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Social Commerce Dimensions: The Potential Leverage for Marketers

Mahdi Shadkam1, James O’Hara2
  1. PhD Candidate, International Business School, Universiti Teknologi Malaysia Postal Address:Jalan Semarak, 54100 Kuala Lumpur, Malaysia Author's Personal/Organizational Website: www.shadkam.com Email: [email protected] Areas of interest are e-commerce, e-marketing, social media, and information technology management
  2. Associate Professor, International Business School, Universiti Teknologi Malaysia Postal Address:Jalan Semarak, 54100 Kuala Lumpur, Malaysia Email: [email protected] Areas of interest are quality management, and information technology management
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Abstract

Nowadays, many firms are exploiting the social media tools in order to attract consumers by participating and/or engaging in a collaborative online social environment. Social commerce has evolved to include a plethora of social media tools and strategies that can be used in the context of e-commerce. The purpose of this paper is to explore the content of related works about social media and business in order to propose a classification framework based on social commerce dimensions. Furthermore, this study investigates new social media tools and presents some directions for retailers to use social media’s potential for improvement their business strategy. Finally, it provides recommendations for future research studies in social commerce. Because the field of social media is under explored, especially from a business perspective, a qualitativeexploratory methodology has been chosen. Results show marketers should realize the growing popularity of social media among customers and devise marketing strategies to cater to their needs, thus fostering a satisfying experience for customers. Blending new social channels together more effectively will increase marketing efficiency and sales.

Keywords

Social Commerce, Social Media, E-Commerce, E-Marketing Strategy

INTRODUCTION

Over recent years, consumers are becoming very digitally savvy, crossing generations and cultures alike, and social is ingrained into their digital worlds. As it continues to break through social and cultural boundaries, digital is something we have all become ever more dependent upon as being a natural part of our daily lives. The increasing growth of social media is the evidence of this thought. A research by Nielsen/Mckinisey Company (2011) shows the number of active Internet users who visit blogs and social network sites is approximately 80% of all, also these sites are the top destination online.
As social media continue to gain in popularity, marketers are searching for a firm foundation on which to base their strategic decisions regarding how to employ social media to engage and influence their customers (Hoffman & Novak, 2012). Just as retailers gravitate to densely populated, highly trafficked areas in the real world, they are now following that model in the virtual world. Rather than hoping for customers to come to them, they are going to where hundreds of millions consumers are not only spending their time but sharing their opinions, recommendations and (in some cases) purchases. Social media enable firms to interact with audience through social channels and help them to use their customers’ social habits, to increase conversion and ultimately sales. Furthermore, “social media provide an unparalleled platform for consumers to publicize their personal evaluations of purchased products and thus facilitate word-of-mouth communication” (Chen, Fay, & Wang, 2011).
“Social Commerce” officially appears in the literature in 2005 to refer to e-commerce new way of doing commerce. More than just a buzzword or a neologism for the combination of social media and e-commerce, it represents an emerging phenomenon stimulated by the web 2.0 wave (C. Wang, 2009). Weijun and Lin (2011) interpret social commerce as "community + e-commerce"; they believe the community plays an irreplaceable role in the realization of the value of e-commerce. More fully, social commerce is a subset of electronic commerce that uses social media, online media that supports social interaction and user contributions, to enhance the online purchase experience (Marsden, 2011c). In this new way of commerce mediated by social media, both consumers and firms benefit. Consumers make informed decisions based on information not only from the firms, but also from other consumers. Firms can make more profits by attracting and alluring potential buyers via social channels (Curty & Zhang, 2011). Because of advances in use of social media in business, social commerce began to attract attention from both researchers and practitioners. Many researchers attempt to analysis different features of social commerce.
Shin (2008) considers self-expression, participation, dialogue, and construction and maintenance of virtual communities as a main concept of Web2.0, aid people to get helpful suggestions, effectively search for and finally purchase goods. Rad and Benyoucef (2010) study different stages of purchase decision making in social commerce and find that the principal driver for social commerce is user interaction and involvement. In an extended research, Kaplan and Haenlein (2010) provide a classification of social media which groups applications currently subsumed under the generalized term into more specific categories by characteristic: collaborative projects, blogs, content communities, social-networking sites, virtual game worlds, and virtual social worlds. They attempt to provide some advices for companies, which decide to utilize social media in their business. According to Weijun and Lin (2011), the best way for businesses to satisfy consumers is to carry out social media, since it capitalizes community to gain stickiness of websites, and fast focuses on the target through the power of people, thereby reducing time in search, inquiry and comparison of goods for consumers. Fijałkowski and Zatoka (2011) examine web recommender system using social network user profiles and find collaborative data filtering can increase the level of personalized recommendation effectiveness. As a result of a survey from 292 participants who engaged in peer communications about products through social media shows that the online consumer socialization through peer communication affects purchasing decisions in two ways: directly (conformity with peers) and indirectly by reinforcing product involvement (X. Wang, Yu, & Wei, 2012). Vries et al (2012) examine popularity of brand posts on brand fan pages in social- networking sites. They find that positioning the brand post on top of the brand fan page enhances brand post popularity. The findings also indicate that different drivers influence the number of likes and the number of comments. Namely, vivid and interactive brand post characteristics enhance the number of likes. Moreover, the share of positive comments on a brand post is positively related to the number of likes.
Research in marketing is currently in an embryonic state regarding the electronic marketplace, both in terms of how consumers interact with each other online and how firms can utilize the Internet to drive value creation activities. Of central concern to marketers is the exploration of the consumer experience and attitudes to interaction within online communities (Brown, Broderick, & Lee, 2007). Although some business enterprises have engaged in social commerce, many organizational administrators are not able to frame and develop effective strategies to employ social commerce. The strategies are just beginning to take shape, and some of the technologies are still evolving. This is perhaps because there is lack of understanding on social media’s abilities in business advancement. Accordingly the reason, this is essential for business to understand how should use the social media to engage consumers wherever they provide personal information, experiences, and word-of-mouth. This issue is important since the phenomenon of social commerce is rising, and online shoppers are becoming accustomed to sharing their detailed observations as well as personal opinions on a specific product.

