Social Media and E-commerce
Social media and e-commerce are products of development of Internet technologies. While social media is hailed as the modern form of communication, e-business is the future of trade. This paper is set to identify how social media is used to improve revenue generation of e-businesses. The study finds that clients highly trust verified social media accounts. The use of social media marketing combined with traditional media is essential in promoting the image of a company. Business operating online should also be concerned with the response that clients have regarding their experience of shopping with them as it will shape the relationship between the company and people who see the comment from the client. Business should also monitor correspondence on social media regarding its products and services to ensure its image is protected.
Keywords: social media, Internet, e-commerce.
Chapter One: Introduction
This chapter introduces the issues to be examined in this research and the structure of the dissertation. The research problem, qualification of references, relevant information, and possible examples of the study are also discussed in depth.
Contextual Background of the Study
The primary aim of any business is to make money for the shareholders and to provide goods and services that satisfy customer expectations. Marketing and proper communication play a significant role in helping organisations reach their goals. E-commerce is a modern form of business that has developed due to the widespread adoption of technology and Internet. Upon the same technologies, social media and electronic media have grown. According to Meng (2017), at the current growth rate of online business, the total value of e-commerce in 2014 will triple by 2020. Figure 1 below illustrates the expected rise of total online sales from $1.3 billion in 2014 to $4 billion by 2020. E-businesses are primarily based on the ability to harness information generation, processing, and utilisation for enhancing the production process (Joshi 2017, p. 104). Some organisations run total electronic businesses while some blend e-business with brick-and-motor shops to reach various sections of the clientele (Hortacsu and Syverson 2015, p. 91). Brick-and-crick businesses include Sports Direct, Pizza Hut, and Safeway. Social media has become a crucial tool in the communication and marketing plans of both e-commerce firms and brick-and-click businesses.
E-business is defined by Joshi (2017, p. 506) as the purchase and selling of goods and amenities via the Internet. Traditional businesses often incorporate electronic marketing into their business models to improve their business and reach a broader clientele. For example, even though the core business of airline companies is to transport people and goods from one point to the other, many airlines have introduced e-business aspects in booking and communication (Leong et al. 2016, p. 479). For example, if passenger X plans to travel from Washington DC to London, he can browse the charges of different airline firms plying the route, pick the one that best suits him and book from the comfort of his house. X can also use electronic money transfer to pay for the ticket in advance without having to travel to the airline offices. He can also use social media to confirm if there are any changes in schedule or give feedback on the experience of travelling with using the chosen airline. Hence, Mr X can use the online platforms of the airline company to check its schedule and charges, book and pay for the trip using money platforms and communicate with the airline using social media channels such as Twitter and Facebook.
Marketing is critical for businesses to reach their clients and prospective clients. Tuten and Mintu-Wimsatt (2018, p. 2), describe social media advertising as the use of social media systems and tools to build, link, release, and trade goods and amenities that are valuable to the firm and its investors. Therefore, social media marketing is a robust tool for marketing that businesses should embrace more to improve their sales, visibility and the brand as a whole. American businesses use approximately 10% of their marketing budget on social media platforms (Colicev et al. 2018, p. 39). Many businesses today operate owner social media (OSM) which they use to inform the clients and potential clients, market their products and receive customer feedback and suggestions regarding their products. Among the Fortune 500 companies, about three-quarters of them operate company Twitter accounts, 66% have Facebook accounts for their clients to interact, while 62% run YouTube channels (Colicev et al. 2018, p. 40). The operations of OSM is easy, cheap and easy to control as the organisation’s social media teams run them.
Businesses also market their brands and products in social media platforms owned by others individuals or organisations for a fee. Earned social media (ESM) are social media channels that businesses do not own, control or generate content for (Colicev et al. 2018, p. 41). As it is prevalent with other platforms of marketing, social media is analysed by advertisers to determine the effectiveness of campaigns run on the different platforms. According to Voorveld, van Noort, Muntinga, and Bronner (2018, p. 42), among the quantitative metrics used to monitor social media tools include likes, clicks, comments, Shares opens, views, followers, and engagements that a social media campaign is generated. The use of ESM in marketing campaigns is expensive compared to OSM, but more efficient as each person involved in the campaign use their accounts to direct traffic from diverse communities to the campaign.
