Success in Social Commerce - Research Paper Example

Success in Social Commerce Introduction For few years, there have been huge advancements in the field of information and technology that has transformed the rules of business globally. Business organizations are now endeavoring to reach to their customers with the help of internet that was not possible a decade ago. E-commerce is one of the major outcomes of these advancements that brought suppliers and consumers on the same platform but the level of interaction remained limited in cases of business-to-business and business-to-consumer platforms (Ickler, Schulke, Wilfling, & Baumol, 2009). However, the world witnessed transformation with the advent of social networking sites, such as Facebook and Twitter that altered the notion of connectivity, which has now become a real-time trend where users interact with each other in the form of online communities resulting in beginning of a completely new era of social interactions. As social networking sites touched new heights of success, the year 2005 signified coining of the term ‘social commerce’ (Beisel, 2006) that has now emerged as the latest trend for business organizations globally and that is still evolving due to complexities related to it. Particularly, experts have attempted to define social commerce and analysis of such definitions has indicated that social commerce is the point where social media and e-commerce interact with each other. In addition, one of the distinctive features of social commerce is social interactions of people that act as its basis and which distinguish it from other forms of commerce, especially e-commerce (Ickler, Schulke, Wilfling, & Baumol, 2009). In other words, social commerce has resulted in creation of buying-selling opportunities for business organizations and consumers using social media. However, since social media is all about interaction of people, this has resulted in various myths and misconceptions and one major myth in this regard is irrelevance and inapplicability of business metrics, such as return on investment in the case of social commerce (Marsden, 2010). In other words, people argue that one cannot measure success in social commerce quantitatively in business language. This paper is an attempt to understand different aspects of social commerce that will allow a comprehensive understanding of complexities that revolve around success of the notion. Discussion While social commerce presents an interactive shopping platform to consumers, it is imperative to see the potential of social commerce from businesses’ perspective. From retailers’ point of view, it has been an understanding that the social commerce has been successful in providing opportunities to retailers to engage people in exploration of their products by creating viral experiences (Ickler, Schulke, Wilfling, & Baumol, 2009). In addition, social commerce enables retailers to bring their products to a place where people interact with each other that is contrary to traditional shopping trend where people have to reach to the place to buy something. Another distinction from traditional commerce is that social commerce focuses on socially enriched relationships rather than one-to-one relationships that usually exist in traditional commerce settings. Rather, social commerce promotes dependence on interaction and experience of users with users; in other words, consumer-to-consumer communication that results in buying or selling of any product or service. The reason this paper is including detailed discussion on distinction of social commerce from other traditional types of commerce is the need for realizing the complexity that exist in social commerce, which will only enable its critical understanding that is essential for understanding different aspects of its success. For instance, as discussed earlier, ‘return on investment’ (Marsden, 2010) is the metric that business organizations usually use in traditional commerce setting, and absence of measurable ‘return on investment’ in social commerce is one of the major arguments these days. Since the social commerce is evolving, the investors are now interested in knowing the impact of their marketing strategies on social media, particularly social networking sites. As the result, Google Analytics and Facebook Connect (Tonkin, Whitmore, & Cutroni, 2011) have now come up with tools and strategies that are showing positive ROI to marketers. In addition, a number of market research companies have carried out researches to understand the relationship of social media experience with consumers’ purchasing decisions. The results indicated that ‘like’ button acts as a significant factor that influences users to purchase a product/service from a specific retailer. In this regard, marketers are now looking at different ways of transforming experiences into measurable returns that will allow a rapid evolution of social commerce (Blanchard, 2011). While the paper is focusing primarily on ‘return on investment’, it is imperative to understand that ‘return on investment’ is usually considered as metrics that is not the case. ROI itself requires metrics for measurement of its business value, and business experts have come