UK major retailers’ adoption of Facebook

Pierre-Michel Dusserre

Sujets

• Social network
• Online shopping
• Online
• Retail
• Facebook
• Commerce électronique
• Innovation
• Social commerce
• E-commerce

Informations

• Publié par: pmdusserre
• Publié le: 26 janvier 2015
• Nombre de lectures: 15
• Langue: English
• Poids de l'ouvrage: 4 Mo

Extrait

September 2011

UK major retailers’ adoption of Facebook

PierreMichel Dusserre

Presented for

MSc. Digital Marketing

Diplôme EDHEC Grande Ecole

This project is entirely the original work of student registration number 24428035. Where material is obtained from published or unpublished works, this has been fully acknowledged by citation in the main text and inclusion in the list of references.

Word Count: 15079 words

Keywords: Shopping motives, retailing, ecommerce, commerce, socialnetwork, Facebook, Fcommerce

Abstract

onlineshopping, social

Online retail and ecommerce environments in general have rapidly changed within the last few years. Users have changed from simple buyers to fully immersing themselves within companyconsumer interactions through recommending products, leaving comments, rating vendors or publishing wish lists. Recently, a new format of online commerce appeared called social commerce or social shopping, leading to more customer satisfaction, user participation and social interaction notably through social networks such as Facebook.

To date, lots has been said about Facebook as a communications medium and recently about its retail marketing potential, very often offering anecdotal or exaggerated speculative forecasts. This is shown through Rzezniczek’s (2008) argument that Facebook will become a major new retailing channel, defining a more social consumption model based on friends’ recommendations and eWOMs.

However, little academic research exists to either define or explain socialcommerce norms in addition to disproving or supporting the claims of Facebook adoption by UK retailers. This dissertation aims to redress this current imbalance by presenting a comprehensive and rigorous review of UK major retailers’ Facebook adoption according to their retail activity. A sampling frame of 82 very large UK retailers were used with each website and Facebook page individually inspected to classify the range of Facebook features adopted through usage of a quantitative proforma.

This study’s findings indicated that, despite the hype, the majority of retail organisations surveyed have not yet opened fully integrated stores within Facebook. Moreover, if almost all retailers have a Facebook page, the vast majority of retailers and especially the largest ones in terms of turnover and number of employees are using it primarily as a communications tool to promote corporate or product information, rather than to support direct sales.

In conclusion, the implications of these current levels of Facebook activity for the future of retail marketing are summarised.

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Acknowledgements

To my family, Lisa Harris, Christine Coisne, Audrey Fleury and Cayley Rowe for their support during the completion of this dissertation

“It ought to be remembered that there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of thingsMachiavelli: The Prince.”. Nicollo

‘’I declare that this dissertation is my own work, and that where material is obtained from published or unpublished works, this has been fully acknowledged in the references.’’

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Table of Contents

LIST OF TABLES

INTRODUCTION

I OVERVIEW OF FACEBOOK’S ADOPTION BY MAJOR UK RETAILERS

1.1T HE UK RETAIL INDUSTRY 1.1.1 Global view of the UK retail industry 1.1.2 Retailing definition 1.1.3 Shopping motives 1.2R ETAILING AND I NTERNET : E  RETAILING 1.2.1 Onlineshopping/ecommerce/eretailing 1.2.2 UK eretailing 1.2.3 Online shopping requirements 1.2.4 Onlineshopping motives

1.2.5 Web 2.0 1.3R ETAILING AND S OCIAL MEDIA : SOCIAL  COMMERCE 1.3.1 Social media 1.3.2 Socialnetworks 1.3.3 Socialnetwork motives 1.3.4 Trust, recommendation and WOM 1.3.5 Socialshopping: extension of onlinestore or new marketing model?

1.4F ACEBOOK + E  COMMERCE =F COMMERCE : 1.4.1 Facebook 1.4.2 Facebook features 1.4.3 Facebook Plugins: 1.4.4 Facebookcommerce 1.5A DOPTION OF F ACEBOOK TECHNOLOGY BY UK RETAILERS 1.5.1 The social system: UK retailers 1.5.2 Communication channels of Facebook adoption 1.5.3 Time of diffusion

1.6R ESEARCH AIMS

II RESEARCH METHODOLOGY

2.1R ESEARCH PHILOSOPHY AND APPROACH 2.1.1 Positivist philosophy 2.1.2 Deductive approach 2.2R ESEARCH DESIGN 2.2.1 Survey strategy 2.2.2 Quantitative method

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39 39 39 40 40 40

3.1F ACEBOOK ADOPTION PENETRATION 3.1.1 Raw data preparation 3.1.2 Ecommerce standardisation 3.1.3 Moderate adoption of Facebook plugins 3.1.4 Adoption of Facebook as an Informative page 3.1.5 Facebook fans’ interest 3.2T HE RELATIONSHIP BETWEEN RETAIL ACTIVITY AND F ACEBOOK ADOPTION 3.2.1 Raw data preparation 3.2.2 Heterogeneity of FB adoption by retail activity 3.3I MPORTANT FACTORS OF F ACEBOOK ADOPTION 3.3.1 Factors influencing Facebook page type adoption 3.3.2 No global correlation between organisations’ size and Facebook adoption 3.3.3 Largest vs. middle size retailers’ adoption of Facebook

