect rich demographic and social
data about customers and their friends using
social graphs.
Social sharing
Social sharing helps retailers leverage friends’
circles and networks to create a personalized
online shopping experience for customers.
It taps into peer recommendations and
suggestions to direct traffic to product pages.
It helps drive business through referrals,
recommendations from friends, friends’
purchase history, social product combination,
group-gifting, and co-shopping. Significantly,
it blends word-of-mouth marketing and brand
advocacy to drive new traffic to the website.
Social advertisement
A majority of retailers use social media
bookmarks in advertising campaigns to drive
traffic to their websites and product pages
on social networks. Social network platforms
such as Facebook are highly visible channels
for advertising. Nielsen’s Social Media Report
2012 indicates that in July 2012, people in the
United States spent 121 billion minutes on
social media sites – approximately 6.5 hours

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buying at brick-and-mortar retail stores in the
neighborhood. Retailers can prevent customer
churn by ensuring that products not available
in local stores are offered online. Location and
postal code are used for providing ‘click & collect’
service [16] and home delivery to customers [15].
Superior user experience
Facebook introduced the ‘want’ button to drive
commerce. It enables marketers to distinguish
between customers who want to purchase and
customers who ‘like’ the product. It has the
potential to develop more targeted promotions
for customers.
Crowdsourcing driving product innovation
Organizations are exploring social platforms
to create products. Crowdsourcing on social
media platforms enables enterprises to develop
a new product in line with the needs of its
community. Such products fulfill their potential
for community branding and promotion.
TESCO, a global retailer used crowdsourcing to
introduce a new flavor of ice cream by seeking
suggestions from customers on Facebook [9].
SOCIAL COMMERCE PLATFORM: AN
OVERVIEW
A social commerce platform is a layer that enables
social interactions across multiple online channels.
Figure 2 provides a high level architecture of a
proposed social commerce platform.
The platform has several components:
channel interface, channel interface services,
core commerce platform, social commerce
platform, integration layer, functional modules,
and master data management.
Channels
A social commerce platform has several
channels for order capturing such as websites,
mobile applications, catalogs, click & collect,
PoS, kiosks, interactive TV, in-store displays,
and call center.
Channel interface services
It provides the mechanism to use the core
commerce platform as a channel for shopping.
Core commerce platform
The platform offers functionalities that enable
shopping such as product catalog and listing,
basket, checkout, order processing, and
fulfillment, merchandising, fraud check,
payment, and promotions.
Social commerce platform
The platform supports social functions
such as reviews and ratings (integration
with Bazaarvoice and Viewpoints), social
connect (Facebook and Twitter), rewards
(Groupon and LivingSocial), social analytics
(Google Analytics), social sharing, and social
bookmarking (Facebook and Twitter). Interface
implementations are enabled using adapters for
service providers.
Integration layer
The layer provides services and adapters
that integrate with Line of Business (LOB)
applications (order management system and
warehouse management system) and enterprise
services built on diverse technology stacks
and platforms. It can be based on integration
infrastructure solutions such as Enterprise
Service Bus (ESB) or Enterprise Application
Integration (EAI) servers. It enables flexible and
loosely coupled integration.
Functional modules
The modules include LOB services and
components for order management, inventory

