Page 222 - Introduction to Electronic Commerce and Social Commerce

206 7 Social Commerce: Foundations, Social Marketing, and Advertising

SECTION 7.2 REVIEW QUESTIONS Benefits to Retailers

1. Describe the major components of social commerce. Retailers are major benefactors of social commerce. For exam-
2. What is social media marketing? ple, about 50% of businesses globally find new customers via
3. Describe Enterprise 2.0. social networks. In addition, about 30% of companies invest in
social networking in order to acquire and retain customers.
Retailers may benefit from social commerce in the fol-
7.3 THE BENEFITS AND LIMITATIONS lowing ways:
OF SOCIAL COMMERCE

According to many practitioners and researchers, social com- • Consumers can provide feedback on market com-
merce is making significant impacts on organizations and indus- munication strategy and on product (service) design.
tries. A major impact has been seen in the fashion industry. • Vendors get free word-of-mouth marketing (see
Several surveys (e.g., Leggatt 2010) have confirmed that Chapters 3 and 4).
social commerce results in significant monetary and strategic • Increased website traffic (recall the Sony opening
benefits to businesses. SC benefits fall, in general, into three case), which increases revenue and sales.
categories: benefits to customers, benefits to retailers, and • Increased sales as collaborative filtering and other
benefits to other types of enterprises. Some are described in social influence methods are used (see Chapters 3 and
the following section. 4 and trendwatching.com/trends/TWINSUMER.
htm).

Benefits to Customers
For more on benefits to retailers, see the video titled “Social
The success of social commerce depends on its benefits to Media a Powerful Tool for Online Retailers” (4:08 min) at
customers. The major benefits appear in the following list: youtube.com/watch?v=1ByDmQICXs4. Also see Spencer
et al. (2014).

• It is easy to get recommendations from friends and Example: Beratta Inc.
other customers (e.g., via Twitter, in social net- Beretta Inc. increased its revenue in 2013 by 15% by intro-
works discussion groups, and on product review ducing social commerce into its e-commerce store using
sites). Recommendations result in more confidence ShopSocially’s SC platform. For details, see the December
and trust helping customers decide about purchas- 23, 2013 press release “Popular Firearms Manufacturer
ing products and services. Beretta Hits the Bullseye on Social Commerce with a 15%
• Customers are exposed to special deals (e.g., via Revenue Uplift” at digitaljournal.com/pr/1655392.
Groupon) for large savings.
• Purchases are better matched with specific needs,
wants, tastes, and wishes of customers; this increases Benefits to Other Types of Enterprises
satisfaction and reduces product choice decision time.
• It is easy for customers to use the SC technology. In addition to increased sales and revenue, enterprises can
• Social commerce fits the mobile device lifestyle well. benefit from social commerce in several ways (see Chapter 8):
• Increased trust in vendors is developed (via closer
relationships).
• Social commerce allows customers to help other • Conduct faster and less costly recruitment with a
customers (social support). larger reach to large number of candidates.
• Customers can get better customer service from • Reduce costs via innovative methods such as using
vendors. the collective intelligence of employees and busi-
• Customers can meet new friends (e.g., for travel) ness partners (see Crowdsourcing in Chapter 8).
and socialize online. • Foster better external relationships; for example,
• Customers can get rich social context and relevancy with partners and channel distribution members.
during their purchase decisions. • Increase collaboration and improve communication
• Customers can connect with individuals and busi- within the enterprise and with business partners (e.g.,
nesses who otherwise are inaccessible to them. by using blogs, microblogs, and wikis).