OBJECTIVES

The purpose of this paper is to review and classify the literature on social commerce comprehensively and to aid the creation and gathering of knowledge related to social commerce by summarizing what we know about it. Specifically, the objectives of this study are as
• to explore the content of related works about social commerce and propose a classification framework based on the identified literature;
• to identify various dimensions of social commerce through a review of the literature;
• to present some directions and guidelines for firms to use social media’s potential for improvement their business strategy; and
• to provide recommendations for future research in different areas of social commerce.

METHOD

For this research, a qualitative-exploratory methodology has been chosen. According to Zikmund et al (2010) when a researcher tries to develop a deeper understanding of some phenomena in great detail and in much depth, qualitative-exploratory research is a useful step. The study reviews available data and examines the current state of knowledge on social commerce, in addition explores new tools of e-commerce among social media.

SOCIAL NETWORK TRENDS

Recent years have brought a massive growth in using of social media and especially in social-networking phenomenon. There are a lot of statistics that show incredible increasing number of users in social networks. For example, Facebook uniquely has had more than 845 million active users who are interconnected by 100 billion friendships, and more than 50% of these users log on to the site in any given day (Facebook, 2012). Every day, Facebook users generate 2.7 billion likes or comments and upload 250 million photos (Hoffman & Novak, 2012). Twitter, another popular social network, has more than 100 million active users (Compete, 2012) and 20% of them check this site several times a day (eMarketer, 2011), where over 200 million tweets sent every day (Hoffman & Novak, 2012). Google+ reached 90 million users in seven months, and is adding 625,000 users per day, whereas Facebook also adding above 700,000 and Twitter adding almost 500,000 users per day (Awareness, 2012). Furthermore, many users have been addicted to social network sites. According to a statistical research, 48% of young adults (18 -34 years old) check their Facebook account right when they wake up; and about 28% of them check it on their phones before getting out of bed (OnlineSchool, 2011). Swedowsky (2009) tries to know why users are so interested in social networks. He argues social networks are popular because:
• satisfies emotional need to be heard,
• gives an ability to connect with one another,
• allows us to promote the things and people we love, and
• easy, low barriers to entry, technology
It seems that, these features are adding many users in social networks day by day, and this is exactly what persuades business to engage it.