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management, warehouse, product pricing and
promotion, and shipping system.
Master Data Management (MDM)
MDM offers a consolidated view of data from
distributed databases (shopping lists, customers,
orders, inventory, suppliers, promotions, etc.)
across channels. It enables ease of management
and data storage, data processing, data
rendering, data retrieval, and analytics with
real-time dashboards and detailed reports.
BEST PRACTICES IN SOCIAL COMMERCE
Exclusivity
Customers must be offered exclusive content
that they cannot access elsewhere. A retailer
can provide a product, service, coupon, or
event invite solely for Facebook friends or
followers. Retailers can also sustain interest by
providing information about in-store events
and e-Commerce deals that are available only
through the social media website.
Content quality and updates
Retailers must offer an online experience that is
consistent, entertaining and up-to-date. Regular
updates with new material will encourage
customers to visit the blog or Facebook page in
anticipation of new information. Being discreet
about promotional pitches and providing
content that is informative will ensure repeat
visits by customers.
Offers and rewards
Retailers can attract new customers by
partnering with coupon and deal websites such
Channels Interface Layer
Channel Interface Services
Core Commerce Platform
Social Commerce Adapter
Social Commerce REST Services
Search, Ratings,
Reviews
Location
Payment
Fraud Check
Identify
Management
Customer Profile
Basket
Checkout
Personalization
Order Capture
Merchandising
Catalogue/Listing
Social Commerce Platform
Integration Layer (Enterprise Service Bus)
Functional Components
Voucher System
Customer ContentSalesLocationsSuppliersOrdersPromotionsProduct
Master Database Management
Fraud Check Partners
SMS Gateway
Email Gateway
Payment Gateway
External Systems
Decision Support
Management
Content Management
Retail Operations
Management
Promotion ManagementFinance ManagementOrder Management
Product Information
Management
Customer Relationship
Management
Warehouse Management
Social
Sharing
Adapter
Other
Adapters
...
Social
Analystics
Adapter
Social
Rewards
Adapter
Social
Connect
Adapter
R&R
Adapter
Website Mobile Tablet
Touch
Screen
Kiosks
In-store
Displays
Click ‘N’
Collect
Interactive
TV
Call Center
Figure 2: Functional architecture of social commerce platform Source: Infosys research

6. 79
as Groupon. Rewarding existing customers with
e-coupons and virtual currency for their loyalty,
recommendation and contribution to customer
service is a smart business practice.
Customer engagement
Retailers should use social media platforms
to interact with customers. Making customers
feel wanted will generate positive feedback,
resulting in increased purchase behavior. Online
shoppers trust feedback from a consumer base
more than marketers. Customers are 71% more
likely to purchase a product when referred by
a social media channel [12].
Customer service
A retailer’s social media website must be
an extension of its customer service. It must
use Facebook and Twitter to speak directly
with customers, answer complaints, thank
customers for purchases, and seek feedback
about their experience. Nurturing a vibrant
micro-community in the retailer’s social
media website will convert consumers
into the retailer’s customer service agents
by responding to requests based on their
experience.
User experience
Customers get discouraged by the number of
pages before ‘add to cart.’ Retailers must adopt
a mechanism to make the payment process easy
for customers. In addition to buzz generated
by the community on social commerce sites,
the ease of purchase aids conversions.
BENEFITS OF SOCIAL COMMERCE
Serves as an effective sales channel
Social commerce engages customers in
promoting products for the business. It is
impactful because consumers trust feedback
from co-consumers more than the retailer.
Social commerce enables electronic marketing
on social networks whose potential reach
is wider than word-of-mouth marketing. It
delivers cost savings since online marketing
via consumers is much less expensive than
television and newspapers.
Builds customer loyalty
An environment where customer interaction is
valued results in increased loyalty and frequent
conversions leading to increased sales.
Higher search engine ranking
Frequent references to a retailer’s website in
conversations on social networks can result in
a higher search engine ranking. It potentially
draws more customers to the website and
increases conversions.
Allows early course corrections
Retailers are informed of negative customer
feedback about their product or service based on
social network conversations. It allows course
correction by either addressing deficiencies or
using the social network to interact and clear
misunderstanding.
Business opportunity in data
A vast amount of data is available in the
form of search behavior, buying habits, likes,
and dislikes. Tracing consumer behavior by
analyzing data enables iterative changes in sales
pitches to maximize impact and conversions.
Increases average order value
Personalized offers, promotions and
merchandising realize an increase in the
average order value of products.

