Impact of Social Media on E-commerce Retail Business

Study of impact of Social Media on E-commerce Retail Business in the UK and Study of
Challenges in ecommerce in UK SMEs
Research question and Methodology
Introduction
The aim of this research is to explore how social media affects ecommerce strategies and what
are the challenges that UK SMEs face when adopting ecommerce as their business model. For
this study, a mixed research would be conducted on the organization involving secondary data
analysis and primary survey.
Research Questions
Aim of this research is to explore how social media is used by online retail companies and the
impacts their social media strategies make on the ecommerce business. To achieve this aim,
following research questions would be answered:
· What are the ecommerce strategies used by online retailers?
· How does social media impact ecommerce organizations?
· How will social media affect the ecommerce strategies of the UK online retailer?
· How can ecommerce retailers use of social media as an opportunity to grow?
Research Methodology
Environmental factors and changes in the business environment can affect the working in the
organization. Adapting to the environment would need large scale changes in the processes. With
advent of social media and increasing usage of it by the consumers of retail today, business
environment is changing.
Just as the commerce website provides an opportunity to the people to make purchases and feel a
shopping experience without having a need to be physically present at the store, social media
platforms give them the option to connect with others and share information without the need to
be physically meeting with the person. Thus, social media can be used for buildings brands,
achieving word of mouth popularity, engaging customers, and increasing sales.
Ecommerce have transformed into a customer centric and social centred business from the
product centred business with the adoption of social media. It has benefited both the consumers
and the brands. With social media, consumers can have access to a large pool of knowledge and

Study of impact of Social Media on E-commerce Retail Business in the UK and Study of
Challenges in ecommerce in UK SMEs
thus, understand products better so that they can take better decisions on their purchases.
Ecommerce firms on the other side, ecommerce organizations can gain insights into the
consumer behaviour and understand their expectations and preferences. This can help
organizations develop business strategies that are effective. Social media can also be used as a
new delivery platform for ecommerce organization. Platforms like Facebook allow creation of
pages as well as integration of a store on the Facebook page. Online consumers can be engaged
through creation of a group where consumers can freely discuss their fashion concerns and
interests. This would also give companies insight into the consumer perceptions (Manneh, 2017).
Research Design
A research methodology is like a systematic plan for conducting any research. It provides a way
to researcher that can be used for collecting data, analysing it, and delivering insights from this
analysis which can assist important decisions related to subject being studied. Basic research
types can be descriptive or analytical, applied or fundamental, quantitative or qualitative, and
conceptual or empirical. Descriptive research aims to identify facts and usually involves surveys.
It describes the events around the subject. In analytical research on the other side, information
and facts that are available are used to make a critical evaluation of the subject through some
tests that can compare or correlated between variables studied.
Applied research deals with discoveries of solutions to specific problems that may be faced by an
organization or a group of people. A research involving identification of trends that can be social
or economic in a specific organization or city can be an example of an action research.
Fundamental research concerns more with the generalizations of explanations and formation of
theories by analysing the basic knowledge that is gathered.
Quantitative methods are used to test theories using statistical methods and the facts are
expressed numerically in a quantitative data. Qualitative research on the other side deals with
understanding of a phenomena. Exploring reasons why people behave in a certain way by using
interviews or secondary data collection can be an example of a qualitative research. The current
research aims to explore how the increasing use of social media is affecting ecommerce
organizations. It would involve exploration of the motives people have behind using social media
and ecommerce, the behaviour they display on the two platforms, the strategies that companies

