1 Chapter 10 Future Trend – Social Commerce

Learning objectives The chapter will discuss the following concepts:  What is social ecommerce  How do firms get benefits out of it  Value addition from social commerce  Strategy for social commerce 2

Introduction  Ecommerce termed as innovative, expansive, immature, FAD’  In spite of dot com burst e-commerce was revived  Today customers have become tech savvy and are willing to spend time online  Customers willing to purchase through online even if they are illiterate  ubiquitous internet changing behavioural pattern  Online Indian social life has taken the lead  Ecommerce with online social life is called socio-commerce  Socio commerce uses potent technologies and harness social media to organize the business strategies  managers use social power and reframe their policies and strategies  This approach shows authenticity, fairness, transparency and good faith to its stakeholders 3

 electronic commerce with social networking network sites  subset of electronic commerce  Also involves social networking sites (online)  social interaction and user contributions  a set of online collaborative shopping tools  Also available - information on different products and services as experienced by these users  user-generated reviews, comments  contents that can act as ‘free advertisements’ for different products  Using these comments prospective buyers can buy these products and services 4 Understanding Social Commerce

Understanding Social Commerce..contd..  these online marketing sites can be accessed from the social networking site  collaborative e-commerce tools  Prospects use these tools to get advice from trusted individuals, find goods and services and then purchase them  Using these collaborative tools manufacturers have tried to improve their product features  Service providers use these tools to improve service levels in their supply chain  Examples of these tools - customer ratings and reviews, user recommendations and referrals  social commerce is a collaborative networks of online participants such as vendors, users etc.  social shopping as collaborative activity of online shoppers 5

Evolution of social commerce  Started with social networking sites such as facebook  Facebook commerce (f-commerce) has become popular  Collaboration amongst customers, suppliers and retailers  Retailers are looking at having their own Facebook page  consumers can take buying and purchase decisions  Creation of virtual marketplace with social shopping websites  Social Commerce important dates (please refer to the chapter) 6

Features of Social Commerce  Ratings and reviews for the products and services by users  recommendation technology features  get product recommendations based on their own interests, preferences  Customers likely to check online for reviews prior to making a purchase  networked users generate new ideas, advertise, and create added value at virtually no cost  increasing efficiency by understanding customer needs, identifying potential customers & building customer loyalty  Ex: Volkswagen launched an ad campaign using YouTube, focusing on ecological concerns  Volkswagon utilizes these ideas and incorporates it  Facebook ‘Like’ Button on the product’s web page  Better Understanding of the Consumer’s behavior  Instant Personalization of the user experience  Brand Growth 7

Advantages of Social Commerce  ensures a personalized shopping experience  access to the customer’s social graph and interests  retailers can develop promotional strategies and plans that suit to the customer’s preferences and interests  Creates communities  Manintains direct contact with ‘Communities’  The community can exchange reviews about the products they have purchased  Social commerce also creates a trusted environment  makes the experience seamless for a customer right from providing the content, product reviews, payment options to final purchase 8

Trends and the challenges of social commerce  Moving Away from the Traditional Media  Offering a United Shopping Experience  Privacy  Customer Engagement  integrate the payment gateway inside the Social Media networks  Facebook’s security issue  Tools for social commerce change rapidly  hidden soft costs  Building a strong relationship with the customer takes time  Customers can express their disappointment and negatively impact a brand’s reputation  Usability testing is complex and requires advance skills  Need domain knowledge to have effective data analytics

To address these challenges During portal design, the following steps need to be followed  Facilitation of planning and control  Minimization of information redundancy  Integration of processes  Efficient metrics  Personalization/Customization  Feedback 10

Future of social commerce  Sometimes known to be effective only for impulse purchases  a balance between data privacy policies (EU fight against google)  More B2B transactions in future  B2C transactions increasing at faster rate  Regulatory and privacy policy to be tightened  Maintaining trust with transparency  3-D effect on products to be sold  Huge user base and hence ability to make meaningful data analysis  New marketing techniques such as Cash On Delivery (COD) will help induce more purchases 11

Case: Halfmantr, Traveltriangle and Lenskart For each case  Discuss traditional supply vs online purchase  Issues such as mindset  Face to face consultation vs online chat  Feel vs 2D online display  Element of doubt regarding customer satisfaction  Promotion policy  Less margin initially  Funding issues with such firms  Achieving break even  Retaining customer – customer loyalty  Risk involved in this models  Privacy issues  Financial data security  Integration of social network with the sites  Using feedback to improve quality of deliverables  Using social platforms for promotion 12

Summary  Socio-commerce is the way to make e-commerce a sustainable model  customers who will enjoy discounts, free shipping, cash on delivery, and experience of a product without touching it  Venture Capitalists, including Tiger Global, has been increasing their investment exposure in internet business  security risks that can put the individual or a company in a compromising position or at serious risk  best practices can be standardized and updated 13