Impact of Social Media on Business

Paper Topic Evolution of Digital Economy: Social Ecommerce 

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Impact of Social Media on Business

Social media platforms have turned the world into a global community. Twitter, Facebook, and Instagram, for example, have users across all age groups as well as business enterprises that use them to meet certain ends. The platforms facilitate users to post pictures, videos, and virtually any other media format to convey information. Over the past few years, businesses have embraced it as a means to pursue business goals, as will be outlined in this section.

The main impact of social media on business is the improved ease of marketing (Siddiqui & Singh 2016). It is beneficial for internet-based retailers in this regard. They can partner with social media firms to put up ads for their products on a platform interface. Millions of customers can access information about brands, engage with their favorite product manufacturers concerning product use, availability, and point of retail within a short time. They can engage their users with interactive advertisements that can be tailor-made for different target consumers as directed by their marketing teams. This way, they can access a more full pool of consumers and generate more publicity and attention for their products. Besides, some social media platforms have features or properties that can make a business’ appeal explode overnight. For instance, the trending feature on Twitter has the capability of transforming a brand’s publicity from regional to global.

Another impact of social media on business is by enabling firms easy access to feedback regarding their product. They can make use of particular information given by social media users regarding their product performance and general suitability or general information such as the number of likes or dislikes it has garnered over a given time. Using this information, a business can tweak its product to appeal to its consumer base more. Also, a firm can obtain essential information about their product. For instance, a product aimed for teenagers may end up appealing to children more, perhaps due to seasonal changes. This information may be reflected on social media platforms by analyzing relevant data as well as the type of social media users visiting their site. Besides, it may enable a firm to determine which factors lead to an increase in the use of their product. All this feedback can be employed by an ambitious firm to increase its consumer base.

The other way that social media influences business is by improving the ease of networking. Qualified job seekers can use the platform, LinkedIn, to connect with potential employers. A firm can obtain expert advice through social media which acts as a link between the firm and the resource person. Also, firms can use social media to showcase the firm’s activities towards meeting corporate responsibility objectives. Such information can be broadcast to shareholders and other stakeholders. A firm can announce impending plans such as mergers with other firms or new countries where it aims to expand into the benefit of the general public. It can use social media to announce its performance for a specific accounting period if required by law to supply such information to the public.

Effects of Information Systems on Social Commerce

An information system is a framework that organizes raw data into functional units that facilitate decision making within a business (Baghdadi, 2016). The system can store this data for future retrieval, which it subsequently provides to other users. For a social, commerce centered firm to achieve its purpose of online product promotion and sales, it must manipulate the data it receives to obtain valuable information as it aims to sharpen its focus in a particular market. Online retail platforms are the most significant users of information systems, as will be discussed herein.

Information systems are useful to Social commerce because they manage and operate online markets, eliminating the need for physical retailing. Online marketing spaces allow purchases to be made from internet-based retailers at the click of a button. The client’s data is already in the hands of the online vendor, who delivers the product purchased afterward. The entire business methodology just described relies on information systems to collect, accumulate, interact with customers, and offer a product. It is the business model adopted by firms such as Amazon and eBay. Therefore, information systems make social commerce possible. The company with the best-developed information systems is better placed than the rest of its sector. As earlier stated, the more conventional way of doing business that employed human interaction has been eclipsed by social commerce, which spends less on labor, warehousing, and takes on less business risk.

Information systems facilitate social commerce users that require storing user data on their orders to markedly improve their sales. Most social commerce firms rely on the interaction they have developed with their consumers over time to gauge appropriate products that they may be seeking to buy. Amazon, which is one of the world’s leading social commerce firms, relies heavily on its accumulated user data to generate more sales. Sixty-six percent of Amazon’s sales are attributed to repurchases by former customers (Yeon, Park, & Lee 2019). Amazon makes about 20% of its sales volume from generating customer-specific ads and advertising a frequently complimentarily bought product to a recent purchaser. The firm must keep a vast amount of customer data that they use for tailor-made advertising, which is facilitated by information systems.

