Visits to social networking websites have increased steadily since the beginning of February 2006 to account for 2.2% of all Internet visits for the week ending 25 November 2006. Shopping & Classifieds websites accounted for 6.17% market share in visits in the same time period. There are far fewer social networking websites however, compared to retail websites, indicating the sheer pull of social networking amongst Australian Internet users, which retailers could be tapping into.

For example, MySpace (www.myspace.com) ranked as the 6^th most-popular website in all industries for the week ending 25 November 2006, with its upstream traffic contribution to the Shopping & Classifieds industry increasing by 451.2% between weeks ending 26 November 2005 and 25 November 2006.

Market Share of Visits to Shopping & Classifieds (left-axis) vs. Social Networking Custom Category (right-axis)

Source: Hitwise Australia
Period: February 2006 - November 2006

Retail Websites with Web 2.0 Features

In the Shopping & Classifieds - Rewards & Directories industry, there are several price comparison websites that offer Web 2.0 features such as user ratings and reviews. ninemsn Shopping ( shopping.ninemsn.com.au) - which was the leading website in the industry for the week ending 25 November 2006 with 14.8% share of visits to the industry - allows users to post comments linked from their Hotmail account, leveraging Hotmail's significant user-base.

Another Australian example is MyShopping.com.au (www.myshopping.com.au), ranked as the 5^th most-popular local website in Rewards & Directories, which allows users to store product and review information as part of their membership. Social shopping websites are beginning to extend this concept such as US start-up, Kaboodle (www.kaboodle.com). Kaboodle is developing search technology that summarises users’ collected shopping information that they can easily act on at purchasing times. Kaboodle also allows users to share their collectibles, a feature of their partnership with eBay (mycollectibles.kaboodle.com).

How Retailers Can Leverage Social Networking Websites

There is an option for retailers to also partner with social networking websites that already have an established user-base and local marketing, such as MySpace. Retailers may also partner with social networking websites that attract users with a propensity to shop online. According to Hitwise Lifestyle data, users in the “Fashionably Wired” Group, who are characterised by high disposable incomes, were three times more likely than the online population average to visit Google’s social networking website, orkut (www.orkut.com). Retailers may tap into this local audience to target their desired consumer segment. These are some tactics that will be needed to lift visits to local Shopping & Classifieds websites; which in Australia account for 68% of visits, compared to 85.7% in the UK and 98.3% in the US.

There are some positive local trends such as classifieds website Cracker (www.cracker.com.au), operated by Fairfax Digital. Similar to US website Craigs List (www.craigslist.org), Cracker offers both free discussion forums and classified ads tailored to local user groups. Cracker ranked at 2^nd position in Shopping & Classifieds – Classifieds for the week ending 25 November 2006 and 21^st in the parent shopping industry.

What’s Ahead?

In 2007, we can expect increased levels of online engagement by Australian users with the rise of consumer generated media. The increasing sophistication of search engines with personalised information and summaries based on commercial intent will make the Internet an increasingly relevant channel for shopping. Retailers in the Australian market need to start incorporating Web 2.0 into their marketing and online distribution strategies.