The Effects Of Social Networks On E-Commerce - Dissertation Example

? The effects of social networks on e-commerce TABLE OF CONTENTS 2 0 INTRODUCTION 3 2.0 LITERATUREREVIEW 4 2.1 Social media revolution 4 2.2 Related work 6 2.3 Elements of Uncertainty 7 3.0 METHODOLOGY 7 4.0 RESULT 8 4.1 Demographics/ Participants: 8 4.2 Facebook 8 4.3 Twitter 8 4.4 Fashion blogs & “Deal-a-Day” Websites 8 5.0 DISCUSSION 9 6.0 CONCLUSION 9 7.0 BIBLIOGRAPHY 10 ABSTRACT The impact of social networks has been exceedingly significant on the way communication between internet users is conducted in everyday life. Over the past years, the internet was used by majority of people as a medium for interaction and making fun by engaging in activities such as online gaming. With numerous improvements made on the internet, there has been an ever rising increase in trust in social links among the users. For this reason, online marketplaces have been augmented by many online business people as a way of developing and building honest and trust in their transactions with their partners as well as maximizing customer satisfactions. The outcome is the growth in the size of sales over the internet leading to a shift in demand. Through social links, customers can chart through forums with their clients, exchange useful business information concerning a particular company or product. Therefore, customers have a better bargaining power. This paper gives a deep exploration into how social media instruments affects the frequent purchasing behaviors and business transaction activities, notwithstanding the implications on the demand for products in the online-fashion industry. Like the trends in fashions, the tools of social media are innovative yet unpredictable because they are getting utilized and improved each and every time. The fashion industry is getting transformed by facets that are more related as a result of movement of more professionals of fashion in the online media, for this case the social media. The accessibility into the industry by has been made easy by these tools thus involving the general public and the entire customers of the fashion industry updated on the current fashion trends. Specifically this study explains the effects of social media on the behaviors of demand and customer inflow into the market. 1.0 INTRODUCTION In the recent years, the way people communicate with each other and share information has been revolutionized by social media. Initially the social networks were being used in large numbers by the teenagers for making new friends as well as keeping in touch with old ones. However, the situation has changed with now the focus being directed to online commerce for the purpose of generating solid and reliable revenues1. The e-mail which was earlier seen as the only method of communication electronically has been out-fashioned by the social media which is currently leaving its mark in the e-commerce, and the online fashion industry is not an exception. The fashion industry traces its roots to the traditional and old business practices hence making it lag behind in adopting new technologies. Almost everything done in the industry is more dependent on human labor rather than machines, beginning with designs sketches of designs to the process of purchasing. In most situations, the customers were the determiners of what kind of stock was to be put in stock because of their different tastes and preferences. However, with the existence of fast-acting technologies, fashion brands no longer seat back and wait for their customers to meet their needs. Social media is a to-way form of media under which users develop personal identities through dialogue and self-presentation.2 This has led to the social media receiving immense attention from consumers who go shopping online, specifically the fashion industry consumers. The global platforms such Tweeter, LinkedIn and Facebook creates room for designers to blog and keep their profiles updated with the aim of molding their brands and personalities on real-time basis. The interaction between consumers and the designers has transformed the structure of the fashion industry through the incorporation of feedback and suggestions that can help improve on the art of fashion. Products can be viewed online by interested customers as they are kept updated. The use of social media by designers to post commercials and fashion shows work for a voice for the brand hence a better demand. 2.0 LITERATURE REVIEW 2.1 Social media revolution Apparel brands and retailers, that have immensely utilized their time and resources to create and efficiently maintain progressive social media, are getting huge benefits. The use of the social media by brands and retailers has made it possible to further customer loyalty, increase the brand awareness, disperse the advertising messages, create communities online, enhance the customer communication and boost sales3. Social media is credited with creation of relationships between customers and the brand. The relationship, help to enhance purchase and brand awareness by word of mouth, Social media is a vital tool that helps the retailers to put their best, in a consumer world that is both conscious and informed. Whenever a consumer engages in online shopping, they consistently look to purchase their products from sites that they fully trust. Social media is capable of introducing elements which are new, to make the online shopping experience even more exciting. Social media can help create more revenue. The retailers and brands products are made accessible to many potential customers in a familiar environment. 