Social Commerce in China
The presented paper will be devoted to the particular in-depth investigation associated with social commerce plus the way this evolves and features in China. The particular choice of the particular issue is specified by the higher speed from the advancement of social business and its effective transformation from web commerce firms. The option of China will be influenced by the growing demand for various systems like Taobao, Pinduoduo, and Xiaohongshu, plus the high yearly incomes generated simply by these companies. The primary goals of the particular research are:
to define and summary the phenomenon associated with social commerce
to evaluate all current styles peculiar to this particular sector, such as the main concerns, problems, plus how they may be solved
investigate effective examples of interpersonal commerce such because Amazon, eBay, Taobao, Xiaohongshu, and Pinduoduo to enhance its understanding
evaluate the peculiarities associated with social commerce within China
outline business versions and strategies that will are utilized for the particular sphere
analyze regulations of the Chinese government that are introduced to regulate the domain and monitor its further development
to create the basis for the future investigations of this popular phenomenon
Acquired results prove that social commerce remains one of the most fast-growing modes of trade associated along with the work associated with the Internet. This broadly employs this kind of popular networks because Facebook, Twitter, or even WeChat to advertise socialization and conversation between people plus impact their purchasing behavior. In The far east, three analyzed systems, Taobao, Xiaohongshu, and Pinduoduo, have stable positions and continue to grow by attracting new clients and utilizing e-commerce, social commerce, and group buying oriented business models. However, there are some concerns associated with ineffective governmental regulations, problems with private data, frauds, and poor quality of fake goods.
The study also creates the basis for future research that can be devoted to the analysis of possible solutions to the outlined problems.
The prior goal of this research project is to investigate the widespread phenomenon of social commerce, its central features, and the way it functions in China. The central motif for the selection of this very issue for the study is the scope of this practice, the high speed of its development, and increasing topicality, especially in the particular selected area. The particular further growth associated with social commerce may transform it as one of the almost all effective and pass on modes of industry.
The fast progress systems can be accepted as an essential requirement for that growth associated with various types of on the internet interactions between customers and sellers. Taking multiple advantages connected with the increase of technologies, people wish to save their own some enjoy the particular opportunity to shop online (Pinvidic, 2019). This factor preconditioned the emergence associated with such platforms such as eBay, Amazon, or even Ali-Express. They grew to become able to fulfill the requirements pointed out above and provide an array of goods that will can be purchased, not leaving houses. The growing degree of clients’ fulfillment resulted in steady revenues, and the particular appearance of companies functioning in similar ways, which became another essential aspect driving change and shifting priorities from tradition to online types of trade.
There are furthermore modern payment techniques that are used by various online retailers, and that may make sure the security associated with all transactions. These people became an essential stage towards the popularization of multiple systems and e-commerce around the globe. Being sure within the capability to spend online, clients involved in this type of cooperation plus contributed to the empowerment at the particular international level (O’Reilly, 2007). Companies obtained a chance to generate income using new transaction systems that grew to become available in nearly all regions.
Justification of the particular Research
The option of the provided topic is preconditioned by the unprecedentedly high speed associated with the progress interpersonal commerce, which handled to evolve through e-commerce and obtain top positions. The particular given process effects international trade plus introduces several aspects that needs to be considered plus evaluated. First associated with all, regarding the particular high income plus new opportunities connected with it, presently there is a crucial requirement for government rules to make sure that the additional empowerment of interpersonal commerce will furthermore support the increase of the nationwide economy and stay controlled by the particular existing taxation guidelines. This task will be solved by says in different methods, meaning that there will be a need with regard to their improved knowing.
The option of China because the main cause for that investigation associated with this type of web commerce is also validated by several aspects. Today, China will be accepted as one associated with the almost all promising regions that provide multiple opportunities with regard to investors, entrepreneurs, along with other actors who would like to generate profits (Eckart, 2013; Rad & Benyoucef, 2011). Furthermore, the economic field of the nation continues to develop extremely fast, in fact it is predicted that the particular given speed will certainly preserve (Eckart, 2013).