2.3.3 Sample selection

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IV CONCLUSION

III FINDINGS AND DISCUSSION

42 43 43 43 44 44 46 46 46 46 47 47 47 49 50

2.3.4 Sample size 2.3.5 Sample technique 2.4D ATA COLLECTION 2.4.1 Proforma template 2.4.2 Time horizon 2.5D ATA ANALYSIS 2.5.1 Data understanding 2.5.2 Data preparation 2.5.3 Data mining

2.2.3 Credibility of the research design 2.2.4 Ethical considerations 2.3S AMPLE 2.3.1 Secondary data 2.3.2 Raw data extraction

4.1M AIN I NSIGHTS 4.2L IMITATIONS 4.2.1 Heterogeneity of retailers classification 4.2.2 Sample size 4.2.3 Snapshot 4.3F UTURE RESEARCH 4.4P RACTICAL IMPLICATIONS 4.5P ERSONAL REFLECTION

V APPENDICES

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Appendix I.1: Retail world ranking, ORBIS database extraction (2011) 53 Appendix I.2: ORBIS database company size categories 54 Appendix I.3: Some dimension of the traditional retail format 55 Appendix I.4: Retail classification in NACE rev. 2, (Eurostat, 2008) 55 Appendix I.5: Eretailing UK statistics, IMRG (2010) 56 Appendix I.6: The social media map (Overdrive Interactive, 2011) 57 Appendix I.7: World and UK websites ranking with Alexa.com (2011) 58 Appendix I.8: World ranking Facebook’s active users, Burcher (2011) 59 Appendix I.9: Repartition of Facebook UK population, BBC News, IMRG and Burcher (2011) 60 Appendix I.10: Weekly market share of visits to Facebook and Google, Hitwise (2010) 60 Appendix I.11: Fcommerce classification, Galloway (2011) 61 Appendix I.12: The stylised diffusion curves, Bronwyn (2003) 62 Appendix I.13: Emerging Hype Cycle, Priority Matrix and Hype Cycle Phases, Benefit Ratings and Maturity Levels, Gartner (2009) 62 Appendix II.1: Top 20 UK Facebook retailers (econsultancy, 2011) 65 Appendix II.2: Keynote Retail Report 2008 industrial classification 65 Appendix II.3: Hart, Doherty and EllisChadwick (2000) Online retail activity classification 66 Appendix II.4: Sample selection adapted from Saunders et al (2007) 66 Appendix II.5: The 162 top retailers selected in the Keynote Retail Report 2008 67 Appendix II.6: The 135 companies excluded from ORBIS database because they had a turnover below €100 million ($140 million) or no turnover available 68 Appendix II.7: The 82 companies excluded from ORBIS because they had a number of employees below 1000 or no data available 69 Appendix II.8: The 66 companies excluded because they were no longer relevant to the survey or because they were already represented by another entity 70 Appendix II.9: Sample size calculation based on Saunders et al Page 585 71 Appendix II.10: The 82 companies surveyed 72 Appendix II.11: Proforma document to fulfil for each retailer 73 Appendix II.12: List of subbrands companies and dormant retail brands with their website type: Onlinestore (OS) or Corporate & Informative website (C&I) 74 Appendix III.1: The 8 Facebook stores without checkout surveyed (Dusserre, 2011) 75 Appendix III.2: Top 23 UK retailers with more than 100,000 Facebook fans (Dusserre, 2011) 76

VI REFERENCES

List of Tables Table I.1: Distribution of UK retailers by organisation size Table I.2: Top 5 UK retailer groups by turnover 2010 Table I.3: The factors of influence of socialcommerce Table I.4: The evolution from ecommerce to socialcommerce Table I.5: Facebook’s Home page screenshot and description Table I.6: Facebook’s Profile page screenshot and description Table I.7: Facebook’s main social Plugins screenshot and description Table I.8: Common onlinesocialshopping process Table I.9: Retailers’ channel strategy Table I.10: Distribution shape of adoption Table II.1: Facebook page categories Table II.2: A classification of retail activity Table II.3: Classification of the data collected Table II.4: Raw data of retailers, retailers with subbrands and subbrands Table II.5: Retailers, retailers with subbrands and subbrands’ Facebook adoption Table II.6: The 7 fields of formatted data Table III.1: Raw data of Facebook features global adoption Table III.2: Facebook features adoption representation Table III.3: Mean of Facebook adoption Table III.4: Raw data of major retailers’ Facebook adoption

Table III.5: Major retailers’ Facebook adoption by retail activity Table III.6: Mean of Facebook’s adoption by retail activity Table III.7: Variables tested for Facebook adoption Table III.8: Relationships between Facebook practices and level of adoption Table III.9: Influence of Turnover and Number of Employees on Facebook adoption Table III.10: Retailers’ segmentation Table III.11: Raw data of retailers’ turnover segmentation Table III.12: Raw data of retailers’ number of employees segmentation Table III.13: Mean of retailers’ adoption y turnover and number of employees Table III.14: Relationship between turnover & Facebook adoption Table III.15: Relationship number of employees and Facebook adoption Table III.16 Retail adoption classification based on retail activity

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Introduction There is considerable buzz surrounding Facebook and its commercial potential for retailers irrespective of size.