4Through the social media, retailers and brands are able to reach thousands of targeted consumers. Social media presents a customizable and user friendly interface that creates an efficient platform for reaching out to a large audience5. This expands business in an environment that is both interactive and friendly. According to the e-Consultancy agency, blogs and the social media are the fourth most popular online activitie.10 Percent of total time spent online, is spent on the social media. Currently the high growth in business requires the presence of Social media. Statistically Facebook is the leading social network today6. Facebook has hit an impressive user mark of more than 500 million users. Many new users’ sign in everyday, and approximately seven hundred billion minutes are used on Facebook per month. Two billion videos are watched each day on YouTube; many more people upload videos every day. Twitter has not been left out, each month Twitter attracts more than 190million visitors, sixty five million tweets are created each day. Due to the many hours spent on the social media, retailers and the apparel brands are given an opportunity to extensively promote themselves and their customer. A report by the ExcatTarget Company revealed that, companies that are active on twitter are able to reach approximately 11.5 consumers in the U.S market. Most twitter users in the U.S follow at least one company or brand on twitter. Social media will engage customers in positions that they naturally spend their time on. Recent polls by Nielsen Company indicated that, peer reviews and ratings are highly trusted by eighty nine percent of consumers, more than company advertisements. Bloggers and average consumers have made a great impact on providing consumer advice on different products7. The influence the social media has on apparel industries can currently be demonstrated by the recent launch of a logo by Gap Company. Days after unveiling the new logo, the company disposed it after many customers posted on the social media in favor of the original logo. Customer’s comments suggested that, the original logo was the best logo the company had ever had in twenty years. With the constant growth of the social media, most business cannot afford to ignore the impact it has in marketing. Currently there is a new social media site every month that requires individuals to join. Social media has gone way too far in building a new level of connectedness. Connections through the social media have helped in building of communities. James Andrew, is a managing partner in the Atlanta-based social media, he suggests that brands and retailers should put more effort in going where the retailers are8. According to him every brand and retailer should utilize, the social media, he says that opting out of the social media can be a very detrimental act towards the retailer and brand. Consumers currently want their voices heard; it is only through the social media that a platform is created where the consumers can actually be heard. The social web is very essential since it acts as an equalizer between some of the large brands with the budget and also the small brands. The social media is affordable and mandatory to help stay in competition in today’s global market. The current trend on popularity and the uptake of the retail brands shows no signs of slowing down. As a matter of fact, followings for some retailers and brands have doubled in the past one year. According to the e-Digital research, a provider of digital market research, Facebook is the common site that is used by retailers to connect with the consumers. Retailers that deal with fashion have the most presence in the social media platform 9.Social media on large scales have the ability to connect people. This is very efficient as it promotes information sharing. Through the social media chances of market exploitation are reduced. Product information is made plentiful. The social media has been utilized by consumers increasingly to communicate on different issues. The consumer is able to express their idea and therefore, it is vital that retailers dominate the social media. Through the social media interpersonal communication and the way apparel products are marketed and sold is reshaped. For example the fashion retail brands engage in face booking, tweeting and blogging, updating profiles in an attempt of maintaining updated with time global platform. The retailers, designers and fashion houses do all this to establish a relationship, with customers that are experienced with technology, and crave for more media. Communication is created through social media practices that provide formal and visible transparent connections. Connections link customers and brands together. Customers through the use of the social media become participants rather than viewers; this participation is what defines engagement in the context of the social media use. The year 2009, saw the re-launch of Facebook page platform. The new page platform has more options for business to upgrade their brand. The new page is a company page which allows fans to post messages video and photos. The presence of a company tab makes it possible to display the company information, regarding sales, promotion and trailers for new advertisements, in a simple and efficient way. A Facebook user can be able to become a fan by simply liking the page after developing a personal interest in what has been brought to the market. After liking the page, the company gains direct access to the fan. The company can then be able to send messages, updates using the news feed on the user’s homepage. Twitter is in so many ways similar to Facebook. When a user follows a particular company, the homepage of the user become refreshed whenever the company sends updates. The power of the social media can be demonstrated by a fashion round event held in 2009.So many people clicked to live stream a fashion show by Alexander McQueen’s, after a tweet by Lady Gaga. Due to the huge pressure by twitter users, the site server crashed. Social media especially twitter is an efficient avenue where customers can be reached. One of its incredible advantages is that it is free and can be efficiently used as a voice for any brand. Creativity to reach audiences has been utilized in various ways for example “Tweeter Writer” was coined by Kate Speed. This is a combination of “Twitter” and “Typewriter”. The typewriter was put in Kate spade store. Customers were convinced to type messages that they would like to see