Social Ecommerce in 2021: Role of Social Media

Social eCommerce: How Social Media have Changed the eCommerce Landscape

 

The image describes social ecommerce and the influence of social media

 

The surge in technological advancements has presented many advantages and disadvantages to the human population. Being glued to a screen for hours on end, a quick internet search becoming a rabbit hole, and sending us on a wild goose search is nothing new.

And, it goes without saying that most of us have not managed to escape the Bermuda triangle that is Social Media. You open your phone in the morning, watch that funny 30-second video that your friend sent you on Facebook, and the next thing you know it is 3 in the afternoon, and you have done nothing else.

 

Having said so, social media does have its merit. Your friend just started her lifelong dream of starting a small business, and even though she had no business connections to start with, her Instagram page was quick to get that 10,000 followers. Your artist friend has a profile with 1 million followers. All of these would not be possible without the sizable social media population. So, today we are going to set aside our prejudices against social media and look at one of its positive outcomes – Social eCommerce.

 

What is Social eCommerce?

Social eCommerce is defined as a subclass of eCommerce or electronic commerce that depends on social me. To be more precise, social eCommerce is simply the use of social media and networking in the context of digital commerce. 

 

Simply put, Social eCommerce is when we use a social media platform to customize the shopping experience and make personalized recommendations and features. It combines the concepts of social media and shopping. So when you are browsing your favorite boutique profile on Instagram or buying that cute notebook from a Facebook page, you are essentially being a participant in Social eCommerce. 

 

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Now that we have seen what Social eCommerce is, or at least the definition of it, let us try to understand the concept in more detail. 

 

Business Classifications in eCommerce

In the traditional eCommerce landscape, a business can be classified as given below:

● Business to business (B2B)

● Business to customer (B2C)

● Customer to customer (C2C)

● Customer to business (C2B)

● Government or public administration

 

The flow of business in each of these classifications can be understood from the name itself. And as the name suggests, most of the businesses that fall under social eCommerce businesses are B2C or C2C. There are also cases of C2C and the rare occurrences of B2B as well. Read more about these five business types here.

 

Business Models in eCommerce

Much like the business classifications, eCommerce can be classified into different business models. The type of business model followed by a business depends on the way the product is handled right from conception to delivery.

 

Dropshipping 

Dropshipping is when the wholesaler directly delivers to the final customer, without the inventory passing hands through the retailer. This is an exceptionally good practice when it comes to eCommerce websites or platforms, especially in the case of social e-commerce, mostly because we don’t have to worry about storage spaces or warehouses for the products. The customer orders the products from the website or profile and we place the order with the manufacturer or wholesaler, who then goes on to deliver the order directly to the customer.

 

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Wholesaling

Much like the traditional concept of wholesale purchases, in the scope of eCommerce also, wholesaling is when the retailer buys in bulk and sells it online on the wholesaler’s behalf. This can be mostly seen with brand items forming partnerships with smaller online businesses, providing higher discounts to the customer as well.

 

Private Label Manufacturing

Probably the easiest eCommerce business model would be to use private label products. These are the products that are manufactured by a third party but are sold under the business name. Here the product will be manufactured based on the specifications provided by the retailer.

 

White Labeling

White labeling, most often, is used interchangeably with private labeling. White labeling, in the digital world, is when a business purchases the products or services of another company and then sells them to the customer under their own brand.

 

Though this might on the surface look the same as private label manufacturing, the difference between the two lies in the fact that for private label products, the specifications are provided by the retailer buying the products or services. On the other hand, for a while label products, the specifications are mostly fixed by the manufacturer or wholesaler.

 

Subscription

Subscription-based eCommerce has been called the future of social eCommerce by many. The concept of digital subscriptions is not new to us. But it has come a long way from the subscription magazines, newspapers, or even streaming platforms.

 

Today, we can even subscribe to groceries online. Subscription-based business happens when the customer makes purchases regularly, and instead of having to make purchases manually every time, the customer can opt for periodic purchases made on his/her behalf. The subscriptions can be daily, weekly, monthly, or at any specific time interval set by the customer. The obvious advantage of this type of business model is the relatively steady estimate that can be made regarding the sales.

 

Advantages of Social eCommerce

Given below are some of the advantages that Social eCommerce provides:

 

Ease to set up

Much like the traditional eCommerce businesses, it is much easier to set up than a physical store. The convenience factor is multiplied by the mobility and accessibility that social media platforms provide to the customer as well as the seller. It should also be noted that the initial cost of setup is also lower compared to other modes of business.

 

Growth factor

Comparatively, it has been found that the numbers show a much better rise for social eCommerce than for other platforms. Not only the case of revenue, but social media is a very good place to gather mass customer loyalty as well as consumer following.

 

Bandwidth

Traditional markets do not provide much bandwidth to the numerous brands that provide similar products or services. Certain brands could easily gain the upper hand under their higher budget. But social media is an almost endless well of consumers. It gives a place to everyone and opens up the market to a lot more sellers. This also helps the customers in the fact that they have several options to choose from.

