Showing posts with label Retailers. Show all posts
Showing posts with label Retailers. Show all posts

Sunday, December 1, 2013

Retailers’ Sly Message: Get Yourself a Gift, Too

“Great Savings for the Holidays on Bissell” said the Amazon.com home page this week. (Category: vacuum.)

The Estée Lauder Anti-Wrinkle Essentials Value Set was a “gift of the day” on the Macys.com holiday beauty page. Among the site’s other head-scratching holiday deals: $50 off a Sonicare electric toothbrush. (Down to $129.)

All were aimed at a particular type of holiday shopper: the self-gifters — people who cannot resist taking advantage of the frenzied seasonal sale wars to buy a few things for themselves. (Those “buy one, get one free offers” are particularly potent bait.)

Even the classic gift of affection for others — jewelry — is fair game, and retailers know it. Under the banner Black Friday Jewelry Deals, Macy’s website coaxed: “This holiday season, get an unforgettable gift for a loved one (or yourself). Black Friday jewelry is a go-to choice for the ultimate present under the tree.”

A number of studies show that since the recession, and even a year or two before, self-gifters have been growing in both numbers and the dollars they spend. Perhaps these shoppers have reasoned that big sales offer the only legitimate excuse to spend for themselves — or in years when their finances were improving, they were finally able to ease up enough to splurge on something.

Whatever the motivation, they’ve become a special demographic niche that retailers depend on heavily, so much so that many preholiday shopping surveys now track them. But some recent surveys suggest this year that these shoppers may be a feeling a little less indulgent — a worrying prospect for companies heading into a season already filled with uncertainty and weak sales projections.

Prosper Insights & Analytics, a consumer intelligence firm that conducts surveys on holiday spending for the National Retail Federation, for example, found that a smaller share of holiday shoppers planned to take advantage of discounts to buy “nongift items” for themselves or their family this holiday season, compared with last year or the year before.

Given that impulse-buying promotes self-gifting, retailers will be doing everything they can this year — overtly, subtly and even subliminally — to tempt people to be more like Robert Kissell of Nags Head, N.C.

Mr. Kissell, 25, is an incurable self-gifter. When the stores open Thanksgiving night and Black Friday morning, he will be on the chase for a 60-inch LED smart TV at Walmart that he says will be on sale for $688, a slow cooker at Ace ($15), an Android tablet at Kmart ($39) and a whole bunch of Blu-ray discs at Target.

He plans to keep every one for himself.

Mr. Kissell hastens to add that he has a wife, parents and others for whom he is also plotting to buy great presents. But the reality is that the number of people on anyone’s gift list — and the general amount they will spend on each — is, in economists’ terms, fairly inelastic. It simply doesn’t vary that much from year to year.

For retailers, the potential for growth is greater with self-gifters because personal wants or domestic needs know fewer limits. And they can be justified as a smart household budget move.

Hence the vacuum cleaner strategy — or as Marshal Cohen, chief retail analyst at NPD Group, a research and consulting firm, describes it, promoting items that really aren’t gifts.

“How many people are you going to buy a big-screen TV for?” asked Mr. Cohen. “That item is not necessarily a gift-giving item.” Retailers, he said, “create it so the price point is so attractive” that it is very easy to rationalize buying it for yourself or even as “a family gift.”

“You are doing yourself a disservice if you don’t wait to see what’s available,” said Mr. Kissell. “The discounts really are worthwhile,” he continued, adding, “I would never buy a TV the other 10 months of the year.”

This article has been revised to reflect the following correction:

Correction: November 29, 2013

An earlier version of this article misspelled the name of a subscription website that offers 30 days free shipping, with the clock starting with your first purchase. It is RueLaLa.com, not Rulala.com.

This article has been revised to reflect the following correction:

Correction: November 29, 2013

A picture caption with an earlier version of this article rendered incorrectly the name of town in North Carolina. It is Nags Head, not Nag’s Head. 

