Introduction
The use of the term social commerce can be traced to the year 2005 and has risen to become one of the most commonly articulated typesof e-commerce. Companies are currently ripping millions of shillings from social commerce. In 2008, for instance, Dell reported that it had experienced more than one billion worth of sale through the use of tweeter commerce (conventionally called T-commerce). Successful social commerce sites are known to have two main characteristics; be able to integrate social media and buying capability and also to fully utilise major advancement in technology. This is what gives social commerce an edge over the rest because the public is the one that has exclusive powers.
Meaning of Social Commerce
The advent of the internet or e- commerce made shopping much easier. Companies would hire web sites where consumers could buy products and services. The companies would then split revenues with the website owner. The realisation that this could be done more efficiently through the use of social sites led to the creation of social commerce. Here, a company can do direct sales without hiring any middlemen.
Companies employ these strategies to take advantage of the high exposure and interaction of social networks (Kietzman, Hermkens, McCarthy & Silvestre, 2011). Social networks serve different functions. For instance; there are social networks like facebook for friendship networking, blogging sites, shopping sites like eBay and those for dating purposes. Currently, it is possible to rate some of these sites using the available search engines. As such, consumers have been given an upper hand. This is what social commerce is trying to exploit. In its basic form, social commerce is the use of the social media to promote buying and selling of goods and services through the interaction of people.
Meaning of E- Commerce
The emerging market of social commerce is a type of market that uses social interaction as a way of fostering trade (Dohoon, 2013). This concept was introduced as recently as 2005 with the realisation of the powers of the internet. Unlike conventional commerce, social commerce incorporates tools that enable access and shopping of goods and services online. Here, the influence of social networks has been exploited as a business platform by most companies. The fact that a variety of social networks are accessible worldwide compounds to this issue. Furthermore, payments can easily be made electronically regardless of distance.
Why Have it?
There are a myriad of reasons as to why social commerce is almost a necessity in this global world. The traditional and conventional ways of commerce will always be appreciated throughout history. The central reason for the preference for social networks in commerce is the fact that they are an efficient method of studying consumers’ behaviour (Guo, Wang & Leskovec, 2011). In their analysis of one of the largest e- commerce websites, GUO, Wang and Leskovec (2011) realized that the number of electronic transactions committed by any buyer is directly proportional to their social graphs. This information is quite useful in companies as they can easily tell the direction of demand. They can also tell the relationship between services and/ or goods to their complementary and subsidiaries. Any transaction by the customer is usually directly communicated to the company. Also, there is the fact that social network is a place where people disclose their identities. Companies can use this aspect to learn more about consumer behaviors.
Consumers who utilize social networks frequently are likely to get access to some of the advertised products and services. They also have a higher propensity to buy the same product online. However, this is affected by customer’s preferences and communication between the company and the buyer. There is a positive correlation between messaging and trading (Guo, Wang & Leskovec, 2011). This is especially true when it comes to expensive products. The loss of sales has been attributed to little or no communication between a buyer and a seller. For consumers, shopping online is one of the biggest risks keeping in mind that it is the product that finds one and not the other way around. This is the probable explanation for communication and trade curve relations.
Moreover, the findings of the research reveals that social commerce contributes to building of customers trust on a product. However, this is largely dependent on the ratings of a product or service by other customers. Apparently, this is a convenient and cheap way of advertising. It is also an efficient way of bargaining because Guo, Wang and Leskovec (2011) realized that customers will only choose to pay a higher price for a product depending on the rating of the product or service being offered.
However, the company must also be in a position to sacrifice their time and resources. It was revealed that products and services do not rate high depending on their quality only. The rate at which the company developed consumer trust also contributed to this. Replying to messages, free shipping and ensuring that products reach customers at the required time are some of the ways of doing this. It is noteworthy that all these are contingencies that cost the business.
Types of e- commerce sites do people prefer
The strength or success of any social network site lies in the power it provides the consumer with. Most consumers prefer an e- commerce site that allows them the power to choose and identify the good or service they want without any hindrances (Huang and Benyuocef, 2013). Generally, power is an inherent factor to the success of any e- commerce site.
Power to the consumer can refer to a myriad of things. More importantly it implies the information in the site. Consumers tend to choose sites that allow them to acquire information about a product or service. This is the conclusion that Huang and Benyuocef (2013) revealed in their study. The information can either be acquired in what is already available on the site and/ or through instant messaging. Instant messaging will allow the buyer to inquire on personal issues with the product or service. Such transparency is what culminates to trust which has been shown to increase sales.
On the other hand, the type and form information placed on the site also contributes to this. The information should be accessible, transparent, and complete, and the language should be simple. This kind of information gives the consumer some sense of power as he or she is in a position to know exactly what kind of product to buy and to expect.
Communication is paramount to any successful trading that occurs in an e- commerce site. In most cases, the buyer is allowed to leave a response on their experience on the product. These reviews come in handy when it comes to general rating of a product or service. It has been shown that there is a correlation between customer reviews and the demand of a product (Guo, Wang & Leskovec, 2011). Usually, high ratings evoke trust in a buyer and this increases sales. However, zero customer reviews spell bad news for a product, and this impedes sales.
