Comment: Social media analysis may solve supply chain problems

In 2012 the UK became the world’s leading user of mobile data and, partly as a result, the internet is increasingly changing the face of the retail landscape. Consumers are interacting with retailers in a complex, multichannel way. They are demanding a smarter, more personalised service that better responds to their individual needs.

In this evolving market, social media is becoming a critical element in a multichannel strategy for retailers to respond to this consumer challenge. Companies which use social media to respond directly and actively to customer comments and complaints can often win over frustrated customers with a proactive and personalised response. Some have focused on using social media for a simple information service; directing users to their call centres or website. Others have directly exploited the power of social media to engage users in conversation. 

More recently companies have begun using social media as a direct sales channel. American Express launched a tweet to order service that allows users to order products from sites such as Amazon simply by tweeting. In 2012 eBay announced the launch of its social shopping service, Help Me Shop. By linking together social media services, with its existing online platform, the service aims to allow users to actively discuss possible purchases with their friends. The objective being to personalise online the shopping experience.

However, the power of social media is not limited just to the communication between a company and its customers. Communication between customers is also a critical element in the mix. On the one hand the analysis of this social media data provides a valuable tool for companies to actively scan for, and address, emerging issues. Supply chain problems and customer dissatisfaction may be rapidly identified and addressed.

On the other hand, research published by Deloitte shows that the social buzz around products actively contributes to the bottom-line. In the same way that word on the street contributes towards excitement, online buzz builds demand around product launches and can play an important role in the eventual commercial success.

Critically, the Deloitte research suggests that with careful intervention firms can play a positive role in building that online buzz through carefully targeted online interaction. The interaction needs to be authentic and appropriate for the audience, but the research shows that it can play a real role in building online interest that eventually translates through to retail sales. As online interventions are low cost when compared to traditional advertising, the ROI on this activity is also very attractive.

As an illustration of this, a number of the major Hollywood studios have been experimenting with the release of targeted previews of films to their online followers. These releases act to build excitement ahead of release of films, as well as a sense of community amongst those who receive them.

Taken together, these examples illustrate the diverse ways in which social media is altering the strategies of companies. Providing them with a new and powerful tool to communicate directly to their customers and, increasingly, acting as a channel to offer their services.

But to make the most of this opportunity, companies need to recognise that social media is not simply another channel. It is an entirely new wave of personalised, mass-communication. With that comes new risks and new opportunities.

While there are many positives from social media, its open nature means that it can also pose a huge risk. There have been several high profile examples of companies holding Twitter Q&A sessions with senior executives or celebrity ambassadors where hashtags have been hijacked by activists and protestors. Despite these risks, the evidence suggests that social media is an increasingly central part of the online strategy of major retailers. And one that, when managed correctly, can make a considerable difference to customer relations and the bottom line.

Toby Paxton, multichannel supply chain lead partner at Deloitte UK, writes a monthly column for Essential Retail, detailing what retailers must consider in order to build the right supply chain architecture.

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