Thursday, July 11, 2013

U.S. Retailers Offer Safety Plan for Bangladeshi Factories

The proposal calls for the retailers to inspect the estimated 500 factories that the American companies use within 12 months, and then develop plans to fix any substantial safety problems that are found, one official involved in the planning said.

Under the effort, called the Alliance for Bangladesh Worker Safety, the participating companies would contribute money — from a modest amount up to $1 million a year, depending on the level of business each does in Bangladesh. This would create a total fund of $40 million to $50 million during the plan’s five years.

While details of the proposal have yet to be fleshed out, it differs from the European-dominated plan in the way the participants take responsibility for safety violations. The Europeans pledge to ensure that there are funds to fix serious fire and building safety problems in any of the factories they use in Bangladesh.

Under the American plan, there is talk of “shared accountability” – the companies would work closely with the factory owners, the government of Bangladesh and various governments and aid agencies to figure out ways to finance safety improvements. If serious safety problems were found at a factory, the plan’s director would inform the Bangladesh government, the factory owner and what the group calls the factory’s “worker participation committee,” a group to be elected by a factory’s workers.

The American retailers plan to develop a common safety standard for the factories by October and to create a clearinghouse to share information among themselves about which factories have been approved for production and which need safety improvements. One retail executive said the American companies would pledge $100 million in loans and other financing to upgrade safety in Bangladesh’s apparel industry.

The 70 companies in the European-dominated effort announced details of their plan on Monday, saying they would have all of the factories they use in Bangladesh inspected within nine months and would have remediation plans developed for those with safety problems. They pledged “to ensure that sufficient funds are available to pay for renovations and other safety improvements.”

Bangladesh is the world’s second-largest apparel exporting nation, after China; Europe buys about 60 percent of its exports and the United States around 25 percent.

The chief executives in the alliance made a joint statement Wednesday, saying: “The safety record of Bangladeshi factories is unacceptable and requires our collective effort. We can prevent future tragedies by consolidating and amplifying our individual efforts to bring about real and sustained progress.”

The beginning of the American effort was announced in May, as Walmart, Gap and other American retailers felt pressure to act because the European-dominated accord was gathering momentum and because of the outcry to do more to ensure safety after 1,129 workers died in a factory building collapse in Bangladesh in April.

The plan announced Wednesday includes J.C.?Penney, Carter’s and the Children’s Place and was reached with the help of the Bipartisan Policy Center and two former United States senators from Maine, George Mitchell and Olympia Snowe.

Supporters of the European-dominated plan, known as the Accord on Fire and Building Safety in Bangladesh, have pre-emptively criticized the American plan, saying it would achieve less in improving safety because the companies have made a less ambitious commitment to finance safety upgrades. Several American companies have joined the European-dominated plan, including Abercrombie & Fitch and PVH, the parent company of Calvin Klein and Tommy Hilfiger.

Critics have faulted the American effort for not including the views of unions or workers in their plan. The Bipartisan Policy Center had invited several labor rights groups to attend a meeting to give their views, but the labor groups boycotted, seeing the American effort as one that was undercutting the European-dominated plan.

Wednesday, May 15, 2013

Six Retailers Join Bangladesh Factory Pact

With only one American company joining — PVH, the parent company of Calvin Klein and Tommy Hilfiger — consumers, investors and labor groups are pressing Gap, Walmart and other American retailers and apparel companies to sign onto the effort. The plan will require participating companies to agree to rigorous inspection of the factories they use in Bangladesh and to help underwrite needed safety improvements at factories with violations.

Late Tuesday afternoon in response to growing criticisms that it was not doing enough to improve factory safety, Walmart announced that its factory monitors would “conduct in-depth safety inspections at 100 percent of the” 279 factories it uses in Bangladesh.

Walmart said it would immediately stop production at factories where urgent safety problems were found and would notify factory owners and government authorities of the need to take action. Walmart stopped short of committing to help underwrite the needed improvements — one of the key aspects of the landmark Bangladesh safety plan that more than a dozen European retailers and apparel brands have embraced since Monday.

