IJEMR January 2017 - Vol 7 Issue 01 - Online - ISSN 22492585 Print - ISSN 2249-8672

Social Commerce: A Paradigm Shift in E-Commerce

*Gunjan Awal
**Dr. Rupa Khanna

*Research Scholar (Mgmt.), Graphic Era University, Dehradun

**Associate Professor (Mgmt.), Graphic Era University, Dehradun
Abstract
This paper aims to address the new trend of social commerce as electronic commerce integrates
with online social media. The phenomenal growth of internet users combined with growing
popularity of social networking sites have paved the way for a new trend termed Social
Commerce. Social Commerce is about allowing users to like, rate, and review, recommend and
last but not least make a direct purchase from a social media platform. Social Commerce has
given a vital opportunity to online business owners to expand their customer base and thereby
drive more and more sales. The focus of this article is to increase understanding on quickly
developing concept of Social Commerce, study its importance from the users point of view as
well as from the point of online business owners. This paper also aims to discuss the pros and
cons of leveraging social commerce as well as the popular social networking sites that are
commonly used for the same.

Today an online retailer cant take chance to ignore social media. Social media has become a
necessity for online retailers to survive and to differentiate over competitors. Social media not
only provides behavioral information about customers but also serves as a channel for direct
purchasing. Facebook, LinkedIn, Twitter are some of the commonly used social networking sites
for social media marketing.

Keywords Electronic Commerce, Facebook, Social Commerce, Social Media.

Introduction
With social networks increasingly looking at social commerce, giving consumers the
opportunity to buy direct from brands, marketers need to understand how to convert todays
browsers into tomorrows buyers. Social networks are becoming the new online marketplaces.
Although consumers are not yet able to buy all products directly through social media
channels, they are already using brands social pages for inspiration to buy, which should act
as an indicator of the potential value of social commerce. Social commerce offers a real
opportunity for retailers to shorten the path to purchase for customers. Today Social media
platforms are acting as a sort of catalogue. Its the younger demographic that are driving the
social shopping trend. Brands need to keep up with this demand if they are going to make the
most of the future generations of shoppers.

If brands do not prioritise social channels, there is the risk that they will miss out
on a vital opportunity to engage with a captive audience of customers and convert browsing
into sales. If fully implemented shopping on social media could become a primary shopping
channel.

Social commerce defined:

While shopping was always a social activity, the combination of social media platforms and
Smartphone owning shoppers has made it more prominent.

Social Commerce is a part of electronic commerce that involves using social media to help in
the online buying and selling of products and services. The term social commerce was

1
www.aeph.in
 IJEMR January 2017 - Vol 7 Issue 01 - Online - ISSN 22492585 Print - ISSN 2249-8672

introduced by Yahoo! in November, 2005, to describe a set of online collaborative shopping

tools such as user ratings and sharing of online product information.

Social commerce is online shopping made easier and/or more useful by social media
integration. Social commerce is a platform where customers can collaborate online, get
advice from other individuals, find products and services and then purchase them. Social
commerce has evolved gradually over time as social networks have gained momentum and
online purchasing has become more convenient.
Social commerce involves the activity where consumers with similar interests and
needs collectively engage in conversations related to products and services. Such
conversations usually result into several types of actions, such as recommending the products
and services to their friends, and ultimately the purchase of those products and services.

Social commerce is shopping-oriented social media marketing that touches buyers before,
during and after their purchase. Social commerce is commerce generated via social
recommendation. Social commerce in simple terms is an activity where people talk, share
and buy using a social media platform. A social media platform provides a chance to share,
like, tweet, comment and review product related information and ultimately purchase that
product.