E-businesses are built on the Internet and related technologies. Therefore, most of the companies operating online use OSM and ESM in promoting their brand and increasing their brand visibility. While the use of ESM increases brand awareness and diversification, OSM is more trustable as they reflect the company. Almost all online businesses have OSM accounts which they use to release controlled information to their audience and also to engage their clients in different ways (Colicev et al. 2018, p. 45). Although the effectiveness of social media campaigns can be measured regarding engagements between the social media messages released and the response of the clients, the monetary value of the campaigns needs to be tested to understand whether they have any impact (Joshi 2017, p.103). Considering that the primary role of businesses is to make profits, any promotional activity carried out by an organisation should contribute towards increasing the sales of the company.
Research Problem
Studies on the relationship between social media and e-commerce are many, but few seek to establish how the earlier financially impacts the latter. First, both concepts are relatively new as both have come about due to advancement in ICT and increased use of Internet across the world (Chang and Cho 2017, p. 233). According to Internetworldstats.com (2018), the number of world Internet users has grown from 5% in early 2000 to 54.4% of the global population in December 2017. The second reason for the shallow research on social media and e-business issues is the dynamism of the ICT industry. The ICT industry is highly dynamic with new technologies and innovations coming up to replace others, which are not yet adopted globally. Therefore, it becomes hard to conduct studies targeting a specific technological perspective as the technology could be replaced in the market before the study is completed.
Social media is however not a technology that is going away anytime soon, and it is widely seen as the future of communication. According to Wellons (2018), by 2022, approximately 2.4 billion people will be on social media, and by 2039, social media will be a fundamental communication technology that will be used in almost all aspects of human life. Through e-business, firms widen their scope of business as the barriers of traditional brick-and-motor businesses are broken down. E-commerce also allows a business to serve customers who live abroad without having to start a shop in the country. One of the best ways to target customers in a foreign company is to execute social media campaigns that focus on the citizens of the specific country. The data obtained before, during and after the campaign is essential in helping the company evaluate the effectiveness of the campaign.
While the numbers collected, indicate the level of engagement that the messages sent out generated, it is essential for the business to understand how the engagements translate into profit. A company may run a social media campaign, which generates great data on participation, the response from the target audience and increase the number of followers on the social media accounts of the company. However, if there is no tangible impact on the revenues of the company, the campaign may be deemed as a failure (Ahmadinejad and Asli 2017, p. 89). For online businesses, brand awareness is not the only requirement for increased customers, but other elements such as trustworthiness, high-quality services and connection generated by the campaign played a role in monetisation of the statistics of the campaign.
The balance between the traditional marketing of online businesses and social media marketing also should help in understanding how the latter help develop revenues. While current media adverts are trustable and seen as more credible because of the scrutiny they are subjected to by the media houses, social media especially OSM are also trusted by clients (Zhang, Trusov, Stephen, and Jamal 2017, p. 26). According to a study by McGoldrick (2013), a unit of traditional media marketing generates around 900 new sales to new customers and 400 from existing customers while blog mentions lead to 90 sales to new customers and 63 unit sales to existing customers. Therefore, businesses need to understand the best practice of using social media to generate not only statistics for the company but also increased sales and hence increased profits for the company.
The number of persons engaged in e-business in the world rises every day as adoption of internet increases. Just like in conventional shopping, women dominate online purchases with Ahmadinejad and Asli (2017) finding that women spends approximately 60% of the total expenditure made online. The study also finds that men are more likely to purchase on their mobile phones and tablets. However, women are found to be less willing compared to men to purchase products online. According to Smith (2014), young American men are more likely to shop online (40%) comapared to their female counterparts (31%). Therefore, it can be deduced that youthful americans are more likely to shop online compared to the older population. Age is a major factor in e-commerce as it significantly define clients of online businesses.
Research Questions and Objectives
Social media marketing should not be viewed as an alternative to traditional advertising but rather as a complementary method. It is therefore vital to derive the research question for this paper from the various factors affecting sales of e-commerce, the role of social media in promoting sales and how to estimate the profit fraction generated directly from social media. Therefore, the primary research question is “Which role does a social medium play in promoting revenue generation for electronic commerce?”