Walmart said it would complete reviews of every factory within six months and would post results of these inspections, although it did not say how much information it would post. “Transparency is vital to make progress in improving factory conditions,” said Rajan Kamalanathan, vice president of Ethical Sourcing for Walmart.

Once numerous European companies began joining the plan on Monday — led by H&M, the Swedish company that is the largest purchaser of apparel from Bangladesh — a division has appeared between European and American companies about what needs to be done to respond to the April 24 factory building collapse in Bangladesh in which more than 1,100 workers died.

Walmart has maintained a distance from the collapse, even though Ether Tex, one of the factories in the collapsed Rana Plaza building, had listed Walmart as a customer on its Web site. Both Walmart and Ether Tex’s chairman have said that Walmart was not a customer at the time of the building collapse.

The Bangladesh Center for Worker Solidarity has provided The New York Times with photos of what it says are documents recovered in the Rana Plaza rubble that show that a Walmart contactor from Canada, Fame Jeans, was having jeans produced for Walmart at Ether Tex. One document, a purchase order dated May 12, 2012, calls for “dark blue wash,” “skinny fit” jeans to be delivered in the fall of 2012.

Another document, dated April 27, 2012, discusses pricing for five different jeans styles, with the F.O.B. prices ranging from $3.41 to $4.50 a pair.

Kevin Gardner, a Walmart spokesman, noted that the documents were from a year ago. “Our investigation of the Rana Plaza building site after the collapse revealed no evidence of authorized or unauthorized production at the time of the tragedy,” Mr. Gardner said. “If we learn of any unauthorized production, we will take appropriate action based upon our zero-tolerance policy on unauthorized subcontracting. We remain committed to promoting stronger safety measures in factories, and that work continues.”

Judy Gearhart, executive director of the International Labor Rights Forum, an advocacy group in Washington, said Walmart was improperly trying to distance itself from the building collapse.

“It’s another example of Walmart’s lack of ability to track the specifics of its supply chain,” she said. She called on Walmart to join a compensation fund for the victims of the Rana Plaza building collapse.

So far no American company has agreed to contribute to such a fund, while Loblaws of Canada, Primark of Britain, El Corte Inglés of Spain and three other European companies have agreed to participate.

Consumer and labor groups have focused more on persuading Gap rather than Walmart to join the Bangladesh factory safety plan. Gap has been the most vocal company in criticizing the plan, expressing concerns that overly litigious American lawyers could seize on the agreement to sue American companies on behalf of aggrieved factory workers in Bangladesh. Gap’s proposed changes would greatly limit any legal liability for any company that violated the plans.

In a statement, Gap said: “We’re pleased that an accord is within reach, and Gap Inc. is ready to sign on today with a modification to a single area — how disputes are resolved in the courts. This proposal is on the table right now with the parties involved. With this single change, this global, historic agreement can move forward with a group of all retailers, not just those based in Europe.”

Under Gap’s proposal, if a retailer is found to have violated the agreement, the only remedy would be public expulsion from the factory safety plan.

“The U.S. is quite litigious,” said Bill Chandler, a Gap spokesman. “We put forward specific proposals that we thought would bring other American retailers into the fold. We thought it would be a step forward and would turn it into a much more global agreement.”

The labor unions and advocacy groups that have negotiated with H&M; Inditex, the Spanish company that owns the Zara chain; and other companies that have signed the plan criticized Gap’s proposal to change the agreement. These groups say Gap’s vigorous push against the version of the plan has helped sway some other American companies not to sign.

“Gap Inc. is ready to sign on today with a modification to a single area — how disputes are resolved,” said Scott Nova, executive director of the Worker Rights Consortium, a group sponsored by 175 colleges and universities. “Gap’s demand is that the agreement be made unenforceable — and therefore meaningless. What Gap wants is the right to renege on its commitments when it wishes.”