Evolution of Social Networks/Social Media

Social media has become an integral part of modern society. There are general social
networks with user bases larger than the population of most countries. There are sites to
share photos, videos, status updates, sites for meeting new people and sites to connect with
old friends.
PRECURSORS TO SOCIAL MEDIA
1) Usernets
Usernet systems were first launched in 1979 by Tom Truscott and Jim Ellis. They allowed
users to post articles or posts (referred to as news) to newsgroups.
2) BBSs (Bulletin Board Systems)
The first BBSs came online in the late 70s. Originally these were primarily hosted on personal
computers and users had to dial in through the host computers modem. Only one person at a
time could gain access to the BBS.
3) Online Services
After BBSs came online services like CompuServe and Prodigy. CompuServe was the first
company to incorporate a chat program into their service. Prodigy was responsible for making
online service more affordable.
Genie was an early online service created by a General Electric subsidiary (GEIS) in 1985. It
ran through 1999 and was one of the earliest services available. It was a text-based service,
and considered the first viable commercial competition to CompuServe.
4) IRC and ICQ
IRC (Internet Relay Chat) was developed in 1988 and used for file sharing, link sharing and
otherwise keeping in touch. ICQ was developed in the mid-90s and was the first instant
messaging program for PCs.
Early Social Networks
1) Dating Sites
Dating sites are sometimes considered the first social networks. The first dating sites started
cropping up almost as soon as people started going online. They allowed users to create
profiles (usually with photos) and to contact other users.
2
www.aeph.in
 IJEMR January 2017 - Vol 7 Issue 01 - Online - ISSN 22492585 Print - ISSN 2249-8672

2) Forums
Online forums also played a large part in the evolution of the social web.Various forum
platforms, including vBulletin and phpBB, were developed, many of which are still used for
forums.
3) Six Degrees
Six Degrees was launched in 1997 and was the first modern social network. It allowed users
to create a profile and to become friends with other users.
4) Live Journal
Live Journal started in 1999 and took a different approach to social networking. While Six
Degrees allowed users to create a basically-static profile, Live Journal was a social network
built around constantly-updated blogs.
Major Advances in Social Networking
The early 2000s brought some huge developments in social networking and social media.
Some of the latest happening social networks are:
1) LinkedIn
LinkedIn was founded in 2003 and was one of the first mainstream social networks devoted to
business. Originally, LinkedIn allowed users to post a profile (basically a resume) and to
interact through private messaging.

2) Facebook
While Facebook started out as a Harvard-only social network back in 2004, it quickly
expanded to other schools, then to high schools, businesses and eventually everyone (by
2006).In 2008 Facebook became the most popular social networking site. Facebook has added
a number of features over the past few years such as writing on another users wall, changing
privacy settings of ones profile to allow different users to see different parts of their profile,
commenting on the posts of friends. There are more than 1 million small or medium sized
businesses advertising o Facebook and it is estimated that larger companies are spending as
much as $100 million on Facebook advertising per year.

3) YouTube
YouTube was the first major video hosting and sharing site, launched in 2005.Users can
upload videos up to 10 minutes long and share them through YouTube.
4) Twitter
Twitter was founded in 2006 and has gained a lot of popularity Twitter has developed a
devoted following and has a number of famous users.

5) Instagram
Instagram was launched in 2010 and became one of the fastest growing apps. In April 2012
Facebook bought it for $1 billion. Today Marketers use Instagram to market products and
services. There are more than 300 million monthly active users on Instagram, of which 75
million are daily active users.

6) Google+
This site has 300 million monthly active users and is used for relationship marketing. It has
over a 53 percent positive interaction between Google+ users and brands.

3
www.aeph.in
 IJEMR January 2017 - Vol 7 Issue 01 - Online - ISSN 22492585 Print - ISSN 2249-8672

Social media has come a long way since the days of its inception and it continues to evolve on
a daily basis. Social networks and social media will keep on evolving in coming years and will
lasts till the time something new comes across.

Importance of Social Networks/Social Commerce

Business owners often wonder about the "ROI of social media". Is my Facebook page actually
driving sales? Is all this tweeting really doing anything for my business? The answer to these
questions is yes social media nowadays has given a vital opportunity to online business
owners to expand their customer base and thereby drive more and more sales.

