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7.3 The Benefits and Limitations of Social Commerce 207

New or Improved Business Models
• Foster better internal relationships (e.g., by increas-
ing employee productivity and satisfaction). Social commerce provides innovative e-commerce business
• Provide free advice to small enterprises by other models. Some are new while others are improvements of
enterprises and experts (e.g., via LinkedIn groups). regular EC models (e.g., group buying). A large number of
• Understand that it is usually not expensive to install SC models are in the area of social shopping as described in
and operate SC systems. Section 7.4. Several other new models are in the area of enter-
• Locate experts quickly, both internally and exter- prise commerce (Chapter 8). Here are some brief examples:
nally, whenever needed (e.g., see guru.com).
• Conduct market research quickly and inexpensively
and get feedback from customers, employees, and • Shopping business models include widgets on
business partners. social media sites to “buy now.”
• Increase market share and margins. • Online software agents that put buyers and sellers
• Build brands through conversations and social media together, such as when TripAdvisor refers users to
promotions. online travel sites to purchase hotel rooms.
• Micro segment for reaching very small markets • Content sponsorship–selling advertising on a site
with brand offerings at a low cost. that supports content development (YouTube).
• Manage company and brand reputations online. • Crowdsourcing models that allow companies to
• Build brand communities for positive word of mouth design their products or logos by involving their
online. customers.
• Enhance customer service and support. • Sales promotions conducted in social networks that
• Increase traffic and sales at the company website and drive traffic to the company’s site, such as contests,
at physical retailers. discounts, and downloading free music and software.
• Facilitate market research by monitoring conversa- • Recruiting in social networks, as exemplified by
tions online. LinkedIn.
• Increase company and brand rankings on search • Collaboration models that are facilitated by blogs,
engine results pages. wikis, and crowdsourcing (see examples in Chapter 8).

The potential benefits in the previous list may increase Many start-ups have invented these and other business
productivity and value and could provide a strategic advan- models. For example, Webkinz (webkinz.com) created a
tage and they encourage companies to at least experiment huge business around virtual pets world for kids, and IZEA
with social commerce. Successful applications are intro- Inc. (izea.com; a pioneer of social sponsorship) created a
duced in Chapters 4, 5, 6, 7, and 8. marketplace for connecting advertisers with social media
creators of content (e.g., bloggers).
For the opportunities for business created by social com-
The Social Business: An IBM Approach merce, see Moontoast (2013). For new models in the fashion
industry, see Knopf (2012) and businessoffashion.com.
The previously noted benefits to enterprises make it desir-
able for enterprises to transform to what IBM calls a social
business. A social business is “a business that embraces net- Concerns and Limitations of Conducting Social
works of people to create business value” (IBM 2011). Many Commerce
consider this term equivalent to social commerce and use the
two interchangeably. However, IBM is more concerned with Although social commerce presents many opportunities for
the structure and operations of enterprises. organizations, its implementation may involve some poten-
IBM strategically integrates social media into various tial risks and possibly complex issues such as integration of
business processes (e.g., procurement) and is developing an new and existing information systems. Representative risk
organizational culture to support the integration process for factors are difficulties in justification of SC initiatives to
delivering rapid and impressive outcomes. For details, see upper management, security and privacy issues, possibilities
ibm.com/social-business/us/en. of fraud, legal concerns, quality of UGC, and time wasting