Goals associated with the Project
The choice of the subject preconditions the formula of specific study questions and objectives that will assist to cover the problem and guide our own investigation. In like a way, these objectives are launched:
to define plus overview the trend of social commerce
to analyze all present trends peculiar for this sector, including the particular major concerns, issues, and exactly how they may be solved
investigate effective examples of interpersonal commerce such because Amazon, eBay, Taobao, Xiaohongshu, and Pinduoduo to improve the understanding
evaluate the peculiarities of social business in China
outline company models and techniques that are used in the sphere
analyze regulations of the particular Chinese government that will are brought to manage the domain plus monitor its additional development
to create the particular basis for the particular future investigations associated with this popular phenomenon
Social Business Overview Definition
The term social business that is popular today was first of all introduced in 2006 on Yahoo! The application form Shoposphere with “pick lists” was an effort to engage individuals with this sort associated with interaction by activities and reviewing item lists (Wang & Zhang, 2012). Within general, the phrase can be defined as a form of commerce that is mediated by social media and working both in online and offline environments (Wang & Zhang, 2012).
It incorporates four big domains that drive the functioning of any entity, which are technology, people, information, and society (Wang & Zhang, 2012). Interaction of these elements contributes to the appearance of an opportunity for the creation of innovative ways to cooperate and provide products and services (Gordon & Michael, 2011; Stephen & Toubia, 2010). That is why being firstly introduced in 2005, the term triggered the appearance of multiple speculations and forecasts associated with its further development and rise (Barnes-Vieyra, & Claycomb, 2001; Lee, 2001). People, or the consumer domain, were ready to accept the new ways of cooperation because of the existence of peer-generated content and multiple sources of information that could be used to discover a particular product and make a decision about its purchase.
Evolution of Social Commerce
Business transformation impacted by the growing power of e-commerce became a distinctive feature of society and global trade. Having realized multiple benefits provided by the Internet and technologies, companies entered the virtual space by overcoming barriers such as difficulties in the interaction between departments, or large firms’ size (Lee, 2001). The new mode and Web technologies provided an opportunity to overcome these obstacles and reach clients in different places. The attraction of a new form of business can be evidenced from the fact that will the dollar quantity of the entire U. S. web commerce sector arrived at about $4, five trillion by 2006 (Ariguzo, Mallach, & White, 2006). To some extent, it can become associated with the particular euphoria related in order to the further pass on of the Web and its effect on international relationships.
Web two. 0
The phrase web 2. zero was introduced in order to describe all aspects and elements associated with an unique atmosphere that was caused from the dominance associated with various types of interpersonal commerce (Constantinides & Fountain, 2008). This was applied in order to sites, services, and networks that rested on the creation and generation of the content by users, instead of the previously employed forms presupposing the work of editors and specially hired content creators (O’Reilly, 2005). The radical decentralization also became one of the results of the revolution caused by social networks (Newman, Chang, Walters, & Wills, 2016). It introduced a new chapter in the development of interactions between people and social commerce.
Social web 2. 0 services created a framework characterized not only by the enhanced interactions between users and their friends, colleagues, or other individuals. Moreover, it enabled people to cooperate with companies, brands, and participate in various events and social groups (Rainie & Wellman, 2012). This opportunity also meant that there was a need for the creation of detailed profiles with the description of preferences and interests to acquire updates, various offerings, and proposals from many entities across the world (Newman et al., 2016).
The social web of this generation empowered clients by providing them with the tool to impact companies, their approach to management, and the swimming pool of products these people can offer (Mazurek, 2009). This is why this particular new approach in order to the functioning associated with the Internet ought to be taken because an essential step within the transformation associated with social commerce plus it’s becoming 1 of the top forces from the contemporary business world.
Today, social systems and commerce are usually inseparable as these people merged underneath the effect of new clients’ demands and strategies used by businesses to handle sales. Even more specifically, they grew to become two forces that will create new stimuli for the advancement of one another plus future growth. The particular majority of the particular online platforms that will exist today perform in terms associated with web 2. zero as users need content that would be interesting for them and provide this very content (Parise & Guinan, 2008). Social web 2. 0 ended the era of non-customized and non-personalized offerings that were previously used by companies that operated on the Internet (Newman et al., 2016).
