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The Virtual Souq

Private Sector Magazine


The growing popularity of social network websites, such as Facebook and Twitter, has impacted our world driving social, political, and economic changes. Since businesses have also reaped the benefits from the continued growth of social media, Hayfa Abdulrahman Ahmed, ICT Research Manager, Qatar Science & Technology Park (QSTP), presents her study on the regional utilization of social commerce.

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Today, the term “social commerce” is widely used to describe commercial activities mediated by social media. Such activities range from social media advertising, to user recommendation, and up to direct sales through social network websites. As perceived by Paul Marsden in his book “Social Commerce: Monetizing Social Media” (2010), social commerce is a way of monetizing social media by the application of one of the following two strategies:

  • Connecting people where they usually buy
  • Guiding people to buy where they usually connect

According to Booz & Co, sales of goods through online social networks are projected to reach USD 30 billion globally by 2015.The uptrend is expected to continue with the widespread use of Smartphones. The GCC countries are amongst the top countries in the world in Smartphone penetration. The overall Smartphone penetration in Qatar was estimated to be 75% in 2011. Similarly, high penetration exists in other Gulf countries as well. Apparently, Smartphones have contributed to the increase in time spent on social media as well as boosted online shopping. According to a study by Google, around 40% of users in the UAE use their Smartphones to make online purchases.

Social commerce solutions are commonly organized into one of the following six distinct dimensions:

  • Social shopping is a toolset which allows people to share the act of online shopping including group buying, co-browsing, group gifting, and similar.
  • Ratings and reviews provide independent third-party evaluation of a product or a service, with an opportunity for viewers to contribute and discuss.
  • Recommendations and referrals are personalized endorsements of products and services often rewarding referrers for their efforts.
  • Social media optimization is designed to attract visitors to websites’ content by promoting and publicizing it through social media. Typically, it involves seeding marketing collateral to major social media platforms.
  • Social applications and ads represent a branded content in social media in the form of paid advertisements or social applications.
  • Forums and community platforms connect people with each other and various businesses in a moderated environment.

Entrepreneurs in the Gulf region have begun to recognize social media as an attractive marketing and sales channel. Actually, this utilization started years back when people used discussion forums to introduce and sell their products. In these days, the most popular chocolate or accessories stores in the Gulf exist only virtually using dedicated accounts on Instagram or Twitter.

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In fact, the region struggled for a long period to adopt the online business which is mainly due to trust issues.

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According to a survey study I conducted this year at Qatar University, consumers in the Gulf region preferred shopping through social network websites to regular online shopping, with the exception of popular international websites like Amazon.

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The Trust

We can conclude that the integration of social media networking with e-commerce obviously contributed to the increased reliability of online shopping and, thus, attracted many customers. The questions is how this change was derived.

In my study, I tried to investigate the factors which influence the Gulf consumers’ attitude towards social commerce. The focus of the study was on utilizing existing social media networks for direct sales and service offerings. The results showed that trust was the major factor that encouraged shopping through social media. This sounds natural due to the collective nature of social media.

Trust is essentially established through the interactions between members of the network. It then expands in a ripple effect manner as the sellers get more “followers” and more “likes”.

I once asked a friend who regularly shops from social media websites, “What makes you trust this way of shopping?” Her answer was that once she saw all the comments of people who had ordered a product and had given a positive feedback about it, she just did what others did or bought what others were buying. Perceptibly, the influence factor of social media is a key in this kind of business interactions since it is all about learning from the experience and knowledge of people we know and trust.

Besides the community centered experience, trust is built around social media shopping by offering different payment methods. Many people were reluctant to use their debit or credit cards in online transactions. For that reason, online sellers today gain the trust of consumers by offering options for direct bank transfers. Such options are very common in the area of social commerce and are widely accepted by the regional shoppers.

Another factor, which was found to be influential among the GCC consumers. while shopping through social media, is usefulness. Consumers are always looking for more convenient, but yet economic ways, to purchase products and consume services. The aggregation of sellers created a sort of “virtual shopping malls” which provide a variety of products with easy and quick purchase and delivery options. The availability of customized products is also increasing among social media sellers and is boosted by the enhanced two-way communication between sellers and buyers. Examples include women entrepreneurs who work from home or the sale of custom-designed cakes or accessories customized with the buyers’ names.

The research also found that people, who believe that social network websites are enjoyable, are more likely to buy products through this channel. In addition to the joy of sharing and discussing, the sellers, for example, add some enjoyment factors like holding competitions or sending free gift items with orders above a certain value.

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A Piece of Advice

Having understood what motivates customers towards buying through social media networks, we can outline the following advice for people who are already engaged in social commerce or are interested in starting their business through social media:

  • Crave to be different: You have to think carefully about what will make you stand out in the huge crowd of sellers which are present within social media networks. Frequent online shoppers often look for things that are not available offline or lower priced items. You don’t necessarily need to come out with differentiated products, but rather an innovative marketing mix. Remember that you will be able to cut the renting cost which will allow you to offer competitive prices compared to regular shops.
  • Build reputation: Social commerce is communal in nature. Sellers usually attract new customers through referrals. While it is easy to build a customer base by offering quality products and ensuring timely fulfillment of orders, it is also easy to lose as many customers with a single mistake. You have to be careful because upset consumers can easily share their negative experience with the rest of the group. A few negative comments on your social media network can influence the intentions of current or potential customers.
  • Make life easy: Social media shoppers look for convenience, so make sure that the order, payment, and delivery methods you adopt are easy for them. Invest a lot of efforts to handle the risks of payment and delivery processes in order to increase the security of the customers’ shopping experiences. For example, allowing bank transfer payments would be an attractive option for those who don’t have credit cards or are afraid to use them for online transactions.
  • Provide a joyful experience: Social network websites can be potentially addictive. Just like with the classic addiction, the engagement within these websites leads to a favourable change in emotional states. Many people find spending time on social media a pleasant experience. Those people are more likely to engage in social media shopping. As a seller, you need to make the shopping experience as joyful as possible. Thus, involve your customers, share their positive feedback with others or offer free stuff or gifts. Even a small advice regarding your offering could count.

In summary, customers in the GCC were generally found to have a positive attitude towards social media shopping. Therefore, chances are open for talented people to sell their work through social media channels skipping much of the complication of a standard business setup. It can also be a starting point for entrepreneurs who plan to grow bigger to initially test customers demand.

Businesses likewise cannot ignore the trend. Companies need to establish or revisit their social media strategy and work on increasing their social media presence. Social media allows sellers to gain insights into a customer’s preferences, which could be used to promote community sharing offerings. So, thoughts should be made for the increased customer involvement or even for the consideration of direct sales through social network websites.

Social media has definitely changed the rules of the game for e-commerce. Social commerce allows both individual sellers and companies to personalize and enhance the shopping experience and create a new demand by generating various techniques.

 

About the author:

Hayfa Abdulrahman Ahmed is the ICT Research Manager at Qatar Science & Technology Park (QSTP). She is a certified Business Analyst and Project Management Professional and holds a Bachelor of Science in Computer Sciences and a Masters of Business Administration (MBA) from Qatar University. Hayfa can be contacted at haahmed@qstp.org.qa.

This article was published in Private Sector Magazine.

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