4. Comparison of traditional and social
ecommerce ecosystem
The progressive deformation that derived from offline physical retail mode to social ecommerce retail mode has changed the previous characteristics of the marketing structure of China's retail business, as welll as Chinese customers behaviors. While offline physical retail stores are seeking for an integration with traditional ecommerce platform that will make them using onlinetooffline commercial model (O2O) through which the customers will be attracted online but leaded to purchase offline, social ecommerce are sharing the same market with traditional ecommerce: The C2C market. It is very important to make it clear that a comparison between traditional and social ecommerce is not the same as the comparison between ecommerce business and entity commerce. Even though social ecommerce is seen as the derivative work of traditional ecommerce, there are some differences are much clear to be noticed.
On one hand, the functionality of traditional ecommerce systems are relatively simple which just refers to the concept of online store that is a commercial company moved from offline mode to online mode, and it should be identified as a process of business electronization through which stores are able to provide a networkbased enviroment for customers browsing and choosing products. But, traditional electronical stores were only relying on the convenience provided by network to save costs and improve efficiency, a lack of large innovations and breakthroughs was ignored. Further more, lots of traditional electronical stores were still stucked in “selfcentered” mode instead of “usercentered” mode, which means, it was the merchandise provider who judged customer’s desires such as what they wanted and what they liked, the
process of production and sale was completed by the same provider.In addition, due to the imperfect credit system and regulations of traditional ecommerce platform, customers’ purchase impulsiveness were dampened in a degree and thus, transaction costs of stores were continoulsy increased. On the other hand, as a derivative work of traditional ecommerce model, the online social relationship of users is the most important factor that social ecommerce should concerned. Compared with traditional ecommerce model, online sellers begin to care about not only the products provided but also the influence of social circles of their customers. Each users involved in social ecommerce model can express their desires and opinions not only on commercial websites such like Taobao, but also, they are willing to share them with friends via social media such as Sinaweibo or Wechat. At the same time, online stores can take advantage of information disseminated by customers to adjust the production and marketing strategies. Further more, the personal information of buyers and sellers are relatively accessible, so that a variety of social medie can be used for buyerseller communication and enhancement of trust.
After all, as we noticed, the biggest difference between traditional and social ecommerce model is not what kind of products they are selling, but the way they take advantage of social media’s influence to change customers’ purchase habits. In order to understand the difference more comprehensively, an ecommerce business ecosystem should be involved in the next section. 1 Based on the changes of customers’ purchase habits, we provide indepth investigation of comparison in three aspects: (1) Alterations on retail process; (2) Changes on information flow, transaction and logistic; 1 Concept first appeared in Moore's May/June 1993 Harvard Business Review article in which "business ecosystem" was defined as “an economic community supported by a foundation of interacting organizations and individuals—the organisms of the business world.”
(3) Deformation of consumer behaviors;
4.1 Alterations on retail process
Under the circumstance of web 2.0 era, some alterations on retail process have taken place in several basic areas which can be can be broken down into three tiers: front, mid, and backend. However, the traditional ecommerce ecosystem has already made the process more effective than offline retail business, the alterations realized by social commerce ecosystem can be basically found on the multiformity of approaches to customers. The implementation of mobile service via smartphone is definitely not only a simple movement from PC to the cellphone and the change is not just shown on the smaller size of screen, instead, the synchronization of shopping anytime and anywhere is supported by the value of mobile commerce. Thus, consumers and businesses are linked together and no matter where consumers appear and purchase, the retail channels can be extended to the same place as well. Here, we illustrate briefly the differences shown on the front, mid and backend area, which will be indicated with I,II and III parts on Figure 15 and Figure 16.
1. Traditional ecommerce retail process
The main features of this kind of retail process can be shown in three parts.Product information provided by online stores are shown in an explosive way, which means, a majority of product information is closed inside ecommerce platforms. For example, before the emerge of social ecommerce model, if you intended to buy some clothes on Taobao, the first choice you would make was searching for information of stores or clothes directly on Taobao, the explosion of information of clothes would drive you to buy from
Taobao’s stores. Here, there are typical approaches to customers in different parts of retail process.
Part I : The front can be considered as the first step that customers will make for accessing to sellers who have online stores. In generally, advertising is the most important part in this step for attracting customer’s attention as well as the influence of search engines. In this moment, the advertising and search engines are used for guide consumer traffic to targeted commercial websites.
Part II : In the middle of retail process, the mid is the key to success of business transaction. Different methods wil be used for different types of consumers which can be normally divided in two styles on ecommerce market: one is consumers with consumption purpose and the other one is consumers with purchase impulsiveness. For the consumers with purposes of consumption, the search engine equipped with functions of directory search, general search, keyword search and precise search can be used for lighting the fire to explode all the product information, and then, consumers can negotiate and bargin with sellers. On the traditional ecommerce model, the factors that may influence consumers’ decision can be concluded as price, reviews and product images on ecommerce platform and also, consumers need more time to make a decision. If they decided to buy, they can go to the third part, if not, they can go back to the first part for researching or terminate the process.
