Social goes first or commerce goes first?

Written by Da Zhi Xiao

Introduction

With the rapid development of technology, consumers today are increasingly using technology as a tool to improve their shopping experiences (Pookulangara & Koesler, 2011). Web 2.0 is a significant phenomenon which transferring the internet to a social environment, creating platforms where people can interact to each other and create content online (Lai and Turban, 2008).

Consumers love to communicate online, with families, friends and even someone you have never met but in the same online community. They share their shopping experience, comment on different goods and also make recommendations for others. Meanwhile, they read others’ reviews, opinions, comments and recommendations. Sometimes, consumers would like to trust other consumers’ words more than the companies’ products information. 

“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, p.85) Consumers who have the knowledge and experience of social media can support them to have a better understanding their online purchase purposes and make more accurate buying decisions (Zhao and Benyoucef, 2013).

Simultaneously, some traditional and e-commerce companies gradually recognize that the importance of social media. More and more companies start to have and use their official account on social media sites such as Facebook, Twitter, LinkedIn, YouTube and so forth to interact with their consumers.

By investigating the Fortune 500 corporations, there are 171 companies (34%) had corporate blogs in 2013, including two of the top five corporations (Wal-Mart and Exxon). 387 (77%) of the Fortune 500 have corporate Twitter accounts. There is a 4% increase since last year. 348 (70%) of the Fortune 500 are on Facebook in 2013. 345 (69%) of Fortune 500 in 2013 own YouTube accounts. (Barnes, Lescault and Wright 2013) 

“Social commerce” is just a new term conceived in 2005 (Wang and Zhang, 2012). Although, people are more familiar with this term in practice than academic, Liang and Turban (2011) identified two fundamental elementsof social commerce: social media activities and commercial activities. So it becomes a problem, which should go first, social activities or commercial activities? Then, I will discuss this problem in this paper.

 

Research Purpose and Research Question 

The purpose of this paper is to find out the priority of social commerce for a company by analyzing the two different situations which are either interacting firstly and selling late or doing business firstly and then communicating with consumers.

The research question of the paper is what should a company do first for social commerce, interacting with its consumers firstly then sell products to them or do the business first and then communicate with its consumers?

 

Theory

The emergence of Web 2.0 applications enable people to interact in the viral world, and creating a new opportunity for business especially for e-commerce (Mueller et al., 2011; Hajli, 2012). Social commerce refers to the delivery of e-commerce by social media which is a social technology introduced by Web 2.0 via SNSs such as Facebook, Twitter and LinkedIn (Liang et al., 2011; Hajli, 2012). Liang and Turban (2011) think social commerce is the use of Web 2.0 and social media supporting interactions in an online context in order to support consumers seeking and acquiring services and products on the internet. For companies, particularly, social commerce aims at enhancing their openness, participation and collaboration to achieve greater economic value (Baghdadi, 2013).

Over the past few years, social commerce business has gotten very popular all over the world. The sales revenues of social commerce industry have increased from US$1.2 billion dollars to US$3.55 billion in China, and they have gone from US$780 billion to more than US$1 trillion in the US. (Kim, 2013) 

There are two major kinds of social commerce websites: social networking websites which can add commercial features for advertisements and transactions such as Facebook and traditional e-commerce websites such as Amzon.com can add social networking capabilities to take advantage of the power of social networking. (Liang and Turban, 2011)

Qu and his colleagues (2012) find that e-retailers’ social commerce activities for friend-making improve their business performance, and also the social activities for advice-giving increase online retailers’ business performance.

 

Hajli (2012) proposes a framework in his research.

  Figure 1. Social commerce adoption model (Hajli, 2012)

Figure 1. Social commerce adoption model (Hajli, 2012)

It says social media activities such as “rating and reviewing”, “forums and communities” and “recommendation and referrals” formulate the “trust” and then increase the intention to buy. I will use part of this model and two cases to discuss the order of social commerce.

 

Discussion

Case 1: Dove – Real Beauty Campaign

The “Real Beauty” campaign was launched in 2004, it is based on a global study about wider the definition of beauty. And in the following years, the campaign is continuing. In 2013, the video “Dove Real Beauty Sketches” was on YouTube for the campaign and it has been viewed more than 114 million times in 25 different kinds of languages and 33 Dove’s YouTube channels in more than 110 countries within one month. This video also was shared 3. 74 times which makes it the third most shared video of all time (Stampler, 1013; Dove Real Beauty Sketches, 2013). “IRI data show Dove's U.S. sales up 1% in the four weeks ended May 19, right after the April 14 "Sketches" release. That compares with a 3% rise to $1.5 billion for the full year.” (Neff, 2013)

 

Case 2: “Teaman”

There is a man called himself “Teaman” in Sina Weibo which is the most popular microblog in China. The “Teaman” started his account in the end of 2009, and now he has 22,000 followers. When he just started to use the microblog, no one knew who he is. The accounts which he is following can be categorized into three groups: marketing specialists, tea sellers and tea lovers. He communicates and interacts with others about tea topics, and sends blogs about tea or pictures of tea. After two years of he uses the “weibo”, he tells his followers and “friends” on “weibo” he has some good tea to sell and his real identity is a tea seller. By now, his monthly sales can get 100,000 US dollars averagely by using the microblog “Sina Weibo”.

From these two cases we can find that social commerce is not a quick transaction, it is a long-term process. The producer or seller need cultivate the relationship between themselves and consumers. The Dove uses nine years to communicate with its consumers, and find real beauty together with them. The “Teaman” interacts with other tea experts and tea lovers, which is like making friends with them. In the end, he gets trusts from others and becomes famous in the tea field. The good reputation makes him grow from “teaman” to “tea expert”. Just like Shadkam and O’Hara (2013) say sellers should devise marketing strategies to cater to their needs by fostering a satisfying experience for customers.

In these two cases, neither Dove nor Teaman mentions their business at the beginning, and even nobody knows what the aim of them showing in social media is. They observe and analyze their consumers. Let consumers find out their needs and think about Dove and Teaman.

By analyzing the two cases, I find that commercial activities should be launched after setting relationships with consumers in social commerce. If the companies can successfully meet the need of consumers, perhaps the consumers will find the companies’ business by themselves.

 

Conclusion

Social media is a new business model of e-commerce which uses social media to facilitate social interaction and enhance the online shopping experience. Social commerce firms can develop such consumers to maximize the WOM advertising, which is less costly than traditional advertising. (Kim and Park, 2013). 

Rad and Benyoucef (2011) find that the main drivers for social commerce are users’ interaction and involvement. The aim of interaction and involvement is building relationship and trust which is an on-going issue in social commerce. What’s more, trust seems to be one of the key factors for consumers to increase their intention to purchase.

When a company plans to expand its business via social commerce, it should not hurry about doing business or selling its products. Be patient and be humble. Let social activities do the job first and put your business behind. Waiting for someone who trusts you buys your products voluntarily.

 

Reference:

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