The above research question will be answered through the setting of objectives that this paper will strive to achieve. The objectives of this study, therefore, will be:
A. To establish the elements that are important for the growth of e-businesses across the world through analysis of literature to understand the following:
1. The role of trust in e-business
2. How social media advertisement impacts e-commerce
3. Importance of communication between client and the e-business
B. How social media marketing compares with traditional marketing regarding reliability, reach, and other aspects
1. Reach of social media and traditional media
2. The reliability of social media in comparison to that of conventional media
3. How traditional marketing compares to social media marketing for e-business
Dissertation Framework
This section summarises the various sections of the dissertation.
1. Introduction: The chapter introduces the different elements of the field of study. It defines critical phrases in this study such as social media, social media marketing, e-business, OSM, and ESM. It also states the research question and objectives that the research aims at accomplishing.
2. Literature Review: the chapter examines the different kinds of literature, which discusses theories by various researchers in regards to social media and e-business.
3. Methodology: A mixed method of research will be used with both qualitative and quantitative methods. Books, research papers and reports from credible organisations and government bodies along with structured questionnaires were used in this study.
4. Results: The chapter discusses the significant findings of the study.
5. Conclusion: Analyses the key points identified in all other chapters of this study to give an apt conclusion
2 Chapter Two: Literature review
This chapter sets an academic background for the study by examining previous studies and theories on social media and e-commerce. The literature is divided into primary topics under which subtopics are discussed.
E-Commerce
E-commerce's growth is embedded in the growth of web-based technologies. Technologies on automation and delegation have led to massive growth in the figure of e-businesses as they have made conducting business online more comfortable (Vulkan, 2003, p. 2). E-commerce is the future of business in the world as it combines the traditional principles of doing business with online technologies. Vulkan (2003) notes that B2B, B2C, web-based procurement systems and online auctions are some of the superior forms of traditional business that leads to the suggestion that e-commerce is a prominent feature of modern business (p. 1). New technologies such as shopping bots and bidding elves shape the future of electronic commerce as they make these naturally tedious processes simple. These technologies allow for business to be carried out with minimum effort and high accuracy.
E-commerce trends suggest that online business is becoming a popular business model. In 2016, 30% the total sales in the US and EU were credited to electronic commerce and related transactions. According to Statista.com (2018), the percentage of retail e-commerce in comparison to the traditional retail has an upward trend in all 13 countries examined. Increase in online transactions primarily in developed economies is an indication that the future of the industry is bright as more people accept online commerce as an option to the traditional business which is reflected in Figure 2.
Role of Internet
E-commerce is highly dependent on the Internet, and therefore, penetration of the later is essential in the development and performance of electronic businesses. Internet penetration in the United Kingdom has grown in the past eighteen years from 30% in 2000 to 88% in 2017 for adults (Statista.com| Internet penetration of households in the UK, 2018). It is also estimated that by 2022, Internet users figure will surpass 56 million users per month, a rise by 5 million from the approximately 53 million users in 2015 (Statista.com| Forecast of Internet users in UK, 2018).
The increased diffusion and adoption of the Internet in the UK and other developed countries such as the United States and Japan translates into an upsurge in figures of people involved in the e-commerce business as either merchants or clients. A high number of persons participating in e-commerce means that many people are willing to invest in the business because of the increased number of clients. An increase in the number of tech-savvy persons increases the number of potential clients for online companies.
Improvements and innovations in Internet technologies are essential for the development of e-commerce. Future of e-business is dependent on significant innovations in Internet technologies which will push it beyond what is normal today. What is normal today in e-commerce was unthinkable in the early 1990s (Chiravuri and Nazareth, 2001). For example, the thought of watching a film in England that is on a server hosted in China was unthinkable. Innovation in computer technologies is still very young, and therefore people should expect more from the technology.
Web 1.0 and 2.0
Web 1.0 is an old online platform that use to operate on a "one-to-many basis." Therefore, that data could be moved using several ways but with interaction with the data was limited. Corporations, firms, and persons could, therefore, be able to communicate via one-way communication line over the Internet. Organisations, therefore, created "brochureware" which was information presented for people to read without responding to the message.
The expansion of web 2.0 was done through the growth of web 1.0 to be more responsive and user-friendly. According to Manzoor (2010), web 2.0 is the 2nd edition of the www which is fixated on allowing different users to cooperate and distribute data on the web in means such as social media and others (p. 64). The advancement of web 1.0 to web 2.0 was aimed at developing an organised, dynamic system that promotes communication through open sharing of information.