Instead, a new form of interaction resting on the enhanced collaboration between users emerged and triggered radical changes in the traditional method of management (Yadav & Mahara, 2018). The ability to generate stable revenues and monitor the state of markets becomes an essential option that is available to corporations or brands that adhere to the social commerce model (Huang & Benyoucef, 2013). It offers them multiple advantages if compared with the traditional one, such as better customer service, topicality of offerings, flexibility, and topical content (Huang & Benyoucef, 2013). For this reason, social networks remain a powerful driver of the development of the business world and innovative forms of e-commerce that presuppose the broad utilization of web 2. 0.
The dominance of new forms
The prevalence of new forms of cooperation also evidences a fundamental alteration in peoples’ behavior. The fact is that the popularity and growth of social media represent a shift in consumers’ thinking from individual to collaborative decisions (Diao, He, & Yuan, 2016). This process triggered multiple responses in the way companies or organizations work. For instance, about 74% of all business organizations in the USA create, support, and utilize social media applications, and 88% of them want to achieve a higher level of spending by integrating the most popular social media into their functioning and core systems (Diao et al., 2016).
Furthermore, Facebook, Amazon, and other traditionally popular and successful companies continue looking for new ways to increase their presence on social media (Diao et al., 2016). These facts evidence the direct correlation between the development of platforms used by individuals for cooperation and e-commerce (Oinas-Kukkonen, Lyytinen, & Yoo, 2010; Rowley & Keegan, 2019). Additionally, more investment in social media advertising is observed as about $8, 2 billion are devoted to this sort of activity, and the number continues to grow (Diao et al., 2016). The given numbers prove that marketers start to accept and recognize the power of social commerce and networks that could be used to enhance customer service and engage in better cooperation with them.
The refusal from previous e-commerce forms and the popularity of fresh ones can furthermore be the result of the particular fact that this was unable to fulfill all the requirements of clients. The presence of a rich option and multiple offerings turned out to be not an advantage but a confusing factor for individuals (Kim & Srivastava, 2007). There were not able to compare the quality and price of demanded products and had to look for the information about a certain kind of good they needed (Diao et al., 2016). At the same time, the adherence to the product-centered model was ineffective when speaking about diversity peculiar to various customers (Diao et al., 2016).
The level of dissatisfaction grew, especially if expectations connected to a certain product failed. Thus, the lack of trust became a fatal strike to the future development of e-commerce and its ability to fulfill current needs (Lamb, Hair, & McDaniel, 2013). The shift to social networks as the platform for trade became apparent as it provided people with an opportunity to communicate with more experienced users and make a decision about the purchase (Laudon & Traver, 2014). Companies and entrepreneurs also realized the idea that social networks consisting of numerous individuals who generate content and provide limitless access to information are the future of the sphere.
Amazon can be considered one of the most successful companies working in the given domain and generating stable revenue every year. Today, it is recognized as the largest Internet company by revenue in the world (Chaffey, 2018). The key factor from the overwhelming success of the trademark is the correct selection of the strategy, supervising of the marketplace, as well as the ability in order to meet existing clients’ demands. Amazon has been founded by the single person, Shaun Bezos, on This summer 5, 1994. The particular main reason because of its foundation served that will existing forecasts concerning the future of the particular Internet and web commerce with the planned growth of about 2, 300% (Shah, 2018).
Having recognized the power and growing popularity of the given paradigm, Bezos launched an online book store that proposed to customers a wide range of the most popular offerings. Because of the growing popularity of the given model along with the multiple advantages that became available to buyers, the firm turned out to be a success. During the first two months of its existence, Bezos managed to sold books to 50 states and about 45 countries (Feedvisor, 2019).
With the given popularity, Amazon also started to generate about $20, 000 per week (Kirubakaran, Keong, Ching, & Joshi, 2016). The positive outcomes peculiar to the first phases of the company’s evolution proved the potency of the selected strategy as well as popularity amongst individuals all more than the world. The particular initial purchases of the particular project comprised regarding $250, 000 offered by Bezos’ mother and father; however, they had been soon compensated (Shah, 2018).
