Analyzing Social Commerce: Advantages and Disadvantages in Marketing

This report provides a detailed analysis of social e-commerce, a subset of e-commerce that utilizes social media platforms for business purposes. It explores the advantages, including reaching a large audience, increased advertising frequency, two-way communication with customers, effective targeting, and social listening. The report also addresses the disadvantages, such as overly frequent advertisements, high costs, and increased transparency that can negatively impact a brand's image. Furthermore, it discusses the future of social e-commerce, highlighting its potential for growth and increased competition. The report concludes that social e-commerce is a valuable tool for businesses, enabling customized customer targeting and increased sales productivity.

E-commerce & Marketing
Social commerce

Social Ecommerce 1
Contents
Introduction.................................................................................................................................................2
Advantages of Social E-Commerce.............................................................................................................2
Large audience........................................................................................................................................2
Increased frequency.................................................................................................................................3
Two way communication........................................................................................................................4
Effective targeting...................................................................................................................................4
Social Listening.......................................................................................................................................5
Disadvantages of Social E-Commerce.........................................................................................................5
Too frequent advertisements....................................................................................................................5
Expensive................................................................................................................................................6
Transparent..............................................................................................................................................6
Future of Social E-Commerce.....................................................................................................................6
Conclusion...................................................................................................................................................7
References...................................................................................................................................................7

Social Ecommerce 2
Introduction
Social Ecommerce is a subset of Ecommerce that involves the use of social media platforms like
Facebook, Twitter, Instagram, Pinterest or Snapchat. Social media is increasingly being used by
organizations to target their customer segments. Social media platforms have widely collaborated
with leading organizations in order to target customers through these platforms. This strategic
collaboration allows businesses to reach out to a large audience in an effective manner (Tuten &
Solomon, 2017). This report throws light upon various advantages and disadvantages of social
ecommerce.
Social Ecommerce term was first coined by Yahoo in 2005. Since then, the utility and
effectiveness of the process has improved over time. The changing lifestyles and increasing use
of social media depicts a bright future for social ecommerce.
Advantages of Social E-Commerce
Since its inception, social ecommerce has largely benefitted industries by enhancing sales
through effective customer targeting. There are various advantages of social ecommerce that
have made one of the most important source of sales for the firms. Few advantages of social
ecommerce are as below:
Large audience
It is uncommon to find someone who does not has a Facebook or an Instagram account. Social
media has enveloped people across all age groups, income classes, religions and geographical
areas (Hollensen & Raman, 2014). Social media has enabled people from different cultural
backgrounds to garner the same information in their local languages. Therefore the largest
advantage of social ecommerce lies with the large amount of population that can be targeted
through social media. 2017 saw a total of 3.1 billion users. This number is estimated to reach
5.24 billion by 2021 (Statista, 2017). The picture below depicts that social media penetration is
about 42% while penetration of unique mobile phone users within the total population is 68%.
Active mobile social users form 39% of the total population. Such large number of social media
users make it easier for organizations to target millions of customers through a single platform.

Social Ecommerce 3
Social ecommerce allows organizations to target similar customers through different social
media platforms.
Increased frequency
Social Ecommerce and adverts can be used to target customers of the organization with an
increased frequency. A single customer can see the same ad on Facebook, Instagram and even
Twitter every time the individual logs into their account. Given the increasing amount of time
people spend on their social media profiles, it is imperative that social ecommerce can enable
organizations to target their potential customers many times during the day. Increased frequency
of targeting will eventually help the firm in communicating with potential customers in an
effective manner (Chaffey, 2016). As opposed to traditional marketing channels like newspaper
and television ads, Facebook and Instagram ads can reach out to customers various times in a
day. When adverts of a particular product are frequently viewed by potential customers then the
possibility of the customer buying the product increases, leading to increased sales for the

Social Ecommerce 4
organization. This is why a major advantage of social ecommerce is the increased frequency with
which organizations can target customers.
Two way communication
Most of the traditional marketing strategies allow organizations to communicate their message to
their potential customers but social media marketing and social ecommerce allows a two way
communication between the organization and its stakeholders. Customers who have availed
services or bought products from a particular brand via social media, they have the power to
provide feedback to the organization. This has been possible owing to the increasing presence of
organizations on various social media platforms. If a customer compliments a brand then it leads
to building a positive goodwill of the brand. On the other hand, one negative feedback from the
customer would be visible to everyone. This makes it imperative for brands to revert to
customers’ feedback and address their grievances in an effective manner. This establishes a two
way communication between the brand and the customer (Lee et. al., 2016). Such a
communication creates trust and transparency between the customers and the organization
leading to improved goodwill.
Effective targeting
Social Ecommerce assists organizations in effectively targeting their customers. A target
customer of a particular organization is the group of customers whose needs the business aims to
fulfill (Kotler, 2015). It is essential for organizations to identify their target market in an efficient
manner so that the business goals can be aligned with consumer needs and wants. Social
Ecommerce has enabled organizations to target customers efficiently. While showing
advertisements to customers, social ecommerce platforms can filter which set of customers will
view the advertisements. These customers are segmented on the basis of their geographical
location, age group, income group, last searched history or even cultural backgrounds. Effective
targeting ensures efficient utilization of organization’s marketing resources and leads to
improved sales by the organization.