up with the following equation to calculate return on investment of something: ROI = Benefits - Costs x 100 = Percentage Return on the Investment Costs The equation of ROI is self-explanatory; however, the paper will now include an example that will clarify the applicability of ROI in social commerce largely. Sea World San Antonio is a venture of SeaWorld Parks & Entertainment (2013). Few years back, the company launched a campaign on one of the social networking sites for their new ‘the Journey of Atlantis ride’. The marketers focused on bloggers and devotees of roller coaster rides by creating a roller coaster community during their social media campaign that subsequently resulted in increased revenue. The company created different content based on interests and attitudes of these roller coaster fans. Particularly, the company launched various videos and photographs that was a graphical documentation of the whole construction of the roller coaster ride (SeaWorld Parks & Entertainment, 2013). The company allowed bloggers on YouTube and Flickr to respond to the videos and photos and share their posts on different social networking sites. At the end, the company invited top enthusiasts at the media launch of the roller coaster and those bloggers were the first ones to ride ‘the Journey to Atlantis ride’ (SeaWorld Parks & Entertainment, 2013) that was followed by posting of their comments and feedback on social media. In order to measure benefit of this social commerce initiative, the company carried out a two-week quantitative study to analyze the impact of social media campaign on consumers’ purchasing decisions. The company primarily asked its subsequent customers about the source of referral to the Journey to Atlantis ride. The results showed more than 2.6 million dollars in revenue from the social media campaign. To measure the ROI, it was essential to look at the costs as well that came out to be approximately forty-four thousand dollars, which included the cost of workforce that would have worked on the campaign, cost of materials and logistics for the media launch day, and lastly, costs of technologies that were used during the whole social media campaign. Convincingly, this exercise allowed the company to measure return on investment of their social commerce initiative: ROI = 2, 600, 00 – 44,000 x 100 = 5809% ROI (SeaWorld Parks & Entertainment, 2013) 44,000 The above-discussed example gives a comprehensive view of how one can measure success in the social commerce. Another contribution in this regard has been from Interactive Advertising Bureau (2013) that has played a significant role in offering the metrics that does not focus only on the online advertising but also on the structure that exists in it’s surrounding. The Interactive Advertising Bureau (2013) has focused on three platforms of the social commerce that are “social networking sites, blogs, and lastly, social media applications” (IAB, 2013). Particularly, the IAB has indicated the following metrics for measuring success or return on investment in social commerce: “Social media sites : Unique Visitors, Cost per unique visitor, Page views, Visits, Return Visits, Interaction rate, Time spent, Video installs, Relevant actions taken. Blogs: Conversation size (number of sites, links and reach of a conversation whose content includes conversation phrases relevant to the client), Site relevance (Conversation density, Author credibility, Content freshness and relevance). Widgets and Social Media Applications: Installs (number of applications), Active Users, Audience Profile, Unique User Reach, Growth, Influence, Installs (number installed per user)” (IAB, 2013) Conclusion The paper included discussion on different aspects of social commerce and mainly on the possibility of measuring its success that has been a complex process until now and will continue to remain complex due to involvement of human interactions in it. As the result, few experts are also opposing the need of ROI measurement in the social commerce and argue that social commerce is more about people and therefore, the marketers will have to transform into people-centric from money-centric to be successful in the social commerce. However, as the marketers will invest in social media tools, they will continue to expect return on their investment, and the process will continue to evolve. References Beisel, D. (2006). The Emerging Field of Social Commerce and Social Shopping. GenuineVC. Blanchard, O. (2011). Social Media ROI. Pearson Education. IAB. (2013). Social Media Ad Metrics. Retrieved on May 10, 2013: http://www.iab.net/guidelines/508676/801817/socialmetrics Ickler, H., Schulke, S., Wilfling, S., Baumol, U. (2009). “New Challenges in E-Commerce: how social commerce influences the customer process.” The 5th National Conference on Computing and Information Technology. NCCIT. Marsden, P. (2010). Social Commerce: monetizing social media. GRIN Verlag. SeaWorld Parks & Entertainment. (2013). Journey to Altantis. Retrieved on May 10, 2013: http://seaworldparks.com/seaworld-sanantonio/Attractions/Rides/Journey-to-Atlantis Tonkin, S., Whitmore, C., Cutroni, J. (2011). Performance Marketing with Google Analytics. John Wiley & Sons. Read More