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Faster go-to-market
Social commerce accelerates go-to-market
of new products by analyzing and offering
consumption-based pricing.
Decreases product return rate
Real-time reviews, ratings and opinions about
the product contribute to a ‘satisfaction factor’
resulting in a decrease in product return rate.
Increases website traffic
S o c i a l i n t e r a c t i o n s , r e f e r r a l s a n d
recommendations, purchase history, co-
shopping, and group-gifting increase website
traffic.
CHALLENGES
Social networks are for socializing
People are more inclined to use social networks
for what they are meant for – socializing. Users
may be disturbed if marketing offers are sold
to them on a social platform.
Just another retailer
Users may not respond to a retailer’s social
networking page if it is not be very different
from the retailer’s website. Several online stores
on Facebook shut down since these stores did
not find favor with customers [10].
Requires continuous innovation
Smart phones with GPS and front-back cameras
and new mobile payment modes make it
imperative for enterprises to innovate in the
dynamic social environment.
Demographics and trust quotient
In most countries, senior citizens are not
comfortable paying someone they do not
know. Social commerce may be irrelevant for
a generation for whom mechanisms such as
e-mail, direct and traditional marketing have a
higher comfort factor.
Failure of automated monitoring systems
Monitoring systems adopted by enterprises
to analyze content on their social networking
sites may fail to detect negative comments
in blogs or tweets of consumers. Failure to
react quickly to assuage negative sentiments
may result in spiraling re-tweets resulting in
dilution of brand equity. Understanding the
context of subtle messages will continue to be
a challenge in spite of intelligent monitoring
systems [11].
CONCLUSION
Social commerce must define a strategy for
social interaction in the marketplace, and
nurture a community that serves as the
backbone of the business. The success of social
commerce lies in allowing customers to build
the brand through participation and promotion.
REFERENCES
1. Boesler, M. (2012) – The State of the
World Economy .Available at http://
www.businessinsider.com/world-bank-
world-economy-2012-6?op=1.
2. Grabowicz, P. (2013) – Web 2.0 and the
Rise of Social Media . Available at http://
multimedia.journalism.berkeley.edu/
tutorials/digital-transform/web-20/.
3. Davis, D. IRCE 2011 Report (2011): eBay
pitches partnerships. Available at http://
www.internetretailer.com/2011/06/15/
ebay-pitches-partnerships.
4. Wikipedia – Social Commerce. Available
at http://en.wikipedia.org/wiki/
Social_commerce.
5. Diaz, S. (2010) – Groupon’s $11 million
Gap day: A business winner or loser?

8. 81
Available at http://www.zdnet.com/
blog/btl/groupons-11-million-gap-day-
a-business-winner-or-loser/38259.
6. Malik, O. (2012) - From ex-Facebookers,
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facebookers-an-online-shopping-engine-
for-mobile-apps/.
7. Popkin, H. (2012) – We spent 230,060
Years on Social Media in One Month.
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Years_on_Social_Media_in_One_
Month.
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9. Chapman, M. (2012) – Tesco chief
salutes Facebook’s crowdsourcing role
by Mathew . Available at http://www.
marketingmagazine.co.uk/sectors/
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salutes-Facebooks-crowdsourcing-role/.
10. Article (2012) – Benefits of Integrating
Social Media into E-Commerce. Available
at http://www.technology-digital.com/
social_media/beniefits-of-integrating-
social-media-into-e-commerce.
11. Article (2011) – Tesco’s Social Media
Crisis by Marcus. Available at http://
blog.investis.com/en/2011/08/tescos-
social-media-crisis/.
12. Article (2012) – Available at http://
prezi.com.
13. Article (2011) – eBay buys Hunch by
Beth Carter. Available at http://www.
wired.com/business/2011/11/ebay-
buys-hunch/.
14. Social Commerce Best Practices from
Top Brands.
15. Tesco - Delivery Information. Available
at http://www.tesco.com/direct/help/
delivery-info.page.
16. Tesco – Click & Collect. Available at
http://www.tesco.com/collect/.
17. Article (2012) – How Walmart is going
all out with mobile by Paul Sloan.

9. Author’s Profile
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© Infosys Limited, 2014
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SURAJ NAIR is a senior technology architect in the engineering unit at Infosys. He can be reached at
suraj_nair01@infosys.com.
DEEPAK KAMBOJ is a technology architect in the engineering unit at Infosys. He can be contacted at
deepak_kamboj@infosys.com.