The evolution of e-commerce to social commerce

The face of consumerism has radically changed in the last few years with the boom of the online marketplace. Online purchases have become an ordinary part of consumer life as higher expectations, lower tolerance, and more demanding consumers have created a shift in the demand side. Equipped with highly efficient search machines, the online retail sector is steadily becoming a bigger part of life as it provides varied solutions where the buyer-seller compatibility is much less of an issue that it was before. BizHive Weekly takes a look at the various trends in the market place.

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The online marketplace is the main growth area for the lo­cal Internet scene. Elegant sites, easy requirements, less cumbersome process, more infor­mation sharing, and animation, attractive information presented in the most fascinating ways are the basis of a sound e-commerce.

Based on a research done by PayPal on Malaysia’s online shop­ping, the size of the Malaysian online shopping market reached RM1.8 billion in 2010 and was expected to grow to RM5 billion in 2014.

The study showed that Malay­sians spent the majority of their online retail purchases worth RM825 million on local web­sites, RM627 million on overseas websites and RM371 million on websites with unknown countries of origin.

According to the report, local merchants could be the biggest winners from the growth of the Malaysian online shopping market by providing a variety of high quality goods on their online stores.

Rodney Lim, a marketing lec­turer from Swinburne University of Technology Sarawak Campus stated that, “There is definitely an online retail boom here in this country. Compared with years past where shoppers were reluc­tant to make purchases online, we have been seeing increasing adoption of online shopping.

“Interestingly, the drive is not really attributed to big global Internet brands such as Amazon, but by many homegrown online retailers that operate on smaller scales. For instance, I would say that the small online shops one often sees hosted on blogs and on Facebook have played a huge role in making online shopping accessible for many people. Inci­dentally, many of these businesses deal with popular consumer items, especially fashion-related prod­ucts,” Lim explained.

Lim also revealed that the trend of e-commerce has slowly progressed into a new phase, which Lim explained as ‘social commerce’.

Lim elaborated on social com­merce as the application of social media to e-commerce activities, that had in a way have now moved beyond e-commerce to social com­merce.

“Basically, it refers to the use of a range of socially oriented tools and processes such as user reviews, peer-recommendations, collaborative shopping activities and more. Social networking is bang in the middle of this. There has been considerable interest in Facebook as a potential platform for social commerce. This has led to the term ‘F-Commerce,” he explained.

He further added, “What is most interesting is that while many established global brands have had varying degrees of success with using Facebook and other social tools for direct selling, we see a swarm of local home-based businesses thriving on these so­cial platforms.

“What is pleasing to see is that the blogshops and Facebook shops that we see everywhere are very much our own version of the social commerce phenomenon, in contrast to other bigger and popular social site such as Etsy. I would say that we are witnessing a homegrown social commerce revolution right now.”

These small-scale businesses are able to use social technolo­gies to present a more personal approach to business. Lim stated that despite lacking in technologi­cal capabilities to operate on scale, they were able to interact more closely with their customers.

He added that this was the cru­cial factor as it provided the kind of assurances needed to allay many of the concerns and fears felt by online shoppers.

Most forecasts predicted that revenue from online shopping would continue to rise however; there were a number of issues relating to their abilities to as­sure product quality and good services.

“Also, many of these enterprises tend to operate in an ad hoc man­ner and are mostly unknown. Thus there is a need to earn trust and to be more structured and professional in some of their practices. I would say that the ability to brand themselves would be crucial,” Lim enthused.

He further mentioned that there would continue to be a gradual maturing of the social commerce scene in this country as shoppers became comfortable with online purchasing and as online sellers developed more stable and struc­tured business forms.

“At any rate, we still have a long way to go.”