 

Market Penetration 

Much like the bandwidth factor discussed above, the market domination of a single or a handful of brands for certain products or services is another obstacle that social e-commerce has managed to tackle. The audience has considerably moved away from the concept of big brands and names and has taken up to supporting smaller and eco-friendlier businesses. This has led to the penetration of the market by a large number of new sellers.

 

International Market

Even though we have Amazon, Flipkart, Alibaba and a hundred other internationally delivering eCommerce websites, traffic across the borders of countries in terms of retail has seen an increase after social media have proved to be a reliable eCommerce carrier.

 

Accessibility

The fact that these virtual shops are easily accessible to anyone with a social media account has definitely boosted the chances of their success goes without saying.

 

Customer perspective

Having seen all the advantages that this mode of eCommerce provides to the seller, it is high time that we see what are the advantages that the customer stands to gain. The most important thing is the competition factor among the sellers.

 

Since the number of online retailers is large, the competition among them is also to that scale. What this leaves the customers with is the chance to obtain high-quality products at affordable prices and a large number of options to choose from. There are also options available for the customization of products.

 

Bypassing Intermediaries

The price of a product in the market depends a lot on the number of hands it has passed through. A physical store does not provide much wriggle room to reduce the number of stages or people involved. But that is where Social media commerce comes into the picture.

 

A lot of these businesses have cut back on the middlemen and deals directly with the manufacturers. We have already seen business models like dropshipping or wholesaling that make this possible. This not only reduces the overall cost but also the average lead time between the time when the customer places the order and the final product is delivered.

 

Moving away from Storefront 

Since these online businesses do not actually require a physical store, this would reduce the overall business and setup cost. Warehousing costs for storing the inventory, maintenance costs on the stores, payment for the employees, etc. are some of the costs that can be avoided in a social commerce landscape.

 

Social Media Audience 

Social media is vast. The number of social media sites that are available and are springing up day by day is comparable to the number of people who have a presence on social media. The reach that could be got for the products is very high when marketed through social media sites than through any other medium.

 

Disadvantages of social eCommerce

Reading through all the advantages, we should not forget that everything has dual sides. Saying that it is all rainbows and sunshine may make you think that this is too good to be true. And that is the truth. Everything is not as perfect as we might imagine, or everyone would be doing it. Below are some of the negative sides of the disadvantages associated with social media commerce.

 

Brand wars

Even though we have established that the concept of big brands is slowly coming to an end, that does not mean that the brands have died out. They are still out there, stronger than ever. This has led to a sort of online brand war situation, where brands have been known to make fun of or outright badmouth other brands through their social media handles.

 

This has further divided the market among the top brands, leaving very little attention to the smaller businesses involved. Customers also have a habit of taking up products from known brands rather than upcoming ones. Customer trust and loyalty are pretty hard to come by in such situations.

 

Fraud websites

The limited amount of cyberlaw or jurisdiction that is available in virtual space has led to the rise of several con artists. Either by posing as a successful business and cheating people of their money or by showing the customer one picture and actually delivering a cheap knock out of that, the number of customers who have been burned by such schemes is very high. This has only increased the distrust that they have towards other small and upcoming businesses.

 

Customer expectations

The increased competition among sellers leading to better products for the customer is something that the customers know as well. No one hesitates to drop one seller and pursue another for a better deal. This has led to the downfall of many small businesses that couldn’t compete with the competition, especially in industries where product availability is not limited.

 

Marketing effort

We might have a notion that since the business is already online where people seem to spend a majority of their time anyway, social eCommerce businesses might not need the level of marketing that the traditional ones may require. But this is a wrong thinking process. Marketing, when done right, is one of the most important factors that can make or break a business. Just placing the product in front of the customer is not enough. You have to make them notice it.

 

Limited to certain groups

Very often, our parents or grandparents are not going to be that familiar with the whole concept of Social Media eCommerce. Apart from the occasional Facebook post or Whatsapp forwarded messages, many of our elders are technologically handicapped.

 

Though this is an issue that might not affect the future businesses much, it still affects a large number of the present businesses in the fact that they are not reaching a large age group of the society. This can also be said for certain economic sections of the population as well. Though the products themselves may not be costly, still it would require access to the internet and an electronic device that some people cannot afford.

 

Regulations and rules

This point is particularly applicable in the case of international markets. For products that have to be shipped outside countries, a lot of regulations need to be followed. This can be cumbersome for smaller businesses and they might even decide to take themselves out of the international market.

 

Customer Support

Moving to online platforms does not mean that the customer does not need further assistance. We might still have to set up a well-planned customer support system that can help the customer while shopping and after. Customer returns, refunds, or complaints have to be taken care of immediately and systematically.

 

Adaptable Niches

After having seen the overall advantages that are offered by social eCommerce, the question on our minds would be why don’t all businesses adopt this practice? The answer is simple, not all businesses are suitable for this landscape. Social media marketing and selling may seem like a piece of cake compared to the traditional storefront model, but the behind-the-scenes of any such business are not as pretty as you might imagine. A lot of work goes into such social media marketing (And no! It is not just posting a picture of the product on Instagram and asking all your friends to share it), and therefore it involves a lot of setup costs and resources.