Social Ecommerce 5
Social Listening
Social listening is the ability of a firm to listen to all the details that are being discussed about the
firm across all social media platforms. Social listening is important for organizations in order for
them to understand consumer’s opinions about the brand. This allows them to address customer
issues, be grateful for positive feedback and resolve customer queries as and when they occur.
Social listening also allows organizations to gain a speculative idea about the organization’s
goodwill in the market.
Disadvantages of Social E-Commerce
There are various disadvantages that are faced by organizations as well as customers due to
social ecommerce. A few disadvantages are as below:
Too frequent advertisements
Often customer complain that they end up seeing the same advertisments too frequently across
various social media platforms. Social Ecommerce allows organizations to target the same set of
customers again and again. This may irritate customers and hence they may refrain from buying
that product all together. Social Ecommerce today has the ability to track a customer’s interests,
recent searches, geographical locations and social media profiles. This provides organizations
immense amount of information about the customers and hence they are able to consistently
target the customers who may have shown a little interest in the product. This often leads to
increased efforts by organizations to reach out to customers via various social channels. This
excessively frequent advertising may make customers lose interest in the product.
If a customer has bought the product through any offline channel, for a few days at least, there is
no way for social platforms and organizations to know if the customer has bought the product
and hence they will continue to target the same customer and those ads will be entirely useless
for the customer.
Customers have also often complained that social ecommerce and its advertisments act as a
disruption as individuals use social media platforms as a form of entertainment. Targeting
customers through these platforms then becomes ineffective.

Social Ecommerce 6
Expensive
Social Ecommerce is often more expensive than traditional forms of reaching out to customers.
Social Ecommerce platforms have a much lesser click through rate and hence it is difficult for
organizations to generate a high number of sales by solely targeting them through social
ecommerce. This is therefore considered to be an expensive strategy adopted by organizations.
For example Amazon will incur a cost in displaying an advertisement to customers but the
probability of customer clicking upon the advertisments and buying something off amazon is
much lesser. This entire process makes social ecommerce an expensive commerce strategy.
Transparent
Social Ecommerce create a dangerous kind of transparency. This transparency is often good
when it customers post positive reviews and the public at large can see these reviews. On the
other hand, if a customer posts a negative review then the transparency of that review adversely
impacts the goodwill of the organization. Therefore social ecommerce is an extremely
transparent medium and this makes it imperative for organizations to be extremely cautious with
their product or service delivery. Customer satisfaction needs to be paid immense attention in
order to maintain a positive social image. This is unlike traditional modes of commerce as
customer reviews stay private.
Future of Social E-Commerce
Ecommerce has come a long way since its inception. Most businesses have benefitted
tremendously with the help of using ecommerce platforms to sell and promote their products and
services. The increasing globalization and advent of technology has also supported the industry
in an extensive manner.
Social commerce is simply a subset of Ecommerce. The extensive use of social media across
different people belonging to varied age groups, income sectors, geographical and
demographical segments has clearly established that social media is here to stay. Initially, social
media was used as a source of entertainment and communication. Over a period of time, social
media is being increasingly used for Ecommerce. Customers are targeted effectively through
social ecommerce.

Social Ecommerce 7
In the future, the contribution of social ecommerce within every business would enhance
drastically. Organizations would introduce unique and innovative strategies to promote their
products and services. Moreover, newer platforms of social media would also be introduced.
Besides Facebook and Twitter, the use of Instagram and Snapchat is also increasing by
organizations as a channel of social ecommerce. Over a period of time, new platforms would be
launched.
Internet would also spread to developing and under developed countries of the world. There is a
large population of the world which does not has access to internet. Growth of internet in these
areas would also result in increased reach of social ecommerce. This increased reach would also
lead to increased competition which would be beneficial for customers at large.
Conclusion
Social Ecommerce has gained traction over the last few years. Social Ecommerce allows
organizations to target customers basing upon their geographic, demographic and psychographic
segments that they belong in. Social Ecommerce has also enhanced the overall reach of
customers (Spencer et. al., 2014). This increases organizational productivity and allows
businesses to reach out to customers through varied channels. Social Ecommerce is here to stay
and has largely enabled customized targeting of customers leading to increased sales productivity
and hence enhanced revenue generated by the business.
References
Chaffey, D. (2016). Global social media research summary 2016. Smart Insights: Social Media
Marketing.
Hollensen, S., & Raman, A. (2014). Social Media Marketing. Marketing Canada-Journal.
Kotler, P. (2015). Framework for marketing management. Pearson Education India.

Social Ecommerce 8
Lee, Y. K., Kim, S. Y., Chung, N., Ahn, K., & Lee, J. W. (2016). When social media met
commerce: a model of perceived customer value in group-buying. Journal of Services
Marketing, 30(4), 398-410.
Spencer, S., Harding, J., & Sheahan, J. (2014). Social eCommerce: Increasing Sales and
Extending Brand Reach. " O'Reilly Media, Inc.".
Statista, (2017), ‘Number of worldwide social network users’, Available at
https://www.statista.com/statistics/278414/number-of-worldwide-social-network-users/,
Retrieved on 22 April, 2018.
Tuten, T. L., & Solomon, M. R. (2017). Social media marketing. Sage. United Kingdom.