Study of impact of Social Media on E-commerce Retail Business in the UK and Study of
Challenges in ecommerce in UK SMEs
make to utilize social media in their business, and the impacts these strategies make on the
ecommerce consumers.
For investigating these reasons and patterns, the research would need both the insights that
include exploration of current theories related to ecommerce and social media to understand the
emerging patterns of consumer behaviour through a quantitative research and the exploration of
the strategies used by ecommerce companies by involving them in a qualitative inquiry such as
interview. Thus, the current research would make use of a mixed methodology in which both
qualitative and quantitative research methods would be used.
The research can take either the conceptual approach to understand an idea, develop new
concepts or interpret the old ones or an empirical approach by observing the data and testing it
empirically to deliver insights. As the current research needs both, an understanding of impacts
of social media on ecommerce conceptually, and testing of the theories that can explain the
consumer behaviour, the research would make use of both approaches.
Data Collection
The data would be collected from the secondary sources like books, journals, websites, research
reports, and authentic websites on the impacts of the social media on the ecommerce retailers. A
primary data would also be collected from the consumers and from the ecommerce retailers to
understand how consumers perceive and prefer social media and ecommerce integration and how
retail organizations are impacted and how they build strategies to make use of social media in
their business. For the primary data collection, the interviews would be conducted with the
ecommerce organization representatives involving digital marketing manager, webmaster, and
top level managers. The survey would be conducted on the consumers and thus, they would be
approached online through a survey link that would be presented to them for online filling of the
responses (Kothari, 2004).
Data Analysis
The secondary data obtained along with the data obtained from the primary interview conducted
on the ecommerce company representatives would be used for performing a thematic analysis
that would deliver the important data patterns and themes for further investigation. These themes
would then be used to formulate a survey questionnaire for consumers which would be used for

Study of impact of Social Media on E-commerce Retail Business in the UK and Study of
Challenges in ecommerce in UK SMEs
testing the results of the qualitative analysis. Statistical testing procedures would used for
gathering the empirical evidences in this way.
Conclusions
The research needs to understand the impact of social media environment on ecommerce
retailers in the UK as well as study the behavior of ecommerce consumers. The study would
utilize a mixed research methodology in which the secondary data would first be used along with
the primary interview responses for a thematic analysis for understanding the impact and
identifying patterns. These patterns would then be tested using a survey method and statistically
testing of the data aim at understanding consumers.

Study of impact of Social Media on E-commerce Retail Business in the UK and Study of
Challenges in ecommerce in UK SMEs
Management report
Introduction
This report is prepared for Ebay which an ecommece retail giant into selling of a large number of
products online. The report involves exploration of ecommece strategies used by the company
and critical analysis of the same for the evaluation. For this, the research would make use of
techniques like Porter’s five forces theory, value chain analysis, and SWOT analysis that would
help researcher gain insights on the operations of the company. This way, the gaps in the current
strategies can be identifies and steps can be taken to enhance the strategic position of the
company.
About Organization
EBay, Inc. Is an online marketplaces which allows buyers and sellers to get connected. It is one
of the largest ecommerce organizations which was started in 1995. The company today has over
147 million people working for the company and has over 430,000 sellers registered on the
portal. The company began with an auctio based retail model but slowly transformed into the
etailing model and has an aim to become the largest online shopping mall for consumers.
Current e-business strategy and activities
Ebay strives to build trust in people making purchases online through its portal by providing
them an open environment in which they can directly connect with the sellers. Sellers have the
opportunity to establish profitable relationships with their buyers.Ebay has almost all categories
of products sold online beginning from office equipments, personal goods to estate and
automobiles. eBay has been running business successfully and is attracting more and more
people who want to trade online. eBay has five key strategies in business that include the
following:
Large customer base: eBay has over 60 websites and auction businesses that it is connected
with and thus, has a huge customer base. It provides a business exchange platform for all

Study of impact of Social Media on E-commerce Retail Business in the UK and Study of
Challenges in ecommerce in UK SMEs
kinds of merchandize including refurbished goods such that a large number of customers can
be addressed. The company has its operations in over 53 US markets where it provides
national and international trading options to customers looking for local goods like furniture
and automobiles. The company has its presence across globe with markets in 150 countries.
Strong Marketing: In initial years of operations, the company had used viral marketing to
gain foothold in the digital space by reaching out to more and more consumers.
High Profit Margins: The company was first to enter the online marketplace and had
limited categories of business at the time. However, players like Amazon and Yahoo entered
the ecommerce space, the company expanded its portfolio and added high price products that
improved their margins.
Mergers and Acquisitions: To get into new products as well as new markets and to gain an
expertise in new product areas, the company had acquired a few companies like Butterfield
which is an auction house that allows eBay to combine its online business with the offline
business of selling collectibles and antiques.
Community Development: EBay believe in creating a strong sense of community in buyers
and sellers by allowing them to interact directly. This builds trust in them and make them feel
the belonging to the community of buyers and sellers. As a result of this strategy, the
company had gained many loyal members who stay on the portal for long.
Ecommerce Enhancements: The company keeps investing in its technologies and the portal
to enhance its features in response to the changing needs of buyers and sellers. For instance,
based on the payment flexibility requirement of customers, eBay had acquired Billpoint
which offered addition of credit card based payment options between buyers and sellers
online (J.Gopalkrishnan & Gupta, 2001).
Appraisal
Competitive Forces Model
EBay is one of the largest online retailer but it cannot be away from the pressures of market
forces and have to keep dealing with them to stay ahead. It is important to study the environment
in which the company operates to be able to understand how it is working and what challenges
the company is facing in the business space. For this, the researcher has used Porter’s five forces