The semantic web is a phrase that is often used interchangeably with web 2.0 despite the two having different meanings. With semantic web, the content is hardly understandable by computers as it is designed for human reading. Most of the current websites can be classified as semantic websites as they use expressive language to describe information. The growth of semantic websites has been slow because of the technical requirement to design them. Manzoor (2010) notes that the learning curve to be able to operate with semantic websites is too steep and discouraging for many people to run such websites.
E-Commerce 2.0
The concept of e-business 2.0 gets its name from Internet 2.0. In comparison to the ordinary e-commerce model, e-commerce 2.0 is aimed at making online business more interactive, user-friendly and inventive. According to Manzoor (2010), e-business is founded on several principles. The principles include a. Augmented availability of products, b. Identification of target niche c. Customer is prioritised with content created to convince clients, d. Making the process of shopping easy and fun, e. good integration and collaboration ensuring uninterrupted user access. Examples of online companies that are based on e-commerce 2.0 include E-Bay, Amazon and the Chinese Alibaba.
E-Business Model
E-Commerce Business Model
The phrase "business model" has several definitions depending on how one intends to use it. Web-based business model is a plan of action that means to use unique characteristics of the Internet. Most of the modern web-based business models rose alongside the Internet and advancement of web-based business application (Simonse 2014, p. 12). B2B, B2C, C2C, and B2G are the most recognisable web-based business models which are heavily reliant on web-based channels such as social media to market their products.
There are numerous kinds of online business models. Guercini( 2014) characterised nine kinds of online business models which are suitable for different business scenarios. From the purpose of the plan of action segments, Moyon and Lecocq (2014) outlined eight models. They are content supplier, agent, sharing framework, esteem web integrator, simulated system group, and undertaking/government incorporation. Online-only and businesses that mix online and traditional operations are likewise two sorts of electronic commerce models in the online market. Online-only organisations are the organisations that only offer items on the web, for example, Amazon. Brick-and-click organisations have both on the web and physical channels to offer items with a good example being Wal-Mart.
The more significant part of research talks about the kinds of Internet business layout, while the philosophy of online business displays are slightly examined. From the viewpoint of Leong, et al. (2016), online business demonstrate cosmology is a device to make a collective, official, and unequivocal archetypal, that show parts of the model. Plan of action metaphysics, e3 value cosmology, REA Ontology and the Service Ontology are a few ontologies on web-based business paradigms. As indicated by Tuten and Mintu-Wimsatt (2018, p. 2), plan of action cosmology has more advantages and favourable circumstances in the offer-and client related region. In this way, we select the online business show metaphysics as our exploration hypothesis to distinguish the web-based social networking impacts.
According to Ovans (2015), defines business models as the rationale of the way a firm makes, supplies and makes value in financial, economic, social and other contexts. There are five main business models in e-commerce which define the way the entities in web-based businesses plan and actualise their money-making activities.
Drop Shipping Model
Drop shipping online business model allows the merchant to open a storefront where they offer products and services to clients, then let suppliers deliver the products to the client. In this model, the merchant is saved from managing stock and dealing with packaging and delivery of the products. The major drawback of this e-business model is that the merchant does not control product quality, delivery of products and other issues that may arise from the ordering time to delivery (Park, 2017). Drop shipping models require less financial commitment to start and operate as one does not own the products that they sell to the general public.
Wholesaling and Warehousing
Wholesaling model of online business require huge initial capital to start and operate. Here, the merchant employs different selling tactics to sell in bulk and also in units but at different prices. Wholesale prices are different from retail prices with the latter being higher to promote bulk buying (Knowler, 2014). The merchant handles more tasks in this model of business which include warehousing, delivery and keeping track of the stock.
Private Labelling and Manufacturing
This model of online business is based on a trader having a good business idea but no resources to make a production plant. The trader designs the products, sends prototypes to offsite manufacturers who then develop the products and ship them to clients, third party sellers such as Amazon and other third-party companies selling their products (Tomas Gomez‐Arias and Bello‐Acebron, 2008). This model of business is cheap to establish and it is a good method for trying new products in the market before establishing production plant for the company.
White Labelling
White labelling involves choosing a product that has already attained success in the market for another company and then design your own package, label and market it under your brand. This model is mainly popular in beauty products as most of the formulations are bought in bulk and then repackaged (Gainor, 2014). A demerit of this system is the fluctuations in demand of a product as once the product is bought, you cannot return it.