Gap says that it has already taken substantial steps to improve safety at the 78 factories it says it uses in Bangladesh. It has hired a respected fire inspector to examine those factories and has pledged $22 million in loans to help finance safety upgrades when problems are found.

Among the other companies that joined the Bangladesh safety plan on Tuesday were Kik, a German low-cost apparel retailer; Aldi, the German retail chain; and G-Star Raw, a Dutch designer clothing company.

Monday, May 13, 2013

Clothing Retailers Pressed on Bangladesh Factory Safety

Nathan Weber for The New York TimesA protest at a Gap store on Thursday in Chicago, in response to the disaster in Bangladesh.

A wide spectrum of government officials, investors and religious groups are warning major retailers like Walmart, Benetton and Gap that they could face financial repercussions from consumers, damage to their stock value or sustained public protests if they do not adopt stricter garment manufacturing standards.

With the death toll rising above 1,000 two weeks after an eight-story factory building collapsed in Bangladesh, organizations and officials say they have been growing impatient with American and European retailers and apparel brands because only two companies — PVH, the parent company of Calvin Klein and Tommy Hilfiger; and Tchibo, a German retailer — have signed onto a binding agreement on safety standards for factories. That agreement would commit companies to allow independent inspections of the apparel factories they use, to terminate business at factories that do not quickly correct violations and to underwrite needed safety improvements. For example, many garment factories in Bangladesh lack basic means for workers to flee in case of fire — specifically fire escapes and smokeproof enclosed staircases.

Avaaz, a human rights group, has collected 875,000 signatures on a petition urging Gap and H&M to sign on to the plan to commit to fire safety improvements at Bangladesh factories. New York City’s comptroller, John C. Liu, who oversees city pension funds owning more than five million Walmart shares, is warning the company that it risks damage to its public image unless it does more on factory safety in Bangladesh.

And the Rev. Seamus P. Finn, representing shareholders from the Catholic organization Missionary Oblates of Mary Immaculate, has been circulating a letter among religious organizations — groups that control more than $100 billion in assets — to express displeasure with the nation’s retailers. He says the retailers have not done nearly enough to improve workplace safety for the more than three million garment workers in Bangladesh.

“What happened in Bangladesh is a game-changer because of the gravity of the situation and the tremendous loss of life,” Father Finn said. “People are really coming to life about this and saying, ‘We need to do something.’ ”

Not just Western retailers are encountering more pressure after the April 24 collapse of the Rana Plaza building outside Dhaka, the Bangladeshi capital. The nation’s government — known for lax building code enforcement — has suddenly grown tougher, closing 18 factories for safety violations. Three of those factories were run by the Nassa Group, the country’s largest clothing exporter, which counts Walmart and Sears among its customers. Last weekend, the government also announced it would hire hundreds of additional factory inspectors.

The United States government has also been pressing Bangladesh and the apparel manufacturers there over safety. In January — two months after the Tazreen factory fire in Bangladesh killed 112 workers — the United States trade representative notified Bangladesh that Washington might withdraw, suspend or limit that country’s trading privileges. The trade representative was responding in part to a complaint that the A.F.L.-C.I.O. filed, asserting that the Bangladesh government had worked in concert with its apparel manufacturers to suppress labor unions.

“There are serious concerns in Bangladesh related to freedom of association, worker safety and other issues,” a senior official in the trade representative’s office said on Friday. The trade representative’s office says it will decide in June whether to take action against Bangladesh, although under esoteric trade rules, any penalties could not be directed against that country’s apparel industry.

The most visible pressures that retailers have faced are street protests, including one in Barcelona, where demonstrators wore shirts with fake blood stains to protest Mango, Benetton and other retailers. In the United States, university chapters of United Students Against Sweatshops have helped organize a series of demonstrations this week against Gap in Boston, Los Angeles, New York and Washington to press it on factory safety.