According to a report Digital Shopping Tool Impact Study 2015 by global marketing
company Epsilon Data Management LLC. Social media influences more shoppers buying
decisions than retail websites. The report finds that retailers social media posts and pages
have a greater influence on the stores and brands consumers buy from than any other
channel.

Consumers often arent on social networks to shop, but if a brand hits them with the right
message it can drive a purchase. Its that very element of surprisethat ability to insert
itself into non shopping life and friendly conversationsthat makes it so influential, the
report says. The report is based on an online survey of more than 2,800 consumers, along
with in-depth interviews and discussion boards with more than 50 shoppers.
Over the past years, due to increased and easy access to information, people have become
more aware of what they want and actually need. They have become more social, and
nowadays they are not likely to purchase something if they dont have some pre-awareness.
And the pre-awareness comes from the experience they have with a brand on social networks
or from the friends they have on social networks.
Today an online retailer cant take chance to ignore social media. Social media has become a
necessity for online retailers to survive and to differentiate over competitors. Social media not
only provides behavioral information about customers but also serves as a channel for direct
purchasing. Buyers worldwide are turning to social networks for a variety of things, like
reading reviews and staying on top of fashion trends. According to September 2015 research
these social media activities influence their shopping behavior.

Pros and Cons of Social Commerce for Business

THE PROS:
1) Increased Brand Recognition: Social networks acts as channels through which brand
related information can be easily accessed by new as well as existing customers which in turn
helps to create awareness and makes a brand widely recognizable.

2) Nurtures Brand Loyalty: According to a report published by Texas Tech University,

brands who engage on social media channels enjoy higher loyalty from their customers. Social
media provides a platform which faciltates more interactive relationship with the targeted
customers or audiences which in turn generates trust and thereby creates brand loyalty.

3) More Opportunities to Convert/Higher Conversion Rates: Whenever a blog is posted,

an image or video is uploaded by a company about its product, it creates a chance for a
person to visit companys site and eventually lead to a conversion. Its not compulsory that
every visit to a companys site will lead to a conversion but every positive interaction will
eventually lead to a conversion. Social media adds a human element to the marketing efforts
done by the companies thereby leading to higher conversion rates.

4
www.aeph.in
 IJEMR January 2017 - Vol 7 Issue 01 - Online - ISSN 22492585 Print - ISSN 2249-8672

4) Social Commerce Involves Low Cost: One of the main advantages of social networks
over traditional media advertising is the considerably low cost that makes it more appealing
for businesses. The most popular social media networks are practically free to join and all
tools for interacting with other people are all available for free.
5) Social Commerce is Time saving: Any information or news about company and its
products can be disseminated to the targeted audiences within no time frame whenever and
wherever it is available.

6) Social Commerce is Good for Customer Service: Customers frequently post either
praises, suggestions or complaints about a brand or company on social media sites which in
turn provides companies a platform to provide good customer service by addressing such
posts and reacting and responding to them.

7) Social Commerce Caters to a Big Audience: One of the main advantages social
commerce has over traditional media marketing is that traditional marketing only caters to a
fixed audience while Social networks have the potential of reaching out to a very big audience
that is totally unlimited in scope and reach from around the globe.

THE CONS:
1) Social Commerce is Time Consuming: Marketing using Social networks is time
consuming. Online Marketers have to spend many hours in order to reap the benefits of using
social networks. Moreover if it is not done correctly then it leads to wastage of time and no
eventual conversion.

2) Social Commerce Generates Negative Users: Social Media attracts both negative as well
as positive users. Positive users who post genuine feedbacks and comments whereas there are
some negative users who intentionally post some negative content in order to spoil company
brands online reputation.

3) Social Commerce Makes You Lose Control: Once something is published through social
networks it goes viral in the online sphere, it can be seen by anyone, and one has no control
over it. It can be seen by both positive as well as negative users those who can spoil online
brand reputation.

