Title

The effects of social networks on e-commerce; with special reference to consumer buying behavior and demand patterns

Overview

Over the recent past, the world has changed in its application of the online environment. Gone are the days when social media was a tool for making social contacts alone (Zarrella, 2010). Today, it is the pursuit of every respectable brand to maintain a social media account for business growth and marketing. The transformation of social media into fragmented online stores has resulted in consumers from the users. Consequently, the improved niche played by social media in e-commerce has shifted the dynamics of consumer-marketer communication. Consumer buying decisions are largely affected by the emergence of new modes of conducting business on social media. According to Singh & Diamond, (2015) the platform of social media provides an important channel for the acquisition of product information through peer reviews referrals.

The application of social media in e-commerce is largely attributed to the emergence of new information technology and the proliferation of mobile devices. Today, social media has the potential of influencing demand patterns of specific products as well as determining consumer decisions. Through the use of social media, potential customers gain the capacity to decide the choice of other potential consumers by reviewing purchased products. In this regard, social media acts as an encyclopedia where consumers can get information regarding specific products without having to make contact with the sellers (Bodnar & Cohen, 2012). Still, social media presents companies with a chance to market their products to a large customer base. Such characteristics as company’s presence on social media as well as its presentation have been found to influence consumer behavior. It is the delight of the companies to, therefore, increases their presence on the social media (Evans, 2012).

The e-commerce market is transforming into a more robust realm following developments in online payment systems. Today, most of the traditional companies, including the most conservative, are realigning their operations to suit the e-commerce market (Anderson, 2010). Indeed, the e-commerce market is slowly overtaking the physical market in its contribution to the world’s economy. Partly responsible for the increase in e-commerce trade is the efficiency and effectiveness with which sales and purchase are made. In addition, the popularity of social media has attracted both consumers and sellers in equal measures. The power of social media in influencing consumer decision is pivotal in the realization of a company’s success in the field (Tuten & Solomon, 2014). Marketers must, therefore, ensure customers satisfaction is guaranteed because of the potential of social media ruining the prospects of a company making a sale. One negative review could spell doom for a company as buyers depend on the opinion of others to make purchases.

Research Questions, Objectives and Aims

The aim of the research is to appraise the role of social media in the concept of e-commerce. In particular, the study aims to identify the influence of social media on customer buying behavior as well as demand patterns. Essentially, it aims to ascertain whether social media has an influence on the purchases that consumers make in online stores.

The research addresses the following questions:

• What is the importance of social media in e-commerce?
• How do social media affect consumer buying behavior in e-commerce?
• How does social media influence demand patterns in e-commerce?
• Do social media platforms affect users’ trust with e-commerce?
• What are the changes brought by social media to consumers in different stages of their decision making?

The research objectives of the paper include:

1. Identification of the role of social media in e-commerce.
2. Determination of the link between social media and consumer buying behavior.
3. Determination of the sway of social media on demand patterns.

Theory

The research conducted will be building on the theory to ascertain the role of social media in e-commerce. The study will build on existing literature in trying to explain the connection between social media’s existence and decisions made by consumers. Despite being a relatively new concept, the role of social media in influencing consumer buying behavior is not heavily researched. Social networks are classified as websites with the potential to link a large number of users across the globe for similar interest (Zarrella, 2010). Popular social media examples include Facebook, YouTube, Instagram, Twitter, and MySpace. Today, users communicate through different formats in sharing and exchanging knowledge about specific brands and products. In addition, social media allows for the consumers to provide reviews for certain products and the information made visible to all users (Meyerson, 2010). In essence, therefore, users can communicate with each other on the products that are available thus providing objective information.

The increased popularity of social media, coupled with its unique characteristics is responsible for the changes in e-commerce (Richardson et al., 2010). Indeed, marketing has been revolutionized to the point that it revolves around social media. According to Tuten, (2008) consumer behavior is largely influenced by social media through the acquisition of information. Other aspects such as post-purchase recommendations play a key role in marketing as other potential buyers look for such insights (Stoica, 2014). Businesses and companies are also provided with a chance to interact and engage with millions of users. Hajli (2014) argues that social media is an important marketing tool as it exposes businesses to potential consumers. The increased level of intimacy associated with social media has the potential of improving customer-buyer relationships to the benefits of the business (Abbas et al., 2013). By having businesses on social media, companies are viewed by consumers as attractive thus influencing demand patterns (Hajli, 2015). More than 70% of the top 100 companies have an active presence in social media (Vafaei, 2015). Also, research has shown that majority of consumers based their buying behavior on reviews written by other users.

The communication between users and companies on social media may have positive or negative implications on the business (Hajli et al., 2014). If the reviews are favorable, then the business is guaranteed of future sales. However, even a small amount of negative message in a product review may dissuade customers from making purchases (Chen, 2014). Most customers consider the perceived risk of purchasing a product as well as the quality in making buying decisions. Consumers are bound to create an emotional bond with products that they purchase online. Kamtarin, (2012) asserts that the relationship between a consumer and a product brand is important in influencing the consumer to make a purchase of the product on sale. The advantages of social media in connecting businesses with potential customers cannot be underestimated. Indeed, social media has the power of pooling millions of users that may be interested in specific products (Tapril & Kanwar, 2012). Businesses must explore the chances provided by social media in improving their sales through marketing. However, social media as an e-commerce tool is as good as it is bad based on the approach that a company employs.

Context

It is true that research should base its context on the different dimensions of national culture (Hofstede, 2000). In this regard, the study will concentrate on the role of social media in e-commerce within the UK by analyzing market trends with the leading UK firms. The choice of the UK economy is based on its maturity with regard to e-commerce and the application of social media. In addition, the UK market is highly diversified thereby providing diversity in the nature of research. The UK online market is estimated to be worth over $99 billion as at 2015 (Favier & Bouquet, 2016).  It is expected that the market will hit the $170 billion mark in 2016 making it the largest in Europe. The e-commerce market consists of businesses in different sectors such as clothing, food, sports as well as travel and entertainment. All of these businesses use social media in marketing and sale of their products to online consumers (Hajli, 2014). It is estimated that an average of 75% of people in the UK shop online with each making an average of 21.2 purchases every year (Favier & Bouquet, 2016). This is a high percentage compared to various countries in the world. It is an indication of how this market has matured.

The UK has a high rate of internet users translating into average online spending worth over $1000 in 2015. A large part of this market is made up of hotels and flight tickets at about 53% (Favier & Bouquet, 2016). The emergence of effective online payment systems such as PayPal also contributes to increased sale in the UK market. Moreover, the UK has over 80% usage of mobile smartphones among people aged over fifteen years. This large volume of online users makes social media an attractive platform for the sale of goods and services (Hajli, 2013). According to Sin et al., (2012) the use of social media is particularly useful as it provides the necessary information regarding a product before purchase. Consumer reviews coupled with referrals from other consumers largely influence the decisions of consumers (Wang & Chang, 2013). In addition, the market demands are also influenced by the increased application of social media in the UK since customers are most likely to buy from companies that have an active online presence. This research will contribute to the existing literature on social media and e-commerce with an emphasis on consumer buying behavior and market demands.

References

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