Study of impact of Social Media on E-commerce Retail Business in the UK and Study of
Challenges in ecommerce in UK SMEs
model to explore the competitive forces and their impacts on the organization. Major competitive
forces faced by EBay in the ecommerce retail space include:
Threat from Substitutes: EBay portal combines a number of ecommerce models such s
Classified listings, Marketplace and StubHub. Thus, supermarket chains like Target, Tesco,
Sainsbury’s, and Wal-Mart can be seen as the substitutes for its services. There may also be
direct substitutes for each of these business models. For instance, Stub Hub can face competition
from their substitute services that sell tickets online through forums. EBay classified could be
fighting in the market with other classified listings such as Yellow Pages. Despite these
substitutes, the fact remains that the company combines them all and provides a single place
solution to its customers and seller. Thus, threat from substitutes is only moderate (Bensoussan
& Fleisher, 2008).
Competitive Rivalry: A large number of retailers have already come into the online selling
space including the big giants like Target Corporation, Amazon, Best Buy, Staples, Yahoo, and
Alibaba. A large number of different business models have emerged including retailers,
importers, exporters, distributors, catalogues, classified, directories, liquidators, and search
engineers. While eBay is likely to face tough competition in the space from these entities, the
consolidation of the supply chain operations in EBay can still give it an edge over most of them.
Thus, it can be said that the competitive rivalry in the retail space is very high for EBay.
Threat from New Entrants: Technologies are advancing and available for lower costs than
ever. Building an ecommerce website can actually cost much less today such that even small
retailers can easily get into the space. Also, online retail does not need any major physical
infrastructure investments. Thus, new entrants can easily enter the space. However, considering
the size of EBay, the retailers in the space are very few because of the technological and supply
chain integrations they have. The new entrants cannot easily scale up to the level of EBay. Thus,
it can be said that the threat from new entrants for EBay is moderate.
Bargaining Power of Suppliers: EBay connects buyers with suppliers such that there are a
huge number of suppliers connected through the website fighting for their deals. There are other
retailers too who work on the similar model like Amazon and BestBuy. However, the business

Study of impact of Social Media on E-commerce Retail Business in the UK and Study of
Challenges in ecommerce in UK SMEs
models differ a little and the direct connection between the suppliers and buyers is rate. Thus,
when considering the retail suppliers of goods, the bargaining power they have is low as EBay
has a huge number of buyers listed online that these suppliers need to sell to. However, when
considering the website, the suppliers can also include the technology developers and third part
integrators who would be supplying services to the company. For them, EBay standards as a big
customer such that they need to provide their best services and do not have any bargaining
power. Thus, it can be said that the bargaining power of suppliers of EBay is actually between
low to moderate because while suppliers would like to be listed on the EBay website, some of
them can still use other marketplaces for their establishment such as Amazon and Best Buy
(Faarup, 2010).
Bargaining power of Buyers: A huge number of buyers exist in the online space and there are
many retailers who they can make purchases from. The retailers have to keep fightin for the
attention of the buyer and work towards giving them best deals and satisfy their preferences to
get the maximum share. This buyer is very price sensitive and looks for attractive deals as well
as assumes a good service. Thus, it can be said that the buyer has the high bargaining power in
the ecommerce space.
Information, Communication, Distribution & technology (ICDT) Model
As per the ICDT model, ecommerce market can be divided into four virtual spaces that are:
Information: EBay is a platform on which products and services are listed by sellers who post
all the necessary information such as description, pictures, pricing, discount, condition, shipping
details, return policies, and availability status. This information can help buyers take decisions on
purchase.
Communication: EBay engages people who use the website by creating virtual groups where
people can discuss on product or services. These groups can help buyers and sellers connect with
each other and resolve queries as well as share information on the products, services or buyer