The example shows that will e-commerce became 1 of the crucial factors for the particular rapid progress Amazon . com. In 1999 the organization launched its posting department with the particular primary idea in order to work within the field (Donici, Maha, Ignat, & Maha, 2012). Furthermore, this started to market other products on the internet, which transformed this as one of the particular most influential associates of e-commerce. Within the 2010s, the company became one associated with the world’s most effective companies combining each online and bodily presence. Being first of all created as a good e-commerce brand that will offered a particular type of goods in order to its clients, Amazon . com soon was remodeled and reorganized.
One of the particular critical features associated with the modern company is its faithfulness to the platform provided by e- and social commerce. For instance, Amazon Prime is a service that promises subscribers multiple advantages and opportunities for socialization, communication, and experience sharing (Investopedia, 2019). Correctly realizing the prevailing and the most dominant tendencies peculiar to the market, the brand’s management guarantees that all clients will enjoy the benefits of web 2. 0 by participating in content-making and offering their ideas regarding particular goods.
In such a way, Amazon can be considered one of the most successful examples of how e-commerce can serve as the basis for the development and rise of a small business company. The brand has its platform and site for sales that combine multiple practical solutions for improved cooperation with clients. Considering the current success of the corporation, it is possible to say that it creates modern social commerce by introducing the features that are followed by other companies.
Another company that can be taken as a leading brand employing the basic ideas of e-commerce and benefits from its use is an American multinational company eBay. At the particular moment, additionally it is used as a powerful player in the particular market with the particular high potential with regard to further development plus growth. eBay has been founded by Calcul Omidyar in 95 as a component of his web site with the main goal to market some things which are not needed at the particular moment (Shah, 2018). Several factors guaranteed the success associated with the given new venture.
First, because it had been mentioned, e-commerce shot to popularity due to the fact of the chance to buy products using a system that is hassle-free right now, and that will can offer the product at the reasonable price. auction web sites, founded like a service to sell numerous things to some other people, met this particular requirement. Online users grew to become able to look over multiple offerings plus, which is even more important, discuss all of them with sellers to get additional information plus make one last choice. It became among the strengths of the particular startup as the particular need for info peculiar to almost all customers was pleased completely (“How will eBay make cash? ” n. deb. ). Simultaneously, these people were provided a substantial level of self-reliance as there has been no need with regard to buying items through a particular seller.
Another feature was the creation of an user-friendly interface to look for the required services or goods or connect with other individuals. In such a way, eBay managed to introduce a platform for successful cooperation between individuals, which is a key factor in the success of any online company. The further increase in the number of clients preconditioned the need for diversification, and in the 2000s, eBay started to offer almost all saleable items to its users (“How does eBay make money? ” n. d. ). The given diversity became another factor preconditioning the fast evolution of the brand.
The company also managed to buy PayPal as a payment system that provides people on the Internet with an opportunity to perform safe transactions and enjoy this convenient way of interaction. The given purchase became a strategically important step for the evolution of this e-commerce corporation. It increased the speed of communication between actors using the platform and provided them with additional guarantees of safety, which was critical regarding the growing level of rivalry in the given sector (Shah, 2018). Altogether, eBay was successful in considering current trends on the Internet and the creation of its unique proposal that attracted clients by its convenience, simplicity, and possibility to discuss various items.
Features of Social Commerce
Resting on the info provided above, plus on the effective examples are available the particular previous sections, you are able to distinguish several basic features and benefits of social commerce that will contribute to the particular rise from the recognition. First of almost all, alternatively to aged types of online product sales, this offers purchasers a chance to participate within the process by giving their feedback, suggestions, and creating the particular content (O’Leary, 2019).
They may end up buying an product not utilizing the explanation, but also simply by discussing it using their friends or others. It also displays another crucial feature of interpersonal commerce, which will be the extensive make use of of internet sites because a core element of a new paradigm of relations among companies and clients. The potency of this device, along with the particular accessibility to critical info about individuals, their own preferences, and options, helps sellers in order to acquire a higher level of versatility and offer almost all topical goods which will be appreciated by the particular targeted audience.
Another significant feature is the accessibility of online platforms due to the wide use of technologies and the appearance of mobile phones. Users might make an order or consult with other people in one touch, which introduces multiple shifts in the way companies work and cooperate and their clients (Hussey, 2019). Finally, another significant feature or advantage is the existence of many opportunities for further development and empowerment. The technologies will continue to evolve, and new forms of cooperation with clients will emerge. It means that social commerce can be taken as one of the possible modes of global trade that will shape interactions in the next several decades.
