Soft marketing: shoppers are encouraged to share their purchases with friends. Photo: Robin Cowcher
Social media has spawned a culture of relentless sharing, and Perth company Kitchenware Direct hopes to harness its power by involving customers' friends in the process of buying homewares online.
The online vendor is making a play for the upper end of the home accessories market with avago.com.au, intended as an online department store, minus the fashion and cosmetics.
The homewares sector was worth $1.4 billion in 2011 and is expected to grow at 2.5 per cent per year until 2017, according to Ibisworld research.
Launched last Friday, Avago offers a range of more than 5000 ornaments, accessories, homewares, travel goods, gifts and children's products, from more than 200 suppliers.
The site is integrated with major social media platforms Google +, Facebook and Pinterest, enabling shoppers to "socialise" their buying decisions by pinning and posting potential purchases for friends and associates to comment about. Loyalty programs reward customers for buying, recommending and reviewing products.
Avago also features a Twitter feed to allow customers to see what's trending globally, and editorial pages with advice on design trends compiled and written by the company's in-house creative team.
Kitchenware Direct managing director Peter Macaulay said social media would be the backbone of the site's marketing strategy.
He said while online shoppers were unlikely to want to opinions about their purchase of everyday items, such as nappies, the social shopping model worked well for discretionary purchases in which "taste" plays a role.
“It's based on the concept of enabling users as they browse the site to make an expression of, 'I want it, I like it, I own it',” Macaulay said.
Online retail stores based in Facebook had failed to take off, he said, but a social shopping model that simply links to Facebook, and other social sites, allows retailers to tap into their user base to boost sales.
“We don't have hundreds and thousands (of dollars) to blow on traditional marketing,” Macaulay said. “It's about leveraging online traffic.”
The company has spent almost $1 million getting the Avago venture off the ground and hopes to achieve sales of $10 million in the first year and 300,000 unique views a month.
Parent company Kitchenware Direct morphed from a traditional retailer of pots, pans and kitchen appliances to a web-based business in 2008 and has annual sales of $20 million.
Macaulay said online retailers had traditionally focused on competitive pricing ahead of quality or the provision of "interesting and different" offerings.
Avago's only online competitors in Australia in the upmarket homewares market were smaller and had narrow products ranges, he said.
Online shopping has become big business in Australia, generating profit of $401.1 million on revenue of $10 billion in 2011-12, according to Ibisworld.
The market has enjoyed annual growth of 8.6 per cent since 2007, with more than 33,000 businesses operating in the sector.
Many of the country's largest retailers, including Myer, David Jones, Big W and Harvey Norman have belatedly entered the fray, after losing ground to "pure play" merchants such as the high-profile discount television vendor Kogan.
Avago is one of the first companies in Australia to deploy a forthcoming version of NetSuite SuiteCommerce; an ecommerce platform used by 2800 companies worldwide.
NetSuite chief executive Zach Nelson said merchants like Avago were finding common ground between the innate sociability of the bricks-and-mortar shopping experience and online shopping, which has been its polar opposite, historically.
“Consumers are forcing businesses to re-architect how they interact with them,” Nelson said.
“Consumers are expecting a very different shopping experience.”
The social media-linked shopping model would replace email-driven marketing models for many online businesses, Nelson added.