Subscription-based
Subscription based model is one of the most used in online business for both goods and services. Here, an arrangement between the client and the trader see the later deliver a specific product at a specific and regular interval (McCarthy and Fader, 2017). Subscription companies have relatively predictable income as long as they keep their customers through high quality products and services.
Trust in E-commerce
Put stock in alludes to having certainty or dependence on a particular element. At the point when organisations take part in dependable and legitimate business forms, they effectively win the trust of their clients. Actualising sound business techniques and models and clinging to corporate social duty commitments likewise enable organisations to get the trust of their clients. The absence of trust in an organisation inspires clients to look for the administrations and results of adversary business substances. Aforementioned implies effective organisations fabricate their systems on trust and the working of customer dependability.
The buyer put stock in alludes to the capacity of clients to believe in the items and administrations of an organisation and its business exercises. Customers create confide in an organisation when they are persuaded that it has the assets, abilities, and quality of executing the required principles of business tasks (Fang, et al., 2014). For example, securing information that is transmitted crosswise over web-based business correspondence or transmission stages. Shopper trust is critical for private companies since it characterises the capacity of an organisation to hold its clients and keep up development in deals and execution in the advertising. Purchaser trust likewise enables private companies to contend positively with huge firms, which include those that have officially established themselves inside the market.
Trust is an essential aspect of all online business stages. Clients' trust in online business is about business-to-buyer web-based business. The level of shoppers' trust on small-scale online organisations relies upon the buyers' involvement with the speciality units. The measure of data produced by individual online organisations about themselves impacts shoppers decision to buying their items (Sherchan, Nepal, and Paris 2013,p.12). Different components affecting the level of shoppers' trust on online traders incorporate the security and nature of the particular organisations' sites, the measure of time and space distributed for every exchange, and vulnerabilities and exchange dangers affirmations (Benlian et al., 2012). Small online organisations gamble on losing existing and potential clients to large and well-established organisations with regards to these variables.
The fast improvement of e-organizations is attributable to good performance based on previous experience, especially on the connection between e-shoppers and purchasers, to another level. Throughout the years, analysts have built up various constructs addressing customers' trust in the e-organizations stage (Chang and Cho, 2017). They have illustrated the properties of online trust as dispositional, institutional, and relational. The dispositional property of trust alludes to the degree at which a buyer exhibits the capacity and will to rely upon online merchants for their shopping needs. Then again, the institutional property of confidence alludes to the buyers' trust on the Internet structure (Peng & Zhang, 2010). The Internet is the framework to which buyers must show the capacity to trust. When they confide in the Internet stage of buying and selling and its highlights, to confide in web-based shopping stages is inescapable. The relational property of stock in alludes to the shoppers' certainty or trustworthiness in the capacity and expectations of online shoppers.
Social Media
Throughout the years, numerous authors have clarified what Social media is from their perspective. Williamson and Parolin (2013) describe social networks as groups of online-based apps that operate according to the definitions and makes of Web 2.0, which permit the making and distribution of client-targeted content. Social media element can contain content, sound, video, and systems. The content denoted the primary online networking, chiefly as web journals. Web journals are composed of substance on the site which is made by the client. These may incorporate everyday journal synopses, sound and furthermore visual material like appended recordings and pictures. When Web 2.0 exploded with the development and change in innovative devices and web-based social networking, development of content for use in the platforms also significantly increased. Youths and young adults are increasingly the producers and consumers of social media content. Before long, there were a lot of social organisations that were formed, and the majority subscribed to them. Individuals were in awe of the way that communication amongst themselves and their companions or family had turned out to be so natural. Leong et al. (2016) say that social media networking has become essential in shopper's behaviour including decision-making, acquiring information on a product, examination of the information, making a choice, buy conduct, and post-buy communication and assessment. The improvement of web-based social networking has profoundly affected the way customer associations speak with their groups of onlookers. Benlian et al. (2012) note that the diminishment in the measure of conventional media and an expansion in the measure of advanced and online networking throughout the most recent quite a while. Aforementioned is the reason we see a ton of online intuitiveness with associations and its buyer base.
Media utilise electronic and portable advancements to make brilliant stages through which groups and individuals co-make, talk about, share and change client produced material. These media speak to the wonder of electronic media and furthermore the one that is most impacted by an undertakings deals, notoriety and endurance (Abeza, et al., 2015).
