go-Digital Blog on Digital Marketing

Social Media Is Changing How Supply And Demand Works For Big Brands

Source: http://www.businessinsider.com/social-media-manufacturing-2012-12

Many companies see social media as just another marketing and communications tool. A particularly effective one maybe, but just another of many.

According to Erich Joachimsthaler, founder and CEO of Vivaldi Partners, they’re missing out on the biggest source of value from these platforms. In a recent report, he outlines how brands can use social media to change their entire business, not just their marketing.

“Where I see the biggest opportunity is to think about your entire business model. There’s so much of this social information that is unstructured information, and consumers make 75 percent of it,” Joachimsthaler says. ”If you want to think about your business, if you want to create value and competitive advantage, it’s about thinking about that information and penetrating it at every step of your value chain.”

One of the best examples of this, which Joachimsthaler has studied in depth, is Burberry.

The first thing that’s allowed them to change their business is the sheer size of their social reach. “Burberry has about 15 million — and that’s growing rapidly — Facebook likes. This is an astounding figure,” Joachimsthaler says. “This is astounding because even Nike is not as strong, and Nike is a $15-18 billion dollar company. Burberry is at about $3 billion. So it’s a massive difference, the two companies don’t compare.”

They built that following by offering something useful. People on Facebo! ok can s ee Burberry fashion shows before the celebrities who actually sit in front of the catwalk.

But what’s truly innovative is what they do with those likes. 

“What Burberry does is, it has made those videos shoppable. You can click on the particular garment and you can basically make an order on the spot. So Burberry can collate the orders from 15 million people. They haven’t manufactured the product yet in China, but they have taken the orders, they know exactly how many people have ordered what,” Joachimsthaler says. ”They already have my money in the bank. 15 million times $200; that’s a lot of money in the bank. When they have the orders, they can then send the order to China, manufacture it, and within two weeks they can either deliver it to your home, or you can have it delivered to a store and you can buy additional garments.”

For a taste-driven and occasionally fickle industry, this saves a tremendous amount of money. “This changes the entire value chain,” Joachimsthaler says. ”The fashion business is fraught with forecasting. You forecast what will be bought in the next year, you need to produce them, manufacture them in China, there are inventory problems, there are logistics problems, then you put it in the store, the thing doesn’t sell, if it doesn’t sell you have to send it to the outlet store and mark it down.

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