on Kate’s twitter page. To promote it’s affordable and yet luxurious fashions designs, luxury brand coach carried out an extensive social campaign, this was after its launch in 2009.Whenever a Facebook fan visited their store, they were given a present. A small piece of code was added to the Lil Bee site-which is a fashion and design blog, the code act as a discovery tool. The site has also created game for users, this help develop the poppy image through visits to twitter .By using Twitter; the consumers can be able to broadcast messages to the brand. The senior vice President of global web and digital media said that, the growth of poppies in the social media can be considered as a homerun. Currently the fashion brands are engaging in a very interesting way; as a result of this many people should find platforms for their brands. In the past blogs were popular in advertisements, Facebook, YouTube and Twitter followed suit. Currently the most popular social media trends are the upcoming deal a day websites. These are for example Group on, living social and other exclusive sites for example GiltGroupe.com. Many businesses are now turning to these sites in effort s to promote their products. Through the use of the social media, customers have the feeling that they are part of an extended family. Social media creates an opportunity for interaction, this helps to deepen the connection between the brand and customers. The internet has contributed so much in changing the fashion industry10. Purchase of products has been made faster and very easier. Open communication has made it possible for the customers to share their ideas with a brand or retailer. To keep up with the ever changing trends in fashion, the use of the social media is very vital. 2.2 Related work There have been a lot of researches done in the field of sociology with the aim of examining how social structures have adversely impacted on economic transactions. Mark Granovetter defined embeddedness as a theory which argues that most economic activities between individuals is very dependent on their social relationship so much that evaluating behavior on economic terms would highly be misleading. There has also been an economic relationship in economic transactions as illustrated by Tong which showed that there exist embeddedness in social relationships and organizational structures11. Increase in the small world effect has also been seen to highly link to the increase probability of increased interaction between business partners outside the commonly known neighborhood. A lot of literature has also looked into the issues of structures and other properties that form the social networks. These include their degree of distributions, sizes, M averages, clustering coefficients and density of these social networks. A good hypothesis to demonstrate this is the Milligram hypothesis which has shown that small-world networks adhere to the power-law scaling effect. Due to the explosion of the popularity of social networks today, it has become an important are of study. A study of the evolution of Yahoo! And Flickr by Kumar et al. shows that there exists a strong component of connection among the entire network with 360 social networks. There also been research on other social networks like cyWorld, Orkut and MySpace, You Tube, Facebook and twitter among other sites all these social networks have scale-free properties. Information gathered from all these sites can be exploited in order to come up with many areas that further research needs to be done in order to improve the marketing campaigns for various firms. Social networks have also been used as a platform to defend the reputations of the systems through improving on the reliability of the reputation system. 2.3 Elements of Uncertainty Fashion brands faced a lot of challenges in trying to utilize the social media. This made the fashion brands among the last group to jump into the social media bandwagon. The fashion brands considered the social media to open; they were not willing to give other parties the chance to control their brands which had taken so many years to build. It was unclear as to how these brands would use the social media to effectively reach to their customers’ base. When one of the brands initiated the opportunity, other brands followed suit. Currently the fashion design is all over the social media. Many fashion brands are now using the social media in a creative and efficient way to reach their customers. Through engaging their online users, these brands have been able to promote their products efficiently. The fashion industry can be describe as very new to the social media, however most of these brands have been able to creatively look for ways by which they can build a long lasting relationship with the consumers. 3.0 METHODOLOGY A survey was conducted online via Facebook and e-mail with a target population of between ages 18-36 and above. This was probable through the use of an online survey program called Survey Monkey. It’s consisted of 14 multi-choice questions that only required 5 minutes to complete them. The main questions asked in the survey included the usage with main emphasis on Facebook and tweeter. Questions on whether on respondents use social media were asked. More emphasis is made on asking if they social media for retail promotions with the demographic information like gender and age. The specific identities of the respondents would however not be known and respondents would be anonymous. A follow up was however made to remind those respondents who had not respondents to the email in order to do so while at the same time thanking those who shave respondent. These remainders were sent out every five days with a deadline given out to speed up the process. Both males and females were interviewed with main focus targeting college and university students, young and experienced professionals. This is because they all fall between the age bracket of 18 – 36 years and above. The above people are consumers are all consumers of retail brands have extensive shopping