Concerns of Social Commerce
The first and the most important concern associated with the further empowerment of social commerce are multiple security issues that arise when using various social networks. Following surveys conducted among broad populations, it remains the primary barrier to adoption of this mode as 71% of respondents have fears about leaks of information, and 65% do not want any interference in their privacy (Hussey, 2019). Non-users of social commerce are sure that this so-called Big Information is a severe threat to their own security as several agencies, companies, or even other entrepreneurs obtain an opportunity in order to collect information that will will be later on used to produce new offerings (Hussey, 2019). It continues to be a substantial problem decreasing down the development of the world and demanding severe attention.
Second, even though interpersonal commerce is upon the rise, plus Amazon, eBay, Taobao, and other comparable services generate steady incomes, the focus on audience continues to be sluggish to adopt the brand new mode of conversation (Hussey, 2019). Systems are continuously developing applications and expose new features in order to reconsider this scenario and make almost all processes easier; nevertheless , in 2018, 82% of individuals possess not used this kind of options as the buy button to have a product directly from a site (Diao et al., 2016). These aspects are taken as the fundamental problems of social commerce that should be solved to guarantee its further evolution.
The possible resolutions for these problems include the introduction of clear, understandable, and comprehensive security privacy policies for customers to understand them. It will help to manage their fears and minimize the level of distrust peculiar to some groups. Additionally, there is an essential need for the protection of individuals’ purchases which can be ensured by devoting more resources to the consideration of their claims, and monitoring of every order (Diao et al., 2016). In general, concerns associated with data and its privacy are not new, and they remain topical for the modern digitalized world characterized by the accessibility to information.
Regarding the truth that social commerce actions aside from conventional methods for generation associated with value and assistance with clients, the particular business models utilized for the sphere will also be different. Thus, the particular given term is utilized to determine exactly how any firm produces value and provides it to customers, and exactly how their obligations are converted in to resources used in order to stimulate the additional evolution from the organization and its capability to make money plus contend with the closest rivals (Diao et al., 2016). The traditional approaches presupposed complex supply chains and direct cooperation with the target audience to ensure that products will be sold.
However, the increased topicality of social networks and the shift to e-, m-, and social commerce preconditioned seen new ones. Their own improved understanding is possible by using the specific framework that will includes its fundamental components such because value proposition, income source, capability, plus sustainability (Diao ainsi que al., 2015).
As one may see from Desk 1, as towards previous forms utilized in e-commerce, within social ones, you will find four new types of value creation plus proposing that are usually a part of business versions used by various systems. First, there will be a focus upon the advance of solutions for existing clients and interaction along with clients to impact them more efficiently. The ability in order to communicate in current eliminates such aspects as distance plus helps to accomplish new levels associated with effectiveness (Hajli, 2014).
Second, presently there are socially focused models that creates worth by the advertising of commercial actions from the interest areas. It is possible due to the fact of the incorporation of business components with the present social networks as clients can share shopping experiences in communities or groups established and managed by brands that want to enhance brand loyalty (Diao et al., 2016). Participation in these very groups can guaranty various advantages, such as lower costs for products or new proposals. Third, social network-oriented models use online friend ties to assist buyers in their decision-making and eliminating trust issues that might arise in the process of shopping (Diao et al., 2016).
It helps to attract new users and guarantee their interest in various products. Finally, the fourth mode is the group buying commerce that offers multiple benefits for traders, groups, and customers. The first cohort acquires an opportunity to promote better consumption and increase revenue; for the second group, it ensures that new clients will be attracted and become active users; for customers, there is an opportunity to discuss existing options and select the most appropriate one.
As for the revenue source, the offered business models of social commerce remain similar, and there are no critical differences among existing types. E-commerce oriented model presupposes the existence of capturing commissions that are paid on a particular volume of the transaction from a website (Zhou, Zhang, & Zimmerman, 2013). The given approach remains the most popular option for the majority of existing platforms as it combines simplicity and effectiveness. Another form is a subscription model presupposing that customers pay a set price for the particular participation or make use of of an provided service (Diao ainsi que al., 2016).