Monday, December 24, 2012

As Shoppers Hop From Tablet to PC to Phone, Retailers Try to Adapt

“I do use the iPad to browse sites,” Mr. O’Neil said, but when it comes time to close the deal, he finds it easier to do on a computer.

Many online retailers had visions of holiday shoppers lounging beneath the Christmas tree with their mobile devices in hand, making purchases. The size of the average order on tablets, particularly iPads, tends to be bigger than on PCs. So retailers poured money and marketing into mobile Web sites and apps with rich images and, they thought, easy checkout.

But while visits to e-commerce sites and apps on tablets and phones have nearly doubled since last year, consumers like Mr. O’Neil are more frequently using multiple devices to shop. In many cases, they are more comfortable making the final purchase on a computer, with its bigger screen and keyboard. So retailers are trying to figure out how to appeal to a shopper who may use a cellphone to research products, a tablet to browse the options and a computer to buy.

“I’ve been yelling at customers for two years, saying, ‘Mobile, mobile, mobile,’ ” said Jason Spero, director of mobile sales and strategy at Google. “But the funny thing is, now we’re going to say: ‘Don’t put mobile in a silo. It’s also about the desktop.’ ”

The challenges are daunting, though. It is technically difficult to track consumers as they hop from phone to computer to tablet and back again. This means customers who, say, fill shopping carts on their tablets have to do all the work again on their PCs or other devices. The biggest obstacle, retailers say, is that the tools used to track shoppers on computers — cookies, or bundles of data stored in Web browsers — don’t transfer across devices.

Instead, retailers are figuring out how to sync the experience in other ways, like prompting shoppers to log in on each device. And being able to track people across devices gives retailers more insight into how they shop.

The retailers’ efforts are backed by research. While one-quarter of the visits to e-commerce sites occur on mobile devices, only around 15 percent of purchases do, according to data from I.B.M. According to Google, 85 percent of online shoppers start searching on one device — most often a mobile phone — and make a purchase on another.

At eBags, customers are shopping on their tablets in the evening and returning on their work computers the next day. But eBags has not yet synced the shoppers across devices, so customers must build their shopping carts from scratch if they switch devices.

“That is a blind spot with a lot of sites,” said Peter Cobb, co-founder of eBags. “It is a requirement moving forward.”

At eBay, one-third of the purchases involve mobile devices at some point, even if the final purchase is made on a computer.

At eBay, once shoppers log in on a device, they do not need to log in again. Their information, like shipping and credit card details and saved items, syncs across all their devices. If an eBay shopper is interested in a certain handbag, and saves that search on a computer, eBay will send alerts to her cellphone when a new handbag arrives or an auction is about to end.

“They might discover an item on a phone or tablet, do a saved-search push alert later on some other screen and eventually close on the Web site,” said Steve Yankovich, who runs eBay Mobile. “People are buying and shopping and consuming potentially every waking moment of the day.”

ModCloth, an e-commerce site for women’s clothes, said that while a quarter of its visits come from mobile devices, people are not yet buying there in the same proportion, though they are becoming more comfortable with checking out on those devices.

“She’s visiting us more on the phone, but she’s actually transacting somewhere else,” said Sarah Rose, vice president of product at ModCloth.

For example, a shopper will skim through new arrivals on her phone while on the bus and add items to her wish list, then visit that evening on her tablet to make a purchase, Ms. Rose said.

Some Gun Retailers Make Changes After Newtown Shootings

Dick’s Sporting Goods, a chain with more than 500 stores, said in a statement that “during this time of national mourning” it was stopping gun sales, and withdrawing them from display, at its store closest to Newtown. The company said it was also temporarily ceasing sales of modern sporting rifles nationwide.

 And Walmart.com removed its information page on the Bushmaster .223, a semiautomatic rifle said to be used by the gunman, Adam Lanza, in the Newtown killings.

Walmart, the nation’s largest retailer, said it removed the information page on Bushmaster “in light of the tragic events.” However, it said it had made no changes to its sales policies on guns and ammunition.