On the other hand, when it comes to consumers with purchase impulsiveness, the way information presented can be more casual and vague and it is not necessary to create a relevance of different types of information. Large volume of information will be presented together to stimulate consumers to buy even if those information are associated with a pretty weak
connection. Of course, the promotion information of products will attract this kind of consumers as well
Part III: At the end of the process, a basic transaction system has been created by traditional ecommerce as well as a basic logistic system. The main payment platform such as ebanking, Alipay, ecoupons, and cashondelivery are widely used for money transaction, and, merchandise transaction is basically realized exclusively by the simple delivery service, which is normally offerd by some thirdparty logistic companies. (Figure 15) Figure 15 : Traditional ecommerce retail process Source: author
2. Social ecommerce retail process
According to the modification of retail process on social ecommerce platform, the formal shopping process is simplified and shorten. Assuming that a retail process via mobile phone was pretty long and slow, the majority of consumers would take no time to switch off the application instead of buying on that. Therefore, in this case, it is very important to target customers’ need and simplify the process of order and purchase. In the social ecommerce model, efficiency is a key factor for attracting consumers’ attention. If they couldn’t get a retail process more convenient, they will choose to buy on the traditional ecommerce platform instead of the other one supported by social media. Particularly, in the mobile purchasing process, the function of link model which was realized by the hypertext linking and widely used for buying via PC, has 2 been completely ineffective, and resulted in the fragmentation of traffic.
Part I: In the first step of prepurchase, compared with the traditional way, the locationbased service (LBS) is widely used for (1) local business information search which aimed at pushing business information that geographical around consumers; (2) socialcirclebased business information search which refers to sharing business ads on the “Moments” of Wechat or microblogging of Sinaweibo; (3) Information pushing based on official accounts of Wechat. Part II: In social commerce ecosystem the position of sellers has been changed from passives to actives, compared with traditional ecommerce, it’s
2 In computing area, a hyperlink is a reference to data that the reader can directly follow either by
not the consumers seeking for commerce websites any more but ecommerce platforms targeting the consumers. On the other words, the consumers with purchase impulsiveness is the only group that social ecommerce is targeting. Based on the influence of centralized information and precise product display , the time that consumers spent on making a decision has been extremely.Thus, if consumers decided to purchase, they can go to the payment system, otherwise, they can go back to get pushedinformation continously. Even the purchase process is suspended, the information still can be transferred to consumers.
Part III: In the social ecommcerce payment system, the platforms are combined with social medie, such as Wechat Pay, Alipay as well as ebanking and cash on delivery. Even better, the way of logistics is combined with CRM system and offline pick up as well as the delivery service, which can make retail process more humanized. (Figure 16)
Figure 16: Social ecommerce retail process
Source: author
4.2 Changes on information flow transaction and
logistic
The core of the traditional ecommerce model is still the flow of products, but the core of social ecommerce is people and huge user traffic should guided through the effective flow of information. The emerge of the Internet had an enormous impact on traditional retail model, and continously the change become more intense from simple internet commerce to social commerce in the mobile Internet era. But no matter what changes occurred, the nature of retail business remains the same which is aiming at digging customer’s demand and satisfying them. Thus, the basic factors of ecommerce should be still concluded into three types of flow: the flow of information,transaction and logistic.The transaction we discuss here refers to cash flow and logistic refers to merchandise transaction. Eventually,differences of these closed business loops can appear in the ecosystems on Figure 17.
(1) The flow of information: as the entrance of ecommerce model, information flow refers to assistence of all the marketing activities of trend, product, brand and so on. On the traditional ecommerce model, information flow is shown in “oneway” structure which aimed at supporting the communication between sellers and consumers. But, on the social ecommerce model, the structure of information flow can be considered as “network”. No matter what kind of structure they have, the point of information flow is the traffic, the traditional ecommerce was using information flow to transfer their products features while the social ecommerce is using that to realize high volume of traffic conversion, and further more, information flow that created by
consumers in their social circle can be used to enhance its influence and realize more conversion and more revisit.
(2) Transaction: as we discussed before, transaction refers to cash flow which is closely related to the payment system. The innovation of transaction on social ecommerce can be concluded in one word: Mobile payment. Compared with the traditional ecommerce, the wireless payment scenarios have been changed and redesign of payment software has made transaction more convenient as we illustrated before.
(3) Logistics: As the same as transaction, some specific parts related to consumers have been modified by the progress from traditional ecommerce to social ecommerce. The most outstanding improvement can be seen in the modification of process of distribution, such as the emerge of the store or commodity barcode which can be directly scanned online by customers via smartphone, and the CRM system through which customers are able to track the distribution process.
Figure 17: Comparison of Information flow, transaction and logistic Source: author
4.3 Deformation of consumer behaviors
The comprehensive understanding of consumer behavior change is the key to the success of all the business models. Based on the two ways of comparison above, we furtherly compare the differences of consumer behaviors in traditional ecommerce model and social ecommerce model. It seems like that traditional ecommerce model may have a battle with social ecommerce model for the consumers, actually, if we take a deep look into that, the consumers that they are targeting is kind of different. For example, before the integration with Sinaweibo, Taobao’s consumers behavior model can be
considered as AIDMA model, but now, they are more close to AISAS model. In order to figure out the changes, we introduce briefly the concepts of AIDMA model and AISAS model and investigate the different roles that traditional ecommerce and social ecommerce played in the development from AIDMA model to AISAS model.