4) Social Commerce ROI is Hard to Define: Digital marketers often wonder about the
returns that they are driving from their social media marketing efforts. Though the returns
cannot be tangibly defined but social media marketing efforts surely deliver some favorable
results for the business provided they are being utilized correctly.

Facebook as a Social Commerce Tool

Facebook is the most popular social network. It has over 1.4 billion users and over 900
million of those users visit the site every day.
Facebook users encompass all demographics. Its users include teenagers, middle aged
group and senior people as well.
Facebook is sticky. Facebook users spend a lot of time on the site 40 minutes per
day, on an average.
Facebook is growing. Facebook is projected to top 169.2 billion users by 2018. [Source:
eMarketer]
Facebook advertising is affordable.
Facebook advertising is highly targeted. Audience can be targeted by location, age,
gender, interests and other factors.
5
www.aeph.in
 IJEMR January 2017 - Vol 7 Issue 01 - Online - ISSN 22492585 Print - ISSN 2249-8672

Facebook allows reaching out to website customers. Facebooks re-targeting option

allows you to show Facebook ads only to people who have previously visited your business
website.
Facebook spreads the word to Friends of Friends. When a person sees his Facebook
posts or ads, his Facebook Friends see them too, thus multiplying the effectiveness of
Facebook marketing efforts.

Linkedin as a Social Commerce Tool

LinkedIn operates the world's largest professional network on the Internet with more than
313 million members in over 200 countries and territories.
Professionals are signing up to join LinkedIn at a rate of more than two new members per
second.
There are over 39 million students and recent college graduates on LinkedIn.
LinkedIn counts executives from all 2013 Fortune 500 companies as members.
LinkedIn is the most powerful marketing tool of the 21st century due to the following
reasons:
a) Media: Media exposure is critical for raising awareness and positioning any brand in the
market. Even if a company provides best product or service in the world but if nobody knows
about it then it is of no use. LinkedIn provides a platform for the same that is cost effective
and less time consuming as compared to other methods.
b) Partnerships: Building up strategic partnerships is a powerful way to grow a business.
With the right partner one can refer clients to each other, leverage the power of offering
complimentary products or services, and help grow each others' businesses. LinkedIn is the
platform that helps in finding the right joint venture and alliance partners.
c) Clients: LinkedIn is also a powerful tool for finding clients. Regardless of industry, size or
location we are all in the business of marketing. And to be a successful marketer, its 10
percent what we say and 90 percent how we say it.
Twitter As a Social Commerce Tool
Twitter as a Popular Social Platform
Twitter is becoming an increasingly important platform for online communication. Tech
Crunch reported that Twitter is receiving 8 million unique visitors per month and about 500
million messages are posted daily.
Twitter as a Media Outlet we can use Twitter to post news or updates about company or
products.
Twitter as a Promotional Palace It's not uncommon for companies to post promotions,
sales, or specials on Twitter.
Twitter as a Customer Service Tool
Twitter helps a company to interact with its prospects and customers. With the help of twitter
companies can get engaged and involved with their customers thus providing optimal
customer service.
Conclusion
With the phenomenal growth of social media in the last few years the purchase intent and
actual purchase of products and services are being affected by social referrals; whether it be
people we know or even strangers. Both discovery and consumption of the products and
services online are being affected by social media. In the nearby future it is to be sure that
social media will continue to influence online and offline merchandising related to shopping.
While the basic framework of social commerce already exists, it will continue to evolve as
consumers will adapt to using it more.