 A spokesman for Wal-Mart, David Tovar, said that the company remained “dedicated to the safe and responsible sale of firearms in areas of the country where they are sold,” and that the company “had not made any changes to the assortment of guns we sell in select stores.”

Walmart had recently been increasing its emphasis on gun sales, after a five-year period where it had backed away from them.

In 2006, the company stopped selling guns in most of its American stores, saying there was little customer demand for the items.

 But in 2011, it reversed that decision, saying it wanted to appeal to hunting enthusiasts, and began selling guns at more than half of its stores.

Mr. Tovar said that the company was a member of Mayors Against Illegal Guns. As part of that, the company takes video recordings of gun sales, conducts background checks on employees selling guns and takes other steps to help keep guns away from criminals.

 Still, Jared Lee Loughner, who shot Representative Gabrielle Giffords and other Arizona residents last year, bought ammunition for a Glock gun at a Walmart the morning of the shooting.

Walmart.com’s removal of the Bushmaster .223 information page was first reported by The Nation.

A spokesman for Cabela’s, another large chain that sells guns, did not immediately return requests for comment on Tuesday. An information page at Cabela’s featured the Bushmaster .223 on Tuesday.

Bass Pro Shops’ site showed information about other guns on Tuesday but no Bushmaster-brand guns; last month, though, it offered a Black Friday special on a Bushmaster M4 Patrolman for $949.99. A spokesman said in an e-mail that the company had made no changes to its Web site.  

A Dick’s Sporting Goods spokesman did not immediately return a request for comment on Tuesday.

Friday, November 2, 2012

Advertising: Calendar Says October; Retailers Say It’s Christmas

The idea that holiday marketing efforts would get under way in earnest before Thanksgiving was once startling. But in recent years, “Christmas creep” has become standard operating procedure, leading to jokes like Stephen Colbert’s last week on Twitter: “Halloween is right around the corner. You can tell because all the stores are decked out for Christmas.”

One company, which specializes in online coupons, is spoofing the phenomenon. RetailMeNot, a Web site operated by WhaleShark Media, is running a campaign saluting “OctoNovemCember,” which features a hybrid holiday character called Pumpkin-Headed Turkey Claus that has its own Twitter feed.

The uncertain economy has been a major reason that holiday ads are arriving early the last several years. Retailers sought to get cash registers ringing as soon as they could, regardless of tradition. As it turned out, many consumers welcomed a longer Christmas shopping season, seeing the sales prices as a way to help stretch their gift budgets.

So even as surveys suggest consumers are growing more confident about the economy, campaigns for this holiday season are still playing up bargains. For instance, Target, which seems to be the first big retailer to have started running Christmas commercials, is concluding them with this promise on-screen: “Dream big. Save bigger.” The spots, which began appearing three weeks ago, are by 72andSunny in Los Angeles, part of MDC Partners.

Toys “R” Us, which started its holiday campaign on Sunday, also is being aggressive on sales. The 2012 edition of its holiday catalog, called the Great Big Toys “R” Us Book, begins with two pages of coupons with discounts as high as $60 off certain Power Wheels toys.

“We’re very optimistic about the holiday,” said Peter Reiner, senior vice president for marketing at Toys “R” Us.

“We’re concentrating on what makes us special, letting consumers know there is a difference,” he added, “and if you want to make sure you get the right toy, there’s really only one place to go.”

That is underlined by the theme of the 2012 campaign: “Why shop anywhere else for toys? Why?”

In commercials by the Chicago agency the Escape Pod, children play the parts of television news reporters and anchors at a make-believe station with the call letters TRU, delivering pitches like “All the toys, all the time” in newscast style.

In one spot, which will run in social media like Facebook, Twitter and YouTube, the youngsters speak lines that sound familiar: They are from the lyrics to the longtime Toys “R” Us jingle.

“For kids, the new toys are the biggest news of the year,” said Vinny Warren, creative director at the Escape Pod, “so we present it as news.”