AIDMA is an concept used for understanding all the stages from hearing a product and purchasing a product of a customer, which, has described a list of events may occur:
(1) A attention: attract customers’s attention of the customer. (2) I interest of the customer.
(3) Ddesire: convince customers that the product or service they want and desire will satisfy their needs.
(4) Mpurchase experience will become customers’ memory. (5) Aaction: lead customers towards taking action on purchasing.
In AIDMA model, the sellers occupy the dominate positon and put consumers in a passive status. But this model was widely used before the emerge of ecommerce model for targeting the consumers in physical retail market. It is believed that consumer behaiviors of AIDMA model was driven into AISAS by the emerge of ecommerce, in which the stages of “Search” and “Share” were generated. On the other hand, in the AISAS model, traditional ecommerce has already taken advatange of the stage “Search” that can help cosumers getting more products information actively, at this time, the stage “desire” was replaced by “search”, which refers to a change that consumers are no longer stay in the passive status, the development of search engines made them have the initiative. (Figure 18)
However, compared with traditional ecommerce, consumer online shopping behavior has got several significant changes in recent years based on the development of social ecommerce, which primarily appeared in the stage
“Search” and stage “Share”. According to the changes, the time for shopping becomes more fragmented, consumers can purchase in a short time via their social medie; and the ways of shopping becomes more mobile, consumers are able to get rid of the limit of time and space for purchase. The most significant change brought by social commerce is making the ways to information dissemination more socializing.
On the contrary, what AISAS model has brought to social ecommerce model? According the impressive influence of “Share”, it is can be considered as the key to a success of estabilishment of a closed loop of purchase which can improve the volume of consumers traffic conversion. On the social ecommerce model, each stages of consumer behaivior model can be affected firmly by the performance of “Share”. Unlike the traditional ecommerce, information is shared into a close relationship circle on social ecommerce model, and thus the potential customers will be driven by the effect of “Share” to skip the stages of “attention” and “interest”, then go directly into “Search”. This change effected by social ecommerce is wellknow by the strong consumer’s viscosity, which drive consumers to adhere to ecommerce websites via influence of social medie, such as social commerce of Taobao and Wechat, thus, the consumer behaiviors of repetitive buying becomes more sustainable than before. According to fact that big data of social media can be used for understanding consumer’s purchase habits, on the social ecommerce, the ways to target consumers will become more effective and diversified.(Figure 19)
Figure 18: Consumer Behaiviors changed from physical retail to ecommerce retail Source: author
Figure 19: Consumer behavior in social ecommerce model Source: author
Conclusion
According to analysis of social ecommerce models of Taobao and Wechat, the study has made multiple frameworks to present different insights on different structures. Now adays,the competition of China’s online market is becoming more and more intense that may generat the other new trends for the development of ecommerce. However, based on the analysis of a variety forms of social ecommerce, it is can be predicted that combination of social, local, mobile and personalized service will be a new direction for ecommerce revolution in the future.
We believe that Taobao’s social ecommerce model will mainly focus on traffic realization and conversion considering that this model is constructed on the base of a mature ecommerce platform.In essence, Taobao is not a website borned with social features, it is still surviving because the strong commercial nature remains.The transaction of cash flow, products flow and information flow can be reflected directly online for business purpose, which means, the core of Taobao’s social ecommerce model is still marketing and the traffic brought by Sinaweibo is an icying on the big cake. However, under the pressure of traffic battle of online market, Taobao has to enhance the integration between social medie for leading more traffic to the stores for which Alibaba will have to pay more bills. Based on the development of Taobao’s social ecommerce in rencent years, the onlinetooffline mode supported by LBS service may become the new form in the future.
For the Wechat social ecommerce, on the other hand, it is borned with a strong social nature, thus, the core of Wechat commerce is not the marketing but the socialization. Wechat has an impressive influence on relationship of virtual social circle and the ecommerce model emerged on the basis of high volume of users traffic. It wasn’t responsible for making business rules or
traffic distributions for which it can be considered as a “container” of social commerce. Based on this fact, Wechat is more willing to cooporate with individual businesses and offer them a social circle to operate. The key to sustainability of Wechat’s social ecommerce is making them believe that Wechat’s traffic is valuable. Still, the identification of business information is based on the recommendation between acquaintances so there is no distribution of traffic flows, buyers are more willing to spread information which make them touched and the provider of that information will get the traffic. We believe that Wechat may build a completed ecosystem gradually for leading cash flow into it and improving its commercial performance.
After all, there is an oppurtunity for the develpment of China’s social ecommerce model. Even if Taobao and Wechat have obtained a large volume of consumers, but, the integration with social media is still remainning on information pushing and interaction, the form of products transaction is still unmature. As long as the current social ecommerce model can create a way to integrate with thirdparty services more effectively, the future of development of social ecommerce model certainly warrants a look.