However, two key questions emerge for retailers; first, what is it and what role can Facebook play in online retail marketing? Some academics and articles (Leitner and Grechening, 2009; Econsultancy, 2010) assert that Facebook will provide a ‘social’ purchasing experience, generating a large amount of traffic through wordofmouth and friends’ recommendations by operating within Facebook itself. Alternatively, Chevalier and Mayzlin (2006) alongside Stephen and Toubia (2009), perceive Facebook as performing a supporting role for existing onlinestores by adding social plugins to the online shopping experience, where trust often established via social networks plays an increasingly important role. Whichever role is adopted may ultimately determine consumer demand for online socialshopping and thus the development of Facebookcommerce.

This raises thesecond area of questioning which concerns the actual size, growth, or future potential of Facebookcommerce where existing research has failed to define the current shape of Facebook UK retailing activity; which retailers are on Facebook and whether they are using it for communication or selling purposes? This information is critical for retailers developing Facebook marketing strategies and may help identify the activities or variables that hold most potential for Facebookcommerce.

This paper addresses both issues, commencing with initially discussing the role of Facebook as portrayed in recent literature. The second issue is addressed via a comprehensive review and classification of UK retailers’ Facebook activities. A sampling frame of 82 largest UK retail companies were used, with each website and Facebook page individually inspected to categorise the range of marketing activities offered. A discussion of findings follows, underlining the main insights and practical implications for online retail marketing strategy, before presenting the conclusions.

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Part I

Literature Review

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I. Overview of Facebook’s adoption by major UK retailers From their inception, socialnetworks, similar to the Internet 20 years ago, have changed current interactions between retailers and consumers.

1.1 The UK retail industry

Due to the heterogeneity of retailers in terms of size and provision of products and services, it is difficult to draw a clear picture of the retail industry (Reynolds, 2004). However, all retailers by selling directly to final consumers are directly impacted by their needs and wants, having to constantly reinvent their business activity. If retailers are by nature very competitive and innovative with companies such as Tesco, Amazon and newly Groupon, they serve to play an important role in the UK economy (Burt, 2003).

1.1.1 Global view of the UK retail industry The retail industry is undoubtedly a major sector within the UK economy, generating 8% of the UK’s GDP and employing over three million people, with total sales of £293 billion in 2010 (Farfan, 2011; BRC, 2011). According to the ORBIS world database th (Appendix I.1), the UK is the 12 highest ranking country in terms of number of retailers with a wide range of small size companies (Kirby and Law, 1981) and very large companies such as Tesco (FT 500, 2011), Sainsbury’s, Marks and Spencer, Boots etc. Table I.1 clearly illustrates the distribution of small and large size companies within the UK retail sector.

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Table I.1: Distribution ofUK retailers by organisation ize

94%

Source:AdaptedfromORBI

y size

Very large

Database(2011)

Table I.2:Top5UKretailergroups by turnove2010 % of Turnover Total UK Company name th USD Turnover 2010 2010 TESCO PLC101 551 667 35% J SAINSBURY PLC34 499 02412% WM MORRISON 26 313 3649% SUPERMARKETS PLC MARKS AND SPENCER P.L.C.14 534 1535% SAFEWAY LIMITED13 854 4845% TOTAL 190 752 691 65% Source:AdaptedfromO BISDatabase(2011)

Retailers studiedallexhibitedveryheterogeneouscharacteristics.lthough very large retailersrepresentonly1ofthetotalindustry,ccountthe top 5 groups for65%of UK total retail turnover (Ta leI.2). Unfortunatelytheindustrylacksgeneralconsensus regardingatruedefinitionflargecompanies. According toOEC(2011), large size companies canbedefinedndbased on their definition of small medium sized companies (SMEs).Inthatcase,retailerscanbeconsideredaslar eintheEUifthey have more than 250 em loyeesandaturnoverabove€50million.Accordingto Keynote’s report(2008),amajorcompanyisdefinedbyaturnoverof over £90 million (€100 million) with over5 %ofitsturnovercomingfromFinally,retailin activities. according to the ORBISd tabase,verylargecompaniesarecons deredlargeifthey matchatleastoneofthesconditions:OperatingRevenuegreaterthan €100 million or Total assets greatermillion or Number of Employeestha €200 greater than 1,000 or Listed (Appendix I.2).

The UKretailindustrywapredictedtoincreaseinsizeby15%overthenextfive years,takingintoaccounthecurrent economic slowdown (BSI, 2011).Therefore one maywonderwhichassetsillhelptheretailsectortoovercometheeconomic crisis.

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