“The idea is to get on with the show and tell them what Toys ‘R’ Us has,” he added. “We’re delivering the offers in a way that’s direct and interruptive but, hopefully, charming.”

Wayfair, which sells products like furniture and home accessories online, said it would start its Christmas campaign on Thursday. A humorous television commercial, created internally, is focused on the variety of merchandise at wayfair.com, then concludes with the words “Holiday supersale starts now, up to 60 percent off.”

“Consumers care about selection and value,” said Niraj Shah, chief executive at Wayfair. “We think this will catch their attention and work for us.”

Although “it’s a little hard to say” if customer attitudes about the economy are improving, “we’ve been consistently growing,” he added. “It seems we’re on track for a really good holiday season.”

Not all Christmas campaigns will encourage bargain hunters. For example, an effort for Dell by Y&R New York is more high-minded, carrying the theme “Inspired gifting.”

In a television commercial, a love-struck boy named Billy uses Dell products to create a gift for an astronomy-minded girl named Charlotte. And in a print ad, a young photography fan named Maxine gets “the perfect gift,” a Dell Inspiron 14z Ultrabook with photo-editing software.

“Our customers want holiday shopping simplified, but they also want to give gifts that will be remembered and inspire loved ones,” said Fara Howard, executive director for North American consumer and small-office marketing at Dell.

An element of the “Inspired gifting” campaign that is to begin on Saturday, created by the Buzz Marketing Group in Philadelphia, is centered on the “#Inspire 100,” whom Dell describes as 100 “influencers” in fields like education, philanthropy and entrepreneurship. They include the actor Edward Norton; Adam Braun, the founder of Pencils of Promise; and the fashion designer Rachel Roy.

“It is all about creating a conversation with consumers, not just pushing a deal or discount,” said Tina Wells, chief executive at Buzz Marketing.

And the Sears division of Sears Holdings plans to start running a commercial on Thursday that is devoted to the depth of selection of home appliances at its stores rather than sale prices.

The humorous spot, by McGarryBowen, is styled like a movie trailer for a romantic comedy and promotes what the retailer calls “the top 10 advantage.” An announcer declares, “Only Sears carries them all,” referring to the 10 leading appliance brands.

Friday, October 5, 2012

Shopping Sites Pay Contributors Who Drive Traffic to Retailers

Ms. Medeiros is not a style pro; her day job is at a talent agency in Manhattan. But in a little-known practice, social media shopping sites are offering payments to shoppers who post product links that drive Web traffic and sales to retailers.

In the case of Ms. Medeiros, it is the sneakers and lipstick she added to Pinterest and the night life collection she posted on the shopping site Beso.

Favorable mentions on blogs have been for sale for years. Product reviews can also be bought. Now social media sites are taking citizen marketing to a new extreme, turning anyone’s Twitter message, Facebook post, Pinterest image or e-mail into a possible paid promotion.

The shopping sites are open about the moneymaking mechanics and argue that readers no longer expect everything online to be commercial-free. But the Federal Trade Commission says the practice blurs the line between a recommendation and a paid endorsement and needs to be flagged to readers.

“It’s turning word of mouth into a revenue opportunity,” said Mary Engle, who directs the commission’s division of advertising practices. “Since they’re getting compensated, in a sense, for their endorsement, then they should disclose that.”

Social media shopping sites let users select items from across the Web and share and comment on other users’ selections. They don’t sell anything themselves but make money by taking a cut from retailers on their sites.

Beso formally introduced a program on Tuesday that Ms. Medeiros has been trying, which pays users to send clicks to hundreds of major retailers, like Target and Gap.

“If they drop a link onto Twitter about a pair of shoes that they’re dying for, or a new handbag they’re coveting, and they refer users to Neiman’s or whoever sells that item,” said David Weinrot, the chief marketing officer for Shopzilla, the parent company of Beso, “they could actually be rewarded.”

