KINGSTON UNIVERSITYFaculty of Computing, Information Systems & Mathematics

An investigation of why Social Networking sites go E-Commerce

Vidoushi D. Bahadur-SomrahMSc Information Systems with Management Studies

Supervisor: Mary Thomson

Reasons for conducting this investigation

To gain an in-depth understanding of:

What is Social Commerce (S-Commerce). The reasons behind the merge between E-Commerce & Social Networking. The psychology of online shoppers compared to high-street shoppers. The marketing techniques & cost(s) of implementing S-Commerce by

retailers...and How will the new S-Commerce shopping experience benefit both retailers &

customers.

and to back the research findings from the points mentioned above by:

Launching a survey questionnaire (online & offline) based on Social Networking, shopping habits and S-Commerce experience.

Analysing the results collected once converted into useable formats Discussing the results collected & being able to make comparisons,

recommendations & conclusions

Reasons for conducting this investigation

Definition:

‘SocialCommerceToday’ Blog defines it is a subset of E-Commerce that involves

using social media, online media that supports social interaction and user

contributions, to assist in the online buying and selling of products and services.

Traditional Commerce

Electronic Commerce

Internet (1990s)

Mobile Commerce

Mobile technology

Social Commerce

Social Media

S-Commerceaccessible from the Internet & Mobiles

So what is Social Commerce?

Let’s have a look at how it evolved:

Social Networking

Facebook

MySpace

Twitter

LinkedIn

Bebo

Hi5

Friendster

E-Commerce

ASOS Clothing

Dove

Delta Airlines

1-800 flowers.com

These retailers have fully integrated S-Commerce platforms available

already

Examples of E-Commerce & Social Media Integration

Let us look at the facts & figures of Social Networking:

Facebook: 750 million active users + 700 billion minutes spent monthly!

Dec 09: A significant increase of 82% in the amount of time spent on Social Network sites such as Facebook, Twitter, MySpace etc compared to 2008.

Online users spent an average of 6 hours each month on Facebook alone compared to just over 3 hours in 2008 on Facebook and Twitter combined.

May 09: almost 80% of all age groups visited a social site & represents an avg. time of 4.6 hours/visit. 67% of people age 55+ spend almost 3.7 hours/sites.

May 08 - 09: shows an increase of 7% in the total UK internet audience on social sites.

Facebook announce profits of $500m (£300m +) in first half of 2011

Why are retailers targeting Social Networking platforms?

comScore World Metrix for 2008 & 2009

Table 1: UK age group visitors visit Table 2: UK Social Networking sites visit

UK figures of Social Networking:

Psychology of online shoppers compared to high-street shoppers

The psychology of both online shoppers & high-street shoppers appears to be similar.Issues that retailers face with the above shoppers are:

Shopping baskets are abandoned & payment not completed at the last minute Hours are spent browsing products but no purchase is made. Shopping basket is used as a wish-list without any intention to buy. No sales are made if feedbacks have not yet been left on the product. Shoppers buy solely on price and do not consider after sales benefits,

warranties or customer service quality.

There are 3 types of shoppers: Vague shopper – Need others opinion/feedback before making a purchase Cost conscious shopper – Want to get the best value for money Window shopper – Browse but never or rarely buys

So how can retailers influence these types of shoppers to buy

Every individual is influenced by the following:

Normative influence - Influenced by the desire to be liked by others.

Informational influence - Influenced by the facts, figures, information available, information provided by expert shoppers and the desire to be correct.

Combination of normative and informational influence

Group and collective influence – Influenced by the majority’s choice in a group

Retailers have used the power of influence factors above and made use of the new S-Commerce platform to overcome this issue in such manner:

Use Social Networking sites to bring shoppers with common interest together.

Use the possibility to leave comments such as feedbacks, reviews and opinions on Social Networking sites.

Make shoppers feel part of a community or group.

Use the word-of-mouth concept and interaction between online users as a brand promotion and an advertising benefit.

Use the info from customers reviews and feedbacks to improve services and products.

So how can retailers influence these types of shoppers to buy

Marketing techniques available within S-Commerce

Social Comm

erce

Marketing techniques available within S-Commerce

SCRM: Close engagement between customers and retailers to provide a long-term relationship based on trust and brand loyalty.

Word-of-Mouth: Sharing of personal opinion or recommendation of one user to others.

Social Shopping: Informed shopping from Social Networking sites based on reviews, feedbacks or recommendations made by friends, family or contacts.

Customer-to-Customer: Platform which permits a transaction from one customer directly to another, e.g. eBay.

Open-Source: Platform where online users can discuss and share their ideas on products or services among each other freely and anytime.

Viral: Mass advertising by using email footers, spam, or ads.

Smart S-Commerce decision-making process - ‘CEPEA’

Improved customer decision journey with S-Commerce platform

Cost of implementing S-Commerce by retailers e.g., Facebook

Facebook has 6 third-party applications where retailers can incorporate their E-Commerce store & have the S-Commerce retail platform.

The costs to retailers to apply these apps are:

1. Voiyk – Free for 1st month & $69 per year after that (no per-item fees, transaction fees or extra charges)

2. ShopTap – Flat monthly fee (start from $10 for up to 500 products)

3. Sortprice - $149 monthly fee for up to 1,000 products to $ 400 monthly for up to 50,000 products (free store app – existing customers).

4. Shoutlet – Enterprise-level companies annual fee is as high as $ 50,000 and smaller retailers: yearly fee from $ 5,000 to $10,000.

5. My Merch Store – Provides retailers who are ‘Zazzle’ customers to input their products on Facebook and share them with friends.

6. LetMeIntroduce – 50 cents every time coupon code gets accessed by customers.

Survey Questionnaire & Results Analysis

Online Survey – 27 questions total

Offline survey – Informal interviews was conducted at home, workplace and shopping malls.

77 respondents recorded over 2 weeks duration. 52 respondents from online source and 25 respondents from informal interview source.

Survey launched on Google Documents site (free)

Survey questions based on ‘Social Networking experience’, ‘Shopping habits ‘ and ‘Social Commerce understanding and views’

Results on which Social Network sites participants are registered with:

Facebook most popular with 74 out of a total 77 participants with an account (96%). Twitter and LinkedIn came in 2nd and 3rd position with 26% and 25% responses

respectively.

Results on Social Networking experience

How many times users tend to check their accounts daily: 29% check between 5 & 10 times daily 21% check more than 10 times a day Other - described their social

networking site being always online via their smartphones and mobile data plan

Average duration of each session users tend to spend on their social sites (daily basis): 66% of participants spend less than 30

minutes per session 35% - less than 10 minutes 14% - between 30 & 60 minutes 16 % - More than 60 minutes Other (4%) – Always online via their

smartphones & the session never ends

Responses on the usage on the ‘like’ button A combined results of 94% of participants

use the ‘like’ button at some point. 51% - often use the ‘Like’ button 12% - always making use of the feature. 31 % - rarely use this feature

Results on shopping habits

Number of times participants shop on a monthly basis: 70% - shop 5 times or less each month. 12% - shop between 5 & 10 times 13% - shop 10 times or more Amazingly no participants said ‘Never’ Unknown – ‘shopaholic ‘ , depends on

mood, every week or unlimited

Number of items purchased on a monthly basis by the participants: 66% - purchase 50 or less items monthly &

20% revealed that they purchase more than 100 items monthly.

Participants further stated that: 35% - normally shop online

Types of products participants buy online: Electrical – 51 % Food – 15 % Clothing – 42 % Everything – 43 %

65 % stated that shopping online offer better value compared to high street retailers.

Participants further described the benefits: Money saving – 74 % Time saving – 78 % Wider choice – 48 % Convenience – 67 % Other – 4 %

An insight on the type of information that participants share among social networkers are: Gossip - 29% Daily news – 34% Pictures / photos - 77% Fashion news - 16% Chat - 73 % Comments - 60% Other - 4 %

25 participants (32 %) claimed they do share their shopping experiences on their network site(s).

The combined result (32 %) was split as follows: 14 % - Often 8% - Always 10% - Rarely

61 participants (79 %) states that they prefer to have feedback/reviews before conducting any purchase of product.

Results on Social Commerce knowledge

39 % - gave a correct description of S- Commerce 23% - have used Social Commerce on Facebook before 62% - were aware of retailers’ presence on social sites 55% - keen to shop & share their shopping experiences within the new platform. 61% - were keen to share /gain knowledge on their friends’ product preferences on their

network. 55% - say that they would like to get the latest updates on deals and promotional

savings.

Companies Successful StoriesGroupon $11 Million in one day sales for GAPSpinback $2.10 average incremental revenues from each Facebook wall

post + an impressive 10.9 % conversion rate on Facebook shares .

Pampers Pampers sold 1,000 Diapers in 1 hour on its Facebook store.

Baby & me 50% of online sales come from FacebookSpinback 10.9% - Conversion rate for Facebook shares that leads to a

purchase.

Livingsocial 42,000 + Facebook shares in 1-day for the $20 Amazon voucher.

Ticketfly 3.25 average sales generated through Facebook shares.F&F £2 million +

Generated in sales with Facebook vouchers

Success Stories of S-Commerce

Social Commerce

Informed purchases

Reviews /feedbacks

Info Sharing

Recommendation

Feel part of a community

Transparency

Group-buy, promotional

vouchers, latest deals

Single log-in

Benefits of S-Commerce for shoppers

Benefits of S-Commerce for retailers

Social Commerce

Target vast audience at one location

Gain insight on popular products

Ability to act on negative

product reviews and

re-gain customers

trust

Use the word-of-mouth

referral to increase

demand & profit

Obtain product-shopper

data and use it for

marketing and business

decisions

Closer customer-

retailer relationship

Increased demand, sales and

profits

Discussions

The following sections have been investigated in depth in the dissertation report: Evaluation of the Social Commerce concept with its advantages as well as

disadvantages identified from the survey results. Discussion of survey results including problems encountered from some

responses and a comparison of the results obtained against other researchers’ work.

Short or long term impact(s) on High-Street retailers. Security issue on social sites. If Social Networking websites become payable to shoppers. Language translation facility within S-Commerce for non-English speaking or

writing social shopping users within the community of S-Commerce.

Some recommendations to enhance the S-Commerce platform

Implementation of Loyalty Schemes to provide further discounts, free gifts, vouchers, bonus points, social credit rewards etc to boost S-Commerce.

A transparent logistic view on their purchased product(s) via an Electronic Data Interchange (EDI).

Improved News Feeds for Social Shoppers to enhance advertising.

Any Questions?