Competitive uses of Social Commerce

Social commerce is the use of online social platforms to facilitate e-commerce. It can be a way to send customer feedback to an online vendor or to provide a platform for the actual trading of goods online, after which the online retailer can make arrangements on how the product will reach the consumer once the payment has been processed (Wu & Li 2018). E-commerce firms also use information obtained from an individual’s social media to generate customer-specific ads.

A social commerce firm can use its delivery dependability as a competitive tool. The margin for error is minimal as the buyer can always report inefficiency to other prospective users through social media platforms, which is detrimental to the firm. Firms such as Amazon Prime have to ensure they have accurate information concerning people’s residences, which they must obtain from the customers. It also has to develop a well-coordinated delivery branch or outsource a specialized logistics firm that will ensure its products reach their consumers. A firm that intends to stand out from the rest will check the orders carefully to ensure the deliveries made are on time, the right quantity, and as requested by the consumer. It will translate into positive social media ratings that will, in turn, generate sales.

Another competitive use of social firms lies in the app or website from which consumers access their products. The level of user-friendliness matters a lot to consumers. They often wish to search through all available brands of a specific product, before making a decision. Sometimes, an e-commerce firm may select to put up their product on social media with an explicit invitation to sell attached. The digital vendor can reach more consumers through social media and on a platform that most users understand better. Social media websites also come with added credibility that is not present for a person using their site to try and sell a product, especially if the site in question is relatively new to users.

Advantages and Challenges off Social commerce

One advantage of social commerce is that it is an avenue for two-way feedback between consumers and the firm. A firm can obtain information through metrics such as the number of likes and dislikes, the number of users visiting their sites, and detailed information from a product review by the customers. Consumers can get value shop services and obtain product advisory information and support from the online vendor. Complaints can also be posted on the seller’s social media firms entities. It is crucial information to a vendor who wishes to develop a long lasting relationship with the consumer. This way, they can guarantee further sales.

Another advantage of social commerce is that it gives the company advertising through its greater customer reach. Users of social media apps can share a product or company’s information with other users which can spread into a network of users invested in the information being shared. The business can reach a global audience within a brief period starting from any time of level including startup. The expansion of the firm can be achieved much more quickly. The firm involved can advertise aggressively in a country it is just about to venture into through its social media platforms and attain a level of cognitive legitimacy before it physically moves into the state.

Challenges facing social commerce include the violation of user privacy rights (Chrimes, Boardman, & Henninger 2019). Most social media sites will keep the data on what information one searched or clicked on during a visit for future use. It constitutes a breach of trust between the two parties as the users often have not consented to the storage of their data on social media or the advertiser’s information systems. People afterward often notice a rise in adverts concerning a product they recently searched on a site such as Amazon Prime. Recently, it has become a concern for many shoppers who have felt ta duty to protect their data from profit-seeking social media firms who sometimes sell users data to parties with hidden motives.

Another challenge facing social commerce is the cognitive responsibility it places on buyers. Before making a purchase, one is presented with a wide selection of products to choose from. After making a decision, the buyer has to understand a transaction process that is sometimes long and winding. They have to enter several types of information, a time-consuming process. All through this process, the buyer can change their mind at any time. The use of a social media app such as Pinterest to sell goods may be unfamiliar to consumers who may choose to leave a transaction incomplete or what is commonly termed as abandoning a “shopping cart.” Social commerce and e-commerce sites may record a lower-than-expected conversion rate for their firm’s products.

Reference

Baghdadi, Y. (2016). A framework for social commerce design. Information Systems, 60, 95-113.

Chrimes, C., Boardman, R., & Henninger, C. E. (2019). The Challenges and Future Opportunities of Social Commerce. In Social Commerce (pp. 255-272). Palgrave Macmillan, Cham.

Siddiqui, S., & Singh, T. (2016). Social media its impact with positive and negative aspects. International Journal of Computer Applications Technology and Research, 5(2), 71-75.

Wu, Y. L., & Li, E. Y. (2018). Marketing mix, customer value, and customer loyalty in social commerce. Internet Research.

Yeon, J., Park, I., & Lee, D. (2019). What creates trust and who gets loyalty in social commerce?. Journal of Retailing and Consumer Services, 50, 138-144.