Other large social shopping sites and apps, including the Fancy and Pose, recently introduced similar programs, and Referly, a site introduced in May, is entirely based on people referring products to friends and receiving money in return. Referly says 10,000 people have already signed up. The programs are too new to evaluate their financial success, but Web marketers say consumers should expect more similar programs, in part because visitors are no longer offended by the idea.

“The economic maturity of consumers is, businesses need to make money somehow if they’re going to survive — it’s so ubiquitous now that it’s expected,” said Alicia Navarro, co-founder and chief executive of Skimlinks, which automates referral links for publishers.

The sites determine who gets paid through unique links created for each participant. When someone uses a link to visit a retailer’s site, or buys a product, a payment is deposited into the referring user’s account. The practice is known as affiliate marketing. Bloggers already use the system and almost all major online retailers are willing to pay for traffic or purchases, Ms. Navarro said.

Links can be tracked no matter where a post occurs, meaning a Twitter message, a photo on Pinterest or a Facebook entry can all generate revenue. The social media shopping sites act as a middle man, collecting fees from the retailers and depositing payments into the users’ online accounts — after taking a cut. (Sometimes, sites cut out consumers, too. Earlier this year, Pinterest got into hot water when it quietly adjusted some users’ links to become affiliate-marketing links, and seemed to be collecting all the revenue for itself. It says it has ceased using affiliate links and declined to comment on whether it would offer users fees from such links in the future.)

Beso pays users an average of 14 cents for each click they send to participating retailers, while other companies, like Pose, pay only when a purchase is associated with a link. Payments for purchases average about 5 percent of the price, Ms. Navarro said. The sites and the retailers monitor for spamlike behavior, like tons of clicks from a single I.P. address, and do not pay in those cases.

Lynsey Eaton, a Pose user who runs the blog Law of Fashion, said switching to the paid model for Pose images had made her more likely to post Pose links, and had made the service more useful. “Instead of just making it an Instagram for fashion, it’s now shoppable as well,” she said.

The Federal Trade Commission issued guidelines in 2009 saying bloggers must disclose any paid endorsements, and recently updated them. The guidelines apply to these commission-based links, Ms. Engle of the commission’s advertising division said, whether they are in a post or a 140-character Twitter post. “They can use a hashtag and then ‘ad,’ and that’s only three characters,” Ms. Engle said.

But there is some disagreement about whether a Twitter post should be treated like a blogger’s recommendation and about the changing expectations of financial disclosure on the Web.

Linda Goldstein, a lawyer specializing in advertising, said when the F.T.C. issued its blogger guidelines, “consumers were much less sophisticated” than they are today. “Consumers are now being used to generate leads — I don’t know if that raises the same concerns as an endorsement,” said Ms. Goldstein of Manatt, Phelps & Phillips. “You’re not expressing an opinion about the product, you’re sending it to someone you think might be interested.”

Twitter and Facebook policies allow individuals to post referral-based links, but both companies say users should disclose that they are getting paid.

So far, the social media companies and their users seem to be largely unaware of how the guidelines apply to them.

Dustin Rosen, chief executive of Pose, said he was not clear on whether the guidelines would apply. Beso says its users should add hashtags like #spon, for sponsored, or #paid to links, but stops short of requiring it. Ms. Eaton, the Pose user, says she follows disclosure guidelines on her blog but has not yet done so on Pose. “I think this is so new that I haven’t really honestly thought about how users perceive the fact that people are making money,” she said.

Ms. Medeiros, who signed up for the Beso pilot program about a month ago, says she doubts that her friends will mind that she makes money from her links.

“It’s extra cash for something that I like doing,” she said. “It’s sort of rewarding to be able to make a few cents from sharing your personal life.”

This article has been revised to reflect the following correction:

Correction: October 2, 2012

An earlier version of a picture caption with this article misstated the name of a social media shopping site that is offering payments to users who drive Web traffic to some retailers. It is Beso, not Bezos.