SOCIAL COMMERCE CONTENT

Today, commercial activity directly triggered by marketers selling to consumers via social channels is nascent. This phenomenon shapes a new business model called social commerce. Although the social commerce is just beginning to develop, it is growing rapidly. Worldwide social commerce revenue in 2011 was about 5 billion U.S. dollars, and Booz & Company estimates that this amount will grow to $30 billion dollar by 2015 (Anderson, Sims, Price, & Brusa, 2011). In fact, the expansion and mainstreaming of social media over the last couple of years, spawning and expanded range of social commerce tools and opportunities. Many brands concur with this bullish assessment; Dell Computers, for example, which is a respected pioneer in both e-commerce and social media believes that social commerce and more generally transactional social media will be the next logical step in social media. Manish Mehta, head of social media in Dell Company, states that “social media may not have driven sales in an obvious way so far, but the next logical step will be transactional social media. When you can buy products through Facebook, rather than just liking them, we’ll start to see a shift in the role of social media in the business” (Marsden, 2011a).
Wang and Zhang (2011) introduce a framework to understand social commerce from four perspectives: people, business strategies, technology, and information.
The people perspective represents the individuals, consumers, communities and societies, which are essential to the social aspect of social commerce.
The business perspective embraces strategies, business models and opportunities for retailers and other entities that are perceived to benefit or to make profits from social commerce transactions.
The technology perspective refers to the information and communication technology infrastructure and applications responsible for social commerce’s technological feasibility.
The information perspective symbolizes the particularity of this extremely content driven environment where a considerable and rich amount of content related to business, products or services, or which is simply social in nature, is constantly produced.
Whilst it may be technology that enables social commerce, the rationale is social (Marsden, 2011c); helping people connect where they buy and buy where they connect. In practice, this means that social commerce can be summarized in terms of two central activities; putting social media tools in e-commerce website and/or putting e-commerce in social media platforms.
• Putting social media tools in e-commerce website: Helping people connect where they buy by adding and linking social media tools and content (such as corporate blog, social-bookmarking, product reviews, chat functionality and forum/community) to e-commerce sites. For example, Amazon invites customers to rate and review products on its e-commerce site, and to discuss them in customer forums.
• Putting e-commerce in social media platforms: Helping people buy where they connect by embedding social media stores and storefronts to popular social media platforms. For example, leading electronics retailer Best Buy's storefront in Facebook.
Both of these two social commerce solutions can enhance the purchase cycle experience in three key areas; product discovery, product selection and product referral. When deployed to enhance product discovery, social commerce solutions act as “Awareness Boosters”. For product selection, social commerce acts primarily as a “Decision Accelerator”, and for product referral social commerce acts as an “Advocacy Activator” (Marsden, 2011c).

SOCIAL COMMERCE DIMENTIONS

Social commerce is a business model that takes place in social media where people can collaborate, get advice from trusted individuals in order to find satisfactory goods and services and then purchase them (Weijun & Lin, 2011). This business model integrates a rapidly evolving and fast expanding toolset. In this regard, researchers attempt constantly to examine different dimensions of social commerce (Curty & Zhang, 2011; Hensel & Deis, 2010; Hsiao, Lin, Wang, Lu, & Yu, 2010; Janrain, 2011; Kaplan & Haenlein, 2010; Teh & Ahmed, 2011; Weijun & Lin, 2011). Whilst researchers as the social commerce solutions present many ways, most of them can be organized into one of six distinct dimensions, each based on a general toolset.

Social Shopping

Social shopping attempts to use technology to mimic the social interactions found in physical malls and stores. Social shopping tools allow people to share the act of online shopping together (synchronous shopping).
- Social Media Stores enable people to buy where they connect to millions of users into a social media platform. For example, retailers and brands can have a storefront in Facebook. Facebook storefront pages enable users to shop and complete purchase transactions without leaving the network. For instance, ASOS, JC Penney, HMV and Express allow people to browse, share and buy from them on their Facebook page. A research shows 35% of online consumers would buy products on Facebook (Marsden, 2011b). Cherif Habib, Kembrel’s CEO, states that: “College students spend two to three hours a day on Facebook. By bringing our store to where our customers spend the most time online, our goal is to provide them with the most convenient and relevant shopping experience” (Sung, 2010). With the imminent launch of Facebook's own integrated payment system, social media stores are set to become a major growth area in social commerce.
- Social Graphs allow social network users to bring their online social networks to e-commerce destinations and interact with their friends and followers directly whilst on the site. For example, when consumers sign-up retail site with their Facebook account, they can choose to grant the retailer access to their member profile data and friend lists. This social graph data opens the door to optimize social shopping on e-commerce site (Janrain, 2011). If retailers know what consumers who are connected to the brand need, want or enjoy, the chances of getting the right product in front of the right customer increases. The social graph allows retailers to find target consumers and personalized recommendations. According to a survey, three in 10 U.S. and U.K. online consumer who have signed in to a retail website using Facebook, nearly 90 percent said they would be somewhat or very likely to browse personalized recommendations from the retailer based on their Facebook profile (Diner, Kimbrely, & Sucharita, 2011).
- Group Buying allows people to use their collective buying power to buy together to get better deal, often by recruiting fellow buyers through social networks such as Facebook, and/or group-buying website such as Groupon. For example, some companies such as Dell, Intel and Adidas invite people to group together into an online social network to buy products in bulk, thereby obtaining a better price. Using group-buying site Groupon , the Gap company was able to bring in sales of $11 million in one day (Awareness, 2012). Group buying offers incentives for people to spread the word about deals.
- Social Shopping Portals enable people to shop multiple stores together using a range of different social shopping tools such as ratings and reviews, recommendations and referrals and social bookmarking (e.g. Kaboodle.com and Storeenvy.com). Research shows 32% of retailers surveyed work with these sites to drive traffic to their stores or planned implementation/enhancement in 2009 (Mulpuru, 2010).