In business, it is always overly important to understand why consumers make the decisions they make with regard to buying. Consumer behavior, often defined as the process and activities that role play leading to a consumer deciding to buy a given product, is perhaps the most commonly studied facet when it come to buying. Many consumer behavior studies have led to the realization that consumers only buy products they are comfortable with. This perhaps explains why mainstream technology should be incorporated into social commerce and not the newest technology. There is always need for one to learn the basics of a new technology and many people, particularly the old, are disinterested in
The main idea is that most people are technophobes and might feel unaffordable having to learn about every new technology.
Additionally, consumers are always concerned about getting involved with products and services that they can trust. This further explains why the mainstream technology is most preferred with regard to social commerce than new technologies. Consumer trust and comfort is evinced when Leland (n.d.) refers to Ziva Jewels's marketing director’s (Felicia Ceballos-Marroquin) story that the eBooks designed by the organization in a bid to educate potential clients on the various types of jewellery they had in stock were not successful until the company decided to produce the eBooks with pictures. The main idea in Leland (n.d.) assertion in that consumers only identify with products that they are comfortable with as well as products that can be trusted.
In a similar manner, there are several types of social media that can be used for e-commerce. Some of the leading social cites that sellers most often use are Facebook, MySpace, LinkedIn, and Twitter. As Krizan (2011) asserts, most of these social sites used to be common with teens but currently more and more adults are joining the sites, and as a result the presence of business organizations in the social media continues to heighten by the day. F-commerce, as is it conventionally called, it the act of selling goods and services through Facebook. The number of businesses having Facebook accounts increase by the day. However, there is a huge disparity in people’s preferences when it comes to the choice of social media. For instance, for people who want to form social but professional networks, LinkedIn is in most cases the most preferred. It follows, therefore, that choice of social media in social commerce is yet another important determining factor; people are not going to use/be a client of a company who uses social media they are not able to use. The use of social media that clients are not comfortable with only leads to loss of clients, sales, as well as revenue.
Additionally, using the mainstream technology other than the newest technology allows clients to be both technology early adapters and mainstream followers - everyone will know how to use the technology. Technology keeps on changing; what is there a today change as soon as people learn about its presence or how to use it. Using the mainstream not only increases the chances of a business organization succeeding with social commerce but also give people time to learn about a given technology. Even if early adapters prefer to have the latest and greatest, they will be familiar with how to make a purchase should they want to. In other instances, a business organization might be forced to offer a better version of a site. The site might be customized by the organization to appeal to early adapters more. This also increases one chances of succeeding in social commerce.
Effect on business
The use of social media has far reaching effects on business performance. Firstly, social commerce foster trust between a business organization with a client especially when the information presented in the social media used for social commerce is overly accurate and is presented in a manner that is appealing to the client. Ideally, increase in the level of trust between a business entity and a client is almost equal to increase in sales. In the same way, the existence of distrust between a business organization and clients adversely affects the sale of the business organization.
On their part, Guo, Weng, & Leskovec (2011) asseverate that the use of social media in business enhances information sharing between consumers and hence is one of the most pertinent drivers of purchasing. Through the social media, consumers can share their experiences after using various products for other to see. This statement underscores the fact that social media allow people to update what they think; updates that can be seen by everyone in the world over. Again, social media promote the formation of social friends regardless of one’s geographical location. All these facets when cupped together can be used to understand the pivotal role that the social media play with regard to information sharing between consumers.
Liang, Ho, Li, & Turban (2012) advice that there is a great need for businesses to understand how social commerce works in order to implement it to make their customers happy and expand their brand. It is indubitable that social commerce has great potential for business growth even though this potential can only be tapped when the right steps in light of the implementation of social commerce is done. Nonetheless, this type of commerce is not suitable for all types of businesses.
Conclusion
Concisely, to succeed in the future, businesses need to understand and incorporate social media into their e-commerce sites and take advantage of advancements made in the realm of "social commerce". Social commerce is the use of the social media to promote buying and selling of goods and services through the interaction of people. There are a plethora of reasons as to why social commerce is fast becoming a necessity in global business with some of the reasons encompassing its efficiency and ability to attract fast consumer response. The success in social commerce is overly dependent on the choice of the write social media; social media that has the potential to foster a feeling of trust in the client, a social media that is aligned to the mainstream technology consumers need to be given time to learn a technology, besides permitting consumers to share information. The type of social media incorporated should be well-known to the public.
References
Dohoon, K. (2013). Under what conditions will social commerce business models survive? Electronic Commerce Research and Applications. 511-520.
Guo, S., Wang, M., & Leskovec, J. (2011). The Role of Social Networks in Online Shopping: Information Passing, Price of Trust, and Consumer Choice.
Huang, Z., & Benyoucef, M. (2013). From e-commerce to social Retrieved May 9, 2013, from http://dx.doi.org/10.1016/j.elerap.2012.12.003
Kietzman, J., Hermkens, K., McCarthy, I., & Silvestre, B. (2011). Social media? Get serious! Understanding the functional building blocks of social media. Business Horizons. 54, 241-251.
Krizan, A. C. (2011). Business communication. Australia: South-Western Cengage Learning.
Leland, K. (n.d.). Small businesses use e-books to build their brands. Small Business Advice. Retrieved May 6, 2013, from http://www.allbusiness.com/small-business-branding-e-books/16751631-1.html
Liang, T., & Ho, Y., Li, Y. & Turban, E. (2012). What drives social commerce: the role of social support and relationship quality. International Journal of Electronic Commerce, 16 (2), pp.69-90.