Study of impact of Social Media on E-commerce Retail Business in the UK and Study of
Challenges in ecommerce in UK SMEs
preferences. A buyer can send a message to a supplier which includes complaint which makes
the communication smooth in the marketplace (John R. Schermerhorn, 2009).
Distribution: EBay do not keep stock of any goods nor does it take the responsibility for making
the deliveries. It only acts as a mediating platform that connects buyers and sellers so that they
can have transactions settled between them using the EBay platform that takes care of the
platform infrastructure and the payment gateway through which the buyers makes a payment
online.
Transaction: EBay platform takes care of the transactions happening between the buyers and
sellers through an integrated payment gateway and provide payment guarantees through
insurance. It maintains an escrow account for the buyers who are purchasing high priced items
and keeps the purchase amount in the account till the goods are delivered. It acts like a virtual
distribution center which gives an opportunity to the buyer to check availability of goods and
make selection for purchase (Amin & Amin, 2017).
Value Chain Analysis
Value chain analysis can help understand the competitive advantage that the company has in a
systematic manner. A value is created when a series of activities are executed in an order such
that marginal values get added at every stage of this chain to build a significant value for the
customer. The activities that re executed in an organization can be primary or support . Primary
activities directly add this value and include logistics, marketing, sales, operations, and services
while support activities are only utilized for augmenting the primary activities.
EBay inbound logistics include web portal, item listing, photographs, auction, and bidding
(Mishra, 2010). Operations include selling of items along 40 categories and keep growing the list
of categories as the new products are added (Jones, 1999). Outbound logistics involve online
auction and delivery of goods to the retailers or customers. A sale is directly completed between
the buyer and the seller but a feedback system is provided for buyers to get connected to the
seller through the EBay account. The buyer is protected by insurance that EBay has taken from

Study of impact of Social Media on E-commerce Retail Business in the UK and Study of
Challenges in ecommerce in UK SMEs
Lloyd’s of London. An escrow company called Tradenable maintains the escrow account f EBay
for high price transactions.
Service: EBay allow creation of virtual groups where buyers can voice their opinions and help in
marketing or promotion activities planning through their feedback and inputs. The discussions
are purely about retail services and do not include issues related to sales services,
training,installation or complaint handling (Eghoff & Mabey, 2006).
Support: Support activities include:
· Procurement: No goods are stocked by EBay but are directly transferred from
supplier to buyer
· Technology: It gives the core advantage as it is the technology based platform that
is allowing company to connect buyers with sellers and maintain internal marketing
and operational activities through a CRM and MIS.
· Human Resource Management: The company staff is recruited, developed,
trained, and facilitated to give their best in services to the company (Chan & Luo,
2007)
SWOT Analysis
Strengths:
· It is one of the top online marketplace and has good reputation across world
· More than 100 million people across globe buy from this marketplace
· The company is growing fast and it is expected to maintain the speed even in future.
· The company has a strong buyer and seller database that always helps it in understanding
people and planning marketing
Weaknesses:
· There are counterfeit sellers who could use EBay platform to crack deals which
can spoil reputation of the company
With shutting down of systems like paypal, eBay would lose a lot on transactions
Opportunities:

Study of impact of Social Media on E-commerce Retail Business in the UK and Study of
Challenges in ecommerce in UK SMEs
· COmpany can develop more portfolios and skills with more acquisitions in future
( 50MINUTES.COM, 2015).
· Developing nations present a good opportunity for the compay to sell
Threats:
· EBay has big companies like Amazon and Yahoo in its competition.
· Illegal practices by eBayers can put customers to risk (Lüthge, 2004).
Conclusions
This report as written to understand the current condition of the EBay ecommerce model and it is
to be submitted to the management of EBay so that they can understand the effectiveness of the
strategies they are using and identify if there are gaps for improvement. The report used Porter’s
Five forces analysis, Value Chain analysis and SWOT analysis as key methods for understanding
operations of EBay. It was found that the company operates a combined model of marketplace
that connects buyers with suppliers. The company has good reputation in market and sells
impressively online. However, it is facing significant competition from new players. A major
threat that company has is the security concerns posed by illegitimate EBayers and thus, the
company needs to take care of the same.

Study of impact of Social Media on E-commerce Retail Business in the UK and Study of
Challenges in ecommerce in UK SMEs
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