Rating and Review

Ratings and Reviews are the original social commerce toolset that allow people to exchange product feedback and inform each other's choices with independent views and experiences. From business perspective ratings and reviews platforms help retailers integrate customer feedback and community features directly into their websites. On the other hand, from consumer perspective the word from the independent users and real consumers on social media is more credible and useful for purchasing decision. In other words, there is a positive relationship between the ratings and reviews quality and the online shopping mall trust, and there is a positive relationship between the online shopping mall trust and the perceived usefulness, perceived ease of use and shopping intention (Shadkam, 2012).Research shows 71% of users believe that consumers’ reviews are very useful to find and purchasing the right product (Bausch & McGiboney, 2008). In this case, 90% of online consumers trust comments from people they know and 70% of them trust reviews of unknown users (Nielsen, 2009).

Recommendations and Referrals

Whereas ratings and reviews are generally visible to all, recommendations and referrals are usually personalized social media endorsements for online goods and services designed to realize the referral value of customers and advocates.
- Social Recommendation refers to using social media to get and make recommendations on what to buy, read, eat, see and do. When consumers buy something, they tend to tell friends about it and support the brand. Consumers may often do this unconditionally, such as by clicking a “Like” button in a social network, which allows them to spread the word without spend many times. Millions of users are being influenced by their friends’ recommendations in social media when making purchasing decisions (Liang, Ho, Li, & Turban, 2011). In a study more than half of respondents said that when they see a product they are excited about, they frequently post a status update about it on Facebook. Furthermore, 55% of them stated they are more likely to purchase a product when a friend has recommended it on Facebook or other social media. And 53% of respondents said they have asked for opinions from friends on Facebook about a purchase (Diner, et al., 2011).
- Referral Programs refers to providing some material and non-material rewards by retailer due to consumer advocacy. Rewarding customers and partners for referring new customers is a powerful strategy in social commerce. Research indicates motivating happy customers to advocate with samples, rewards and discounts has proven to be an effective alternative to margin-eroding price promotions (Marsden, 2011b).

Forums and Communities

Forums are popular, useful and effective social media tools for social commerce that assist product discovery, selection and referrals by providing a moderated environment around a particular theme, task or category. Forums and communities help retailers to provide user-generated content that can engage customers and drive sale.
- Forums generally are divided into two types. “Discussion forums” that are shaped in an interactive area where people can offer each other support and solve each other's problems. And “Q&A” forums that typically have a searchable FAQ (frequently asked questions) structure. In these forums, users participate to answer common questions (for example Yahoo question-and-answer).
- Retail Blogs provide news and discussion around e-commerce events, as well as capture customer feedback and suggestions on desired improvements. The main benefit of blogs is generally in the opportunity to engage brand enthusiasts.
- Online Consumer Communitiesare linked to an e-commerce site, usually with a loyalty, advisory or social CRM (Social Customer Relationship Management) purpose. Customer communities can be hosted on social media platforms such as Facebook or on website with dedicated community software.

Social Media Optimization

It is designed, in the context of social commerce, to attract visitors to e-commerce destinations by promoting and publicizing these destinations and content through social media. It typically involves seeding marketing collateral to major social media platforms and linking them to e-commerce sites. Social media optimization increases e-commerce traffic volume through direct links and improvement in search engine rankings (SEO) (Smith, 2011).

Social Ads and Applications

Advertising on social media platforms or promotional applications is a useful strategy in social commerce in order to attract more consumers among social media users.
- Social Ads refers to placing advertisements in social media platforms such as Facebook, YouTube, Twitter, as well as on blogs and forums. It is another effective traffic-driver to product pages and conversation points on an e-commerce site. Social advertising works for retailers partially because of social media’s abilities. For example, in the case of Facebook, retailers can order ads based on consumers’ demographics and/or interest. This makes a great opportunity for advertising through millions potential target consumers.
- Social Apps are a group of online application or widgets offered by social media. They support social interaction and user contributions (technically a widget is a standalone program that can run on any Internet site, whilst an application is platform specific).

