Someone, somewhere, thinks you'll like this new kind of online store enough to buy
Social media ads driven by demographic data are 'a mutation of globalized capitalism'
If you use a social platform like Facebook or Instagram, you've probably noticed ads for a new kind of store showing up in your feeds.
After all, while you've likely never heard of any of these brands, they use social media advertising demographic data, which means the goods you're seeing are ones that someone, somewhere, thinks you'll like enough to buy.
So even if you didn't intend on shopping for a new sweater, or jacket, or baby onesie, you might be lured into a purchase.
But maybe you're wary. After all, what are these new outlets? Are they legitimate stores? They don't have any brick and mortar retail outlets. And can they be trusted with your hard-earned dollars?
This new form of online commerce is called dropshipping, which, according to Shopify's website, is "a retail fulfillment method where a store doesn't keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer. As a result, the merchant never sees or handles the product."
And that, together with targeted ads on social media, has created what Madrigal refers to as "a fascinating new retail world" that is "a mutation of globalized capitalism that's been growing in the cracks of mainstream commerce."
A new world of retail
According to Yona Shtern, the CEO and executive chairman of ParkWhiz and founder and former CEO of Beyond the Rack, one of the first major online shopping platforms in Canada, a number of factors contribute to this new world of retail.
As chains like Eaton's and Sears close, there are fewer opportunities for manufacturers to sell in traditional stores. Moreover, there are now a number of simple-to-use technological solutions that facilitate the process of buying and selling goods online. Plus, from Shopify to PayPal, turnkey solutions exist for every part of the consumer experience.
While manufacturers used to have to rely on retailers to put their goods in front of customers, says Shtern, now, stand-alone platforms like Shopify have significantly reduced the barriers to entry for producers.
For consumers, a number of overlapping factors make these new online storefronts appealing. Not only are they hyper-targeted toward specific demographics, they show up right in your social media feed, tucked between posts from friends and family.
For Shtern, the primary appeal to consumers is savings. "Direct to consumer from manufacturer typically means lower prices, both for product and sometimes for freight."
"Believe it or not," he adds, "it can sometimes be cheaper to ship the same package from [a] factory in China or from the port of Los Angeles to Toronto, than from Montreal."
So you're seeing items targeted to you with ads that look like fashion magazine editorial content, at a price that is often so low it's hard to pass up. Throw PayPal into the mix, and you don't even need to go searching for your credit card or wallet; a few simple clicks and the item is on its way to you.
Are these stores legit?
The question persists, are these stores legit? How do users know what to trust?
When it comes to trust and online shopping there is a sliding scale of accountability. There are the top-tier brands, like Gap, which have very clear policies for purchases and returns and offer peace of mind that the items you've paid for online will, in fact, arrive and will match the quality and appearance of what you saw online.
But with the new social media storefronts, eager online shoppers don't necessarily have the same assurances. Often there is little to no customer service; email inquiries bounce back undelivered and phone calls are redirected to mailboxes too full to accept new messages.
Jeff Goldenberg, co-founder of Abacus, a Toronto-based agency specializing in Facebook and Instagram advertising, says, "It's a case of buyer beware. Many stores are legit, but of course many are shady."
Stores like Chic Wish and Speedy Trends that operate primarily by reaching consumers on social media tend to use hype to try to create a sense of urgency in the hope of rushing buyers into making hasty purchases.
Only available until midnight!
One common strategy is a post that claims huge savings, or even free offers or products, that are only available until midnight, though perceptive shoppers might notice that the ads actually appear for weeks on end.
Goldenberg's advice is to "be skeptical. Look for third-party reviews." A quick Google search can reveal other people's experiences.
And then, just cross your fingers and hope that when your package arrives, the item you ordered looks like the photos. After all, we've learned that things aren't always the way they appear online.