experience. There was however a major limitation in this study on sample size that was used for undertaking the study. Despite having sent emails to more than 500 people, only a fraction of this respondent their emails. The sample size was therefore not large enough to be representative. This is a very useful however in giving a directional indication of the impact on social media in fashion industry. Two datasets will be relied upon in this analysis. The first dataset will be a large one that is provided by Overstock. The set consists of business and personal networks connectivity data with a total number of users of 431805. This set includes all the currently active users excluding all the members who have never made any transaction. This would include those users who are no longer active and the ones who are not using the online platform at all. The remaining data set consists of close to 10000 users whose profiles are downloaded from the Deal-a-Day online platform. The data gathering methodology is further described in this section of the paper. For this study to be successful, an empirical analysis of a large data set is carried out to find out the impacts of personal and business networks connectivity data on Overstock’s online marketplace. This will be possible by use of a crawler which gives specific feedback information on all the transactions that take place in a log format. This helps in monitoring the user satisfaction after the transaction has been undertaken. To get all these information, a download of all the 10000 users is made. This would include their individual feedback ratings on various transactions, their business ratings which are aggregated to include the positive feedback percentages. 4.0 RESULT The main objective of this study is to find out how social media would affect the volumes of sales of retail brands on the fashion industry. Of great interest are the major social media platforms like Facebook and Tweeter though other platforms like Deal-a-Day Websites and Fashion blogs are also mentioned. The study also tries to find out how social media outlets connect people to the various brand s and people them share the same liking and interests. 4.1 Demographics/ Participants: College/ university students, young professional and experienced professionals are the main participants in the study with the sample taken from various part of the country. Their average age ranges between 18- 36 and above. A total of 206 respondents took part in the survey with 29.6 % being males, 73.75 % females. 47.3% of the population was between the ages of 18-22, 51. 5% were between ages 23-26 while the remaining were above 26 years 4.2 Facebook Of the 206 participants 100% of them are Facebook users with 38% of those using Facebook using it for liking their various fashion brands? Many of the like the idea of using Facebook for brand advertisement since they are able to interact with various users allover the world. Many of whom have been tempted r convinced to buy products that are advertised on the social plat form. 4.3 Twitter Of the 206 participants 71.9% of them are Tweeter users with 35% of those using Facebook using it for liking their various fashion brands? Many of the like the idea of using Facebook for brand advertisement since they are able to interact with various users allover the world. Many of whom have been tempted r convinced to buy products that are advertised on the social plat form. 4.4 Fashion blogs & “Deal-a-Day” Websites Participants were also asked whether they also use other social media platforms like deal-a-day websites and fashion blogs. 28% acknowledged that they do read fashion blogs. More than 70% of these participant said that they do not read these websites. The same is the case for websites such as deal-a-day as more than 57% of them do not visit these sites. They however argued that if they have to visit the site, then they do so to purchase deals that are on offer. Its can the argued therefore that social sites greatly affect the consumption patterns for various brands. In a similar way like that eBay’s Feedback Forum, Deal-a-Day has its users that are the buyers and seller rated at the end of every transaction performed online. These ratings are then used in forming the reputation profile which contains all the feedback from the users. All the users of the online platform are then encouraged to form personal pages that can be used to post their own photos, list their own interests and hobbies. They can also use the same pages to post their fiends’ contacts together with their business contacts and lists. The main aim of this social networking component is used to form a network of both buyers and sellers in the fashion industry. The network helps to build a community which has buyers and sellers who have build trust in the system and build a reputation which is beyond reproach. The system comprises of two main components that is the Overstock’s reputation system and Deal-a-Day social network. Overstock’s reputation system is a feedback rating system which aggregated (-2 to +2). This forms the user’s “positive percentage” and “business rating” score. For all the transactions made by distinct partners, the business rating is used to calculate its total sum for all the averages made. All the non-negative transactions are made by using the positive rating percentages that each user has been engaged. There are also transaction summaries given by Deal-a-Day summaries which show what every user has done in the platform. This could include things like the total number of transactions that have been performed by various users. The percentages of repeated transactions among many other activities recorded. Deal-a-Day social network is the other component that forms the Deal-a-Day social network. This the individual network which comprises the user and its friends that he or she has helped bring on board. While on the network, friends can choose to rate themselves in a scale of 1 to 5 While on Deal-a-Day platform, a user is able to view particular buyer or seller on the web in order to make guided decision on what to do online. On the personal friend of friends’ network, a user is able to seek the opinion of family other friends or any other social entity in order to make informed decision on what to do online. This also helps in making connections that will help build the social network. This is based on mutual trust and the level of closeness that friends have in the social platform. There is also the business network that is provided for in this social network. For every transaction made on the platform, a first degree business network is created in which the transaction partner becomes part of the business network and crates a marketing effect that is viral since every business partner forms a business network. 