This document describes an investigation into why social networking sites incorporate e-commerce features. It begins by outlining the reasons for conducting the investigation and defining social commerce. It then provides examples of social media platforms that have integrated e-commerce. The document discusses how retailers benefit from targeting social networking users and the marketing techniques used in social commerce. It also outlines the costs for retailers to implement social commerce features and describes the results of a survey on social networking usage and shopping habits.

1. An investigation of why Social
Networking sites go E-Commerce
Vidoushi D. Bahadur-Somrah
MSc Information Systems with Management Studies
Supervisor: Mary Thomson
KINGSTON UNIVERSITY
Faculty of Computing, Information Systems & Mathematics

2. 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.

3. Reasons for conducting this investigation
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

4. So what is Social Commerce?
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.
Let’s have a look at how it evolved:
Mobile technology
Mobile
Internet Commerce S-Commerce
(1990s) accessible
from the
Traditional Electronic Internet &
Commerce Commerce Mobiles
Social
Commerce
Social Media

5. Examples of E-Commerce & Social Media Integration
Social Networking E-Commerce
Facebook ASOS Clothing
MySpace Dove
Twitter Delta Airlines
LinkedIn 1-800
flowers.com
Bebo
Hi5
Friendster
These retailers have fully integrated
S-Commerce platforms available
already

6. Why are retailers targeting Social Networking platforms?
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

7. comScore World Metrix for 2008 & 2009
UK figures of Social Networking:
Table 1: UK age group visitors visit Table 2: UK Social Networking sites visit

8. Psychology of online shoppers compared to high-street shoppers
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
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.

9. 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

10. So how can retailers influence these types of shoppers to buy
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.

11. Marketing techniques available within S-Commerce
SCRM
Social Word-Of-
Shopping Mouth
Social
Commerce
Open-Source Viral
Customer-to-
Customer

12. 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.

13. Smart S-Commerce decision-making process - ‘CEPEA’
Improved customer decision journey with S-Commerce platform

14. 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.

15. 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’

16. Results on Social Networking experience
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.

17. How many times users tend to check their Average duration of each session users tend
accounts daily: to spend on their social sites (daily basis):
 29% check between 5 & 10 times daily  66% of participants spend less than 30
 21% check more than 10 times a day minutes per session
 Other - described their social  35% - less than 10 minutes
networking site being always online via  14% - between 30 & 60 minutes
their smartphones and mobile data plan  16 % - More than 60 minutes
 Other (4%) – Always online via their
smartphones & the session never ends

18. 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

19. Results on shopping habits
Number of times participants shop on a Number of items purchased on a monthly basis
monthly basis: by the participants:
 70% - shop 5 times or less each month.  66% - purchase 50 or less items monthly &
 12% - shop between 5 & 10 times 20% revealed that they purchase more
than 100 items monthly.
 13% - shop 10 times or more
 Amazingly no participants said ‘Never’
Participants further stated that:
 Unknown – ‘shopaholic ‘ , depends on
mood, every week or unlimited  35% - normally shop online
Types of products participants buy online:
 Electrical – 51 %
 Food – 15 %
 Clothing – 42 %
 Everything – 43 %

20. 65 % stated that shopping online offer An insight on the type of information that
better value compared to high street participants share among social networkers
retailers. are:
 Gossip - 29%
Participants further described the benefits:  Daily news – 34%
 Money saving – 74 %  Pictures / photos - 77%
 Time saving – 78 %  Fashion news - 16%
 Wider choice – 48 %  Chat - 73 %
 Convenience – 67 %  Comments - 60%
 Other – 4 %  Other - 4 %

21. 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.

22. 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.

23. Success Stories of S-Commerce
Companies Successful Stories
Groupon $11 Million in one day sales for GAP
Spinback $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 Facebook
Spinback 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

24. Benefits of S-Commerce for shoppers
Informed
purchases
Single log- Reviews /
in feedbacks
Group-
buy, promotional
vouchers, latest Social Commerce Info
deals Sharing
Transparency Recommendation
Feel part of a
community

25. Benefits of S-Commerce for retailers
Target vast Gain insight on
audience at popular
one location products
Ability to act on
Increased negative product
demand, sales reviews and re-
and profits Social gain customers
Commerce trust
Obtain product-
shopper data and Use the word-of-
use it for marketing Closer mouth referral to
and business customer- increase demand
decisions retailer & profit
relationship

26. 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.

27. 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.

28. Any Questions?