6
www.aeph.in
 IJEMR January 2017 - Vol 7 Issue 01 - Online - ISSN 22492585 Print - ISSN 2249-8672

References
Research papers
1) Dennison Gabe, Bourdage-Braun Stephanie, Chetuparambil Madhu (2011) Social
Commerce Defined [Whitepaper] Retrieved 6th Jan, 2017 from IBM Corporation:
http://digitalintelligencetoday.com/documents/IBM2011.pdf.
2) Linda, Sau-ling LAI (2010). Social Commerce E-Commerce in Social Media Context,
International Journal of Social, Behavioral, Educational, Economic, Business and Industrial
Engineering Vol:4, No:12,pp. 2213-2218.
3) Paquette, Holly, "Social Media as a Marketing Tool: A Literature Review" (2013).Major
Papers by Master of Science Students. Paper 2..
http://digitalcommons.uri.edu/tmd_major_papers/2.

Website Articles
1) Chahal Mindi.( 23 Mar 2016 ) . Social commerce: How willing are consumers to buy
through social media? Retrieved from https://www.marketingweek.com/2016/03/23/social-
commerce-how-willing-are-consumers-to-buy-through-social-media/
2) Chansamooth Anfernee. (26th Aug, 2014). Why LinkedIn Is the Most Powerful Marketing
Tool of the 21st Century Retrieved from http://www.huffingtonpost.in/entry/why-linkedin-
is-the-most-_b_5706017.
3) Cohen Heidi. (November 2, 2011). What Is Social Commerce? Retrieved from
http://heidicohen.com/what-is-social-commerce/.
4) Copp Emily. (17 August 2016). 10 Benefits of Social Media for Business Retrieved from
https://blog.hootsuite.com/social-media-for-business/.
5) DeMers Jayson .(Aug 11, 2014) The Top 10 Benefits Of Social Media Marketing
retrieved from http://www.forbes.com/sites/jaysondemers/2014/08/11/the-top-10-benefits-
of-social-media-marketing/#2e6a56d72a4d.
6) Haubrich Valdez Maria.( 13 June 2016) Face book, On Your Way, Social Media
Retrieved from https://forum.web.com/9-reasons-facebook-effective-social-media-marketing-
tool/.
7) Lake Laura. ( May 09, 2016). Twitter: A Valuable Marketing Tool? Retrieved from
https://www.thebalance.com/twitter-a-valuable-marketing-tool-2296167.
8) Macdonald Mark. Which Social Media Platforms Drive the Most Sales? [Info graphic].
Retrieved from https://www.shopify.com/blog/12731545-which-social-media-platforms-drive-
the-most-sales-infographic.
9) March 17, 2016. How Social Media Influences Shopping Behavior Social commerce has
also evolved. Retrieved from http://www.emarketer.com/Article/How-Social-Media-
Influences-Shopping-Behavior/1013718.

7
www.aeph.in
 IJEMR January 2017 - Vol 7 Issue 01 - Online - ISSN 22492585 Print - ISSN 2249-8672

10) Redsicker Patricia.( August 27, 2014). 5 Ways You Can Influence Consumer Purchasing
Decisions: New Research. Retrieved from http://www.socialmediaexaminer.com/5-ways-
brands-can-influence-consumer-purchasing-decisions/.
11) Sareah Faiza.( Jul 26, 2015). Interesting Statistics for the Top 10 Social Media Sites.
Retrieved from https://smallbiztrends.com/2015/07/social-media-sites-statistics.html.
12) Stambor Zak. (July 7, 2015). Why social media holds more sway over shoppers
buying decisions than retail websites. Retrieved from
https://www.internetretailer.com/2015/07/07/why-social-media-holds-more-sway-over-
shoppers-buying-decisions.
13) Stambor Zak. 5% of marketers say social media marketing is paying off Retrieved from
https://www.internetretailer.com/2016/03/31/75-marketers-say-social-media-marketing-
paying.
14) WebdesignerDepot Staff .(Oct. 07, 2009). The History and Evolution of Social Media
Retrieved from http://www.webdesignerdepot.com/2009/10/the-history-and-evolution-of-
social-media/.
15) Zorzini Catalin .(June 2,2015) Top Tips on How to Benefit From Social Media
Retrieved from http://ecommerce-platforms.com/ecommerce-selling-advice/social-media-
ecommerce-power-social.

8
www.aeph.in