It guarantees particular support and accessibility to information that may be used to improve sales. The provided model is furthermore utilized by various systems which are focused upon the provision associated with unique offerings in order to its clients. Because for the 3rd model, social business brands suggest a good opportunity for some other organizations to utilize their own platforms to promote plus promotion of the items, such as Fb, Google, Yahoo! (Diao et al., 2016).
This design is the almost all popular today because it guarantees steady advertisement fees that will help to carry on further evolution. Lastly, a sales design is meaning that will some categories of web sites might split income with partners in order to guarantee that new business will be obtained (Diao et ing., 2016). It furthermore contributes to the introduction of more effective cooperation tools and the particular further evolution associated with social trade.
As for that sustainability and options for future development, social commerce business models differ because of various goals and approaches. For instance, e-commerce oriented platforms should be ready to cultivate a specific climate on the Internet to ensure that the desired constructs will evolve and provide opportunities for expansion and the increase in sales (Diao et al., 2016). The introduction of social components helps to support clients and provide them with new opportunities. Group buying social commerce forms mainly focus on the use of various applications to create user groups that will discuss proposals and enjoy the existing benefits of participation (Diao et al., 2016). As for the interest-oriented modes, they provide clients with an opportunity to buy something resting on collective intelligence and social activities (Diao et al., 2016).
Individuals become a part of the global discourse that attracts them and provides them with goods that might be attractive to them (Diao et al., 2016). In such a way, the given models differ because of the goals and approaches used as the basis for the evolution, but they all contribute to improved sustainability.
Generally, resting on these business models and their core components, it is possible to outline four broad categories of social commerce that are relevant today: e-commerce oriented social commerce
social network-oriented social commerce
group buying-oriented social commerce
interest-oriented interpersonal commerce
The first one, web commerce oriented social business, such as Amazon . com, or Taobao, concentrates on direct selling through web sites using the integration of interpersonal components such while the discussion along with clients as well as the development of a particular community to increase clients’ loyalty and acquire the stable source of revenue.
Interest-oriented modes are specially created platforms that employ the topic community formed around specific demands, attractions, common views, and requirements (Diao et al., 2016). The main characteristic of these very sites is that potential clients can read recommendations provided by other users, share their experiences, find the desired information, discuss it, and make informed decisions about the purchase of a particular product (Diao et ing., 2016). These systems also guarantee an association with e-commerce retailers and suppliers to get benefits from the particular promotion of customers and the readiness in order to cooperate with the particular brand.
As it really is observed from the title, the given systems broadly utilize the particular growing power associated with social networks to draw clients and create them cooperate. These people mainly explore Fb and Twitter within the European area and Wechat within China. Multiple benefits come from this kind of interaction, as techniques continue to develop and attract fresh and new customers. Moreover, real plus online friends may encourage individuals in order to make particular items or make the certain purchasing choice. You will encounteer multiple choices for clients in order to consult with the particular social community plus ask for any piece of advice in order to satisfy their demands (Diao et al., 2016). The given technique is becoming even more and more well-known because of the particular tendency towards improved participation of customers in the on the internet sector.
Finally, the final mode associated with social commerce will be the group-oriented 1. It presupposes that will people organize numerous group activities in a few days to shape their buying behavior. A specific Internet community is offered a certain type of product regarding the focus and their current preferences. Every successful purchase involves a minimum number of buyers that should be affected to guarantee the further development of those and the generation of stable income. Due to the increased power of social networks and technologies that provide new chances to both clients and businesses, the given mode promotes more deals and provides additional information about available orders. All these categories are successful enough in the modern environment to be employed by numerous companies to produce income and enhance their cooperation along with clients.
Social Commerce in China
The second section of the paper is dedicated to the in-depth analysis of the pattern in China. The particular selection of the location is preconditioned from the incredibly high speed associated with e-commerce and interpersonal commerce in the particular country. The marketplace dimension of this pretty sector is likely to reach about two, 7 trillion yuan ($302 billion) within 2018, and carry on its growth growing by 63, 2% year-year because the particular usage of mobile systems and access in order