IMPLICATIONS FOR MARKETERS

To help online retailers plan their social commerce, this study tries to map the current state of social commerce tools and provide eight tips for successful social commerce. The following tips will take marketers through a step-by-step roadmap toward building a prosperous social commerce program.

Defining a clear goal

The goals for social media integration and its role in an overall strategy will be different for every organization. Marketers should think about how social media integration plays into their overall brand strategy. Too often organizations think that the only way to measure the success of a social commerce program is to track sales completed on Facebook or tally their “like” count, but what about influence? Objectives, goals, and program metrics need to be clearly defined and could include:
• The number of total impressions
• The acquisition of new customers
• The new data points captured
• Loyalty program growth
• Website referrals
• Customer sentiment measures
• The sales generated from transactions on social media such as Facebook.

Execution a social shopping strategy

Marketers should use the social shopping tools for implement new strategies. They can start to sell inside of Facebook with a storefront. Advantages include increasing customer exposure to a full range of products and frictionless commerce with the promise of higher conversion rates. Marketers also can attract target consumers to their own online store website by leveraging Facebook data from “Social Graph” and provide personalized services. Sometimes, cooperation with group buying websites (e.g. Groupon) and/or social shopping portals (e.g. Storeenvy) is a good shopping strategy increasing sale. A successful social shopping strategy leverages different methods opportunities.

Integration and Synchronization

When building a social commerce program, marketers should think like a customer does. Customers expect to be able to glide between retailer website, mobile apps, and Facebook and have a consistent experience. Integrating social commerce tightly with retailer existing tools, programs, and processes will mean greater consistency for customers and more visibility for the organization.

Utilizing customer ratings and reviews

Implementation an appropriate rating and review system assists marketers to get feedback and also increase consumer trust. Much of this benefit is because consumers can engage in direct feedback on the offerings most important to them, providing instant and critical insights for a wide variety of brands, products, and retailers (Mulpuru, 2010). Marketers should decide this function can be used by only registered consumers or all. When reviews are written by users, they will be visible immediately in the site or whether they must first be approved by marketers.

Utilizing social recommendation

The “social” in social network can help spread the word about exclusive merchandise and brand and product preferences, and ultimately drive sales. Marketers should use the power of social media platforms to drive consumers to purchase by social recommendations and product suggestions. For example, they can encourage new visitors to like their product in Facebook and existing ones to share details about it by different incentives.

Providing consumer communities

Social commerce tools such as forums, blogs and social networks increase the level of consumers’ association and time of consumers on retailer data sources. This will raise potential business value. By using a forum, a business blog, or a guestbook, retailers are showing their consumers that they are open and present thus strengthening the consumer relationship (i.e. customer retention).

Providing social Ads

Display advertisements on social media platforms designed to drive traffic to ecommerce sites. Marketers can take advantage of existing millions users in social media for advertising. Nevertheless, this is an important issue that ads must be timely, relevant and targeted. In this case, personalized ads base on consumer location, interest and information is a powerful strategy.

Updating tools and strategies

As social commerce continues to evolve, things will change fast. Marketers should be prepared to engage new social commerce tools and fresh experiences. They should give new social commerce platforms and tools to monitor usage, test new strategies, create campaigns, and get to market quickly. Updated companies in social commerce can get ahead of the competition with an integrated approach, reap the benefits of first-mover advantage, and apply knowledge across your channels.

CONCLUSION AND FUTURE STUDY

Today, social commerce is gradually mature and widely recognized. We should be confident that it will become a core business model of the Internet in the future. However, social commerce is still in early stages of development, and explorers are still struggling to find effective operating strategy. This paper tries to discuss the present researches and the background of social commerce due to exploring social commerce content, characteristics and dimensions. This research verifies six distinct dimensions of social commerce base on social media platforms and tools and provides some tips for marketers that enable them to map their social commerce strategy. Results show marketers should realize the growing popularity of social media among customers and devise marketing strategies to cater to their needs, thus fostering a satisfying experience for customers. Providing social commerce functionality not only enhances the overall effectiveness of social media as a marketing channel by showcasing products to a group of people, but when done well, enables business to turn conversations into actions and sales.
As innovative mobile technologies and smart phones come to market, the potential for retailers to leverage the social media will greatly increase. Nowadays, many social media application and sites are adapted with mobile technologies, and marketers can provide mobile-based solutions that make easier for shoppers to connect online market. In this regard, future study can focus on mobile social commerce due to provide new business solutions and strategies base on mobile technologies (Nielsen/Mckinisey, 2011).

References

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