5.0 DISCUSSION Several hypotheses were developed in order to help in undertaking this project with the aim of meeting specific targets that have been set for this project. One of the key aims of using social media is to help fashion retailers in achieving their targets by developing their brans through personal advertisements. This possible through targeting the clients directly and using their own personal level that help the promote their brands and giving special offers and deals to the customers. According to the expectations of the study, both hypotheses were expected to be correct. However the results of the study suggested that only 38% of the people targeted in the study “like” the use of Facebook in branding their clothing. Another 33% of the population follows the branding of clothing on tweeter. These are the two major social media platforms that are widely used by various people online. The results of the study showed that people are taking it personal on the brands that they “like” or follow. At the same time, many of these people have a strong feeling and interests on the brands that they have chosen. These has enable most of them to receive promotional deals and special consideration on particular brands of their choice. More than 64% of those who “like” fashion brands on Facebook for instance do this because of the promotional offers and deals that come with the various products that are on offer. Another 535 of this group of people argues that they would love to be informed and stay updated on everything that goes on with the brands. Majority of them at about 32% claim that they just one of the part of the online community that share the same interests and likes. On tweeter, more than 77% of the people who follow brands on tweeter do so as they are keen on promotions that would come along way. Another 65% of the people would generally want to be informed on what is going on the on everything about the brands they follow. 51% of the population however just wants to have the feeling of being connected to the brand With the emergence of social media, there has been a break away from the predominant way of communicating with the customers which was basically sending emails and doing no follow up to find out the experience the customer is having with brand. Today, people are able to connect with various people with the same likes and be able to connect to their brand of choice. People are very interested today to keep updated on their brands hence the feeling of inclusion in the same brand community. There is however a big bond that is created by social media between the brand and the customer, companies should therefore invest in social media in order to drive their sales in future. 6.0 CONCLUSION In conclusion, the social media has impacted positively on the demand for products in the online fashion industry. Majority users of the social media especially in the fashion industry establish connections with brand retailers with a sole purpose of getting promotions from that specific brand. This establishment of connections with the brand retailers through the social media builds a new kind of relationship that none of the brands has ever had with consumers in the past. However, such connections eventually lead to the rebirth of another new society of online community which is embraced by those sharing the effects of social media on the nature of demand in the online fashion industry. Most importantly, majority of people would want to create a feeling of personal bonding with certain brands by staying updated in all moves that that specific brand takes in the platform of social media. The ongoing dramatic rise in participation in social media over groups of all demographics, and the outcome of the survey lays a strong basis for the fashion industry to maximize the innovative strategies in over social media so as to involve consumers directly as well as more individually with their brands of fashion. These forms of strategies would probably compel or steer more sales, though at minimum it will propel a powerful consumer-brand engagement which is being sought by most thriving industries. It is evident that the target market for the fashion industry has shifted to customers who belong to the online network and those who use the social media to order for purchase of products. A qualitative research should be carried out in regular basis so as to measure the intensity of the effect on the demand within the fashion industry in relation to the application of the social media. Owing to speedy pace in technological trends and improvement of online medium including the online fashion industry, a research on demand should be conducted periodically through the analysis of data collected and interviewing professionals from the fashion industry. This study is nevertheless serves an instrumental tool for disseminating knowledge to those people who have the intentions of venturing into the fashion industry for business gain. 7.0 BIBLIOGRAPHY Binkley, Michault, (2010, March 25). Fashion Pros Share… Sometimes Too Much. Wall Street Journal - Eastern Edition. p. D9. Retrieved from EBSCOhost. Khosrowpour, Mehdi. 2004. The social and cognitive impacts of e-commerce on modern organizations. Hershey, Pa. [u.a.]: Idea Group Publ. 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