 

Below are some of the niches that would benefit from moving to social media marketplaces.  

● Fashion Industry

● Consumer Electronics

● Food and Grocery

● Beauty and Wellness

● Sports

● Automobile Industry

 

This is not to say that other industries cannot try or profit from selling online, but these are just some of the easily adaptable fields.

 

The hottest trend in social eCommerce

Below are the top social media commerce trends that experts have identified that will be ruling the game.

Personalization

A lot of these sites can be customized for the customers’ needs and are created individually targeted for the shopper. The majority of buyers nowadays are sophisticated when it comes to shopping. They are not only looking for quality but also attention and support during and after they make a purchase. UX or user experience designing has become one of the hottest IT jobs of the current time owing to this reason.

 

Artificial Intelligence

Digital marketing experts have identified that with the advent of Artificial Intelligence and Voice Assistants like Amazon Alexa, Okay Google, or Siri, a whole new vista of technology has opened up for social media eCommerce websites.

 

People no longer have the patience to sit and browse through pages and pages of products; they prefer to “ask” these voice assistants for help. A direct voice search feature added to an eCommerce website is probably one of the most powerful tools that eCommerce would ever see.

 

Mobile eCommerce

Even though we cannot say that the concept of mobile shopping is new, the complete potential it can offer to businesses has still not been tapped into. Adapting to mobile platforms, migrating or adjusting the websites for the mobile view are some of the steps that can be taken to adapt to a mobile commerce landscape.

 

The psychology of people has changed a lot over the years. We find it more convenient to have everything at the touch of our fingers and on our mobiles. This will undoubtedly be one of the trends that are never going out of style.

 

Social Media eCommerce apps

If you do not know the popular social media applications from where you can make purchases, then you were probably born yesterday. Just kidding! Here are a few such apps that you can use either as a merchant or as a buyer to get introduced to the idea of Social eCommerce.

● Instagram

● Facebook

● Twitter

● Pinterest

● Snapchat

● Beetailer

● Shop Social

● WeChat

● Etsy

 

Social eCommerce in India

Now let’s talk about the homeland. A recent survey has revealed that India is the leading social commerce market among Asian countries. It is predicted to increase further. Already, this has been certified as an investment-worthy sector, owing to the rising user count in India. One of the latest out of a long line of social media-backed eCommerce sites is Meesho, an online reselling app backed by Facebook. Instagram, Tiktok, Twitter, Pinterest, etc are the other major players in the Indian market.

 

One of the main reasons that experts have attributed to this growth is the penetration of technology and related devices across the country. More than half the population owns smartphones and has access to the internet, and this is only predicted to increase in the coming years, which is going to result in a significant rise in the number of people using social media.

 

Startups focusing on Social eCommerce in India have received more than 100 million US dollars in funding during 2018-19 and have onboarded more than 20 million resellers online. These startups are primarily focused on India’s population from mid-tier towns and depend on video and social platforms. These companies are trying to scale up their operations with the increased funding coming in and sales channels. Mall91BulbulSim-SimCityMall, Deal shareetc. are some of the names of these up-and-coming e-commerce platforms in India.

 

It is estimated that by 2025, India’s e-commerce market will reach 220 billion US dollars, under which social commerce has the potential to grow to a whopping 100 billion dollar market. With the expanding customer base, lowering the overhead expenses, and attracting more and more investors, social commerce is all set to be the next big thing in the Indian e-commerce industry. 

 

Future of Social eCommerce

Social media have developed a lot over the years after it has been introduced. But more than that, the way people make use of it has seen a drastic change as well. The initial usage pattern involved the occasional photo or status update and mainly involved keeping in touch with friends and family. But social media today has come a long way from that. We can almost consider it as a self-contained amalgamation of all things the internet has to offer. The not-so-recent addition being eCommerce. The recent launch of Facebook Shop is one of the game-changing moves taken by Facebook.

 

It is not very difficult to understand the effect that Social media commerce will have on people. These have always affected us in the way we think and act, and it should not come as a surprise that they can actually persuade us to make a purchase. The current Covid-19 situation has only helped the online sellers; with the shops being closed down and people forced to spend their days indoors, it is totally expected that we would see a rise in the use of these platforms. But even after Corona has vanished from the face of the earth (hopefully), it is safe to say that the trend of eCommerce through Social Media is here to stay.

 

 

It is no doubt that the concept of Social eCommerce is relatively new. But that only means that it is going to grow even further. In this age of digitalization, when everyone is looking to promote their brand name, social media is the easiest and most efficient way of doing this. If you are looking to grow your business or even start one, now would be a perfect time.

Author:
An Electronics and Communications Engineering graduate, currently working in IT and content writing. Experienced in technical content writing for professional learning platforms and creating blog content. Passionate about reading, writing, and all things related to books.

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