West Bengal University of Technology associatedPeter. F. Drucker Memorial 4th National Seminar on

“Opportunities & Challenges of Contemporary & Innovative Management Practices”

Paper Title- S-Commerce- A Fourth Retail Channel

Author: Koushik Dutta & Anindya Mondal Student- Bachelor of Business

Administration (Honors)e-mail Id-koushik.dutta@y7mail.com

anindya.mondal@y7mail.com

Social commerce is a subset of electronic 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.More succinctly, social commerce is the use of social network(s) in the context of e-commerce transactions.The term social commerce was introduced by Yahoo! in November 2005 to describe a set of online collaborative shopping tools such as shared pick lists, user ratings and other user-generated content-sharing of online product information and advice.

What is S-Commerce or Social Commerce ?

S-Commerce- A Fourth Retail Channel

The world of social commerce, or as some have described it, the fourth retail channel. Four distinct elements define this commerce opportunity for merchants:

a. the explosive growth of social networks, in particular, Facebook,

b. the increasing time that people spend on social networks (at the exclusion of other activities),

c. the increasing use of social networks for information related to the purchase of products and services,

d. the investment that merchants are making in elevating their presence there.

First, let’s start with the basics – the growth of social networks, and in particular, the explosive growth of Facebook. Social networks continue to evolve at a dizzying pace both in terms of the growth seen in existing sites and in the rapidly growing number of social networks themselves. Today, roughly 40 percent of all people in the United States use social networks in some form or fashion, representing 61 percent of all Internet users. Worldwide, 75 percent of Internet users visit social network or blog sites, a 24 percent increase since last year.

The First Force: The Explosive Growth of Social Networks

Who are these visitors? Well, just about everyone! Eighty-two percent of 14-17 year olds and 99 percent of 18-24 year olds have a social networking profile. Half (47 percent) of Internet users ages 50-64 and one-in-four (26 percent) users ages 65 and older now use social networking sites.Just what’s driving the popularity of these networks? Social network membership, by design, is an extension of a person’s interests. People join because it is an efficient way to meet people like them and stay in touch with friends, colleagues, and people who share their interests. Once people are there, they find more people who work in the same place, went to the same school, like the same causes, follow the same music, read the same books, eat the same foods, etc.

The Second Force: Time Spent on Social Networks

It’s not just that social networks are getting bigger and more pervasive. They are beginning to dominate time spent online. Americans spend more than a quarter of their online time on Social networking sites and blogs- a new study shows.

Social Networking /

BlogsGames e-mails Portals

Instant Messaging

Videos / Movies Search Classifieds /

Auctions

Jun-09 15.8 9.3 11.5 5.5 4.7 3.5 3.4 2.7

Jun-10 22.7 10.2 8.3 4.4 4 3.9 3.5 2.7

Jun-11 30.1 11.1 7.5 4.2 3.8 4.1 3.5 2.8

Globally, it was reported earlier this year that more than 300 million people spent 113 billion minutes on social networking sites; representing a 20 percent annual growth in audience and more than 100 percent annual growth in minutes from one year ago.  The global average time spent per person on social networking sites is now nearly five and half hours per month, a nearly two hour increase from 2009. In August 2010, U.S. Internet users spent 41.1 billion minutes on Facebook, surpassing Google’s 39.8 billion minutes for the first time.

The Third Force: Use of Social Networks as an Information Resource

A sociologist would define a community as a group of people who interact and share a common location. The Internet enables online social networks as the common location where people can connect with their friends or make new ones – irrespective of physical location. People join social networks because they want to be part of a connected community. Once there, these members willingly disclose quite a bit of information about themselves – their careers, education, interests, hobbies, and even their political and religious interests.

According to Facebook, the average user has 130 friends, creates 90 pieces of content each month, and is connected to 80 community pages, groups, and events. More than 30 billion pieces of content (Web links, news stories, blog posts, notes, photo albums, etc.) are shared each month on Facebook. These numbers continually rise as more people join and interact on the network. 

The Fourth Force: Merchant Investment in Social Networks

The Web will be involved in 53 percent of total retail sales by 2014 as consumers increasingly use the Internet to research products before buying. In fact, roughly 83 percent of U.S. consumers shop online at least once a week. 

 When coupled with the fact that consumer recommendations are the most trusted “advertising” medium for Internet users and time on Facebook (in particular) accounts for more of the time people spend online. Merchants and their marketers increasingly view it as an important and convenient sales channel with which to turn fans into customers. 

Nearly 100 percent of all major retailers will have a fan page on Facebook by the end of 2010 for one good reason: Traffic to their own websites is being cannibalized by traffic to their fan pages on Facebook, and those fans tend to be more willing to buy and advocate on behalf of the brand.

Who’s Turning Visits Into Cash?

Although many merchants are keen on the idea of using social networks as platforms for conducting commerce, only a small number of them actually transact on those platforms, and fewer still have tapped into the “mother lode” of group dynamics that these networks can foster. Efforts to tap into commerce in a more social way fall into three distinct categories:

Using a shopping cart to facilitate checkout on Facebook. 

Using deal sites off social networks to drive sales at a discount (in the hopes that deal customers convert into repeat customers).

Promotional activities on social networks that drive activity to their existing merchant websites or even physical stores.

Using a shopping cart to facilitate checkout on Facebook.

Payment is probably the most well known of these enablers and uses PayPal as its payment backend. It launched in November 2009 and claims to have roughly 30,000 businesses and individuals who have used the app, with more than 500,000 Facebook users who have shopped for products in stores using it. It is a pure-technology play and provides a shopping cart, the ability to offer fan discounts, a search tool, and the ability for customers to add comments and reviews. Although technology makes commerce possible, it still falls to the merchant to promote and engage the social network and drive traffic to their fan page.

Using deal sites off social networks to drive sales at a discount (in the hopes that deal customers convert into repeat customers)

Groupon and Living Social are probably the most well known of these social commerce schemes, although at last count there were roughly 200 “knocks-offs” attempting to replicate its success. Their focus is mostly services and on the long-tail, local retailers. These “loss leaders” drive mostly unprofitable sales to local merchants who hope to convert “trials” into long term customer relationships.

Promotional activities on social networks that drive activity to their existing merchant websites or even physical stores.

Here schemes abound – including Macy’s Virtual Mirror that enables shoppers to friend-source product recommendations while in stores – to the Neiman Marcus Midday Dash promoted on their fan pages to Jet Blue’s weekly Twitter promotions. These marketing initiatives are mostly one-off efforts to drive a sales spike and are hard both to track and scale.

Socialify – a New Way to Sell on Facebook

Many businesses want to try to sell more of their wares by using various social media sites including Facebook. But they have to put a lot of time and effort into maintaining their social media accounts if they are going to make the most of them in this way.

So imagine how intriguing it was to find a website that makes selling on Facebook even easier. Socialify works in conjunction with Shopify to let you sell products on your Facebook page. This could make it easier to bring in more sales, as every time someone visits your page they will see some of your products and perhaps even be inspired to buy them.

You have to sign up for Shopify first, but there are four different options to choose from here. This enables you to choose the best option for your needs, depending on the size of your business. You can also enjoy a free trial that lasts for thirty days. Once this is up you will pay the relevant amount depending on which package you opted for.The good news is that the system also works with Twitter, giving you greater potential for rising sales because of how it works. This straightforward system allows you to make the most of your fans on Facebook. The free trial enables you to see whether it would be worth investing in for the long haul. If you make enough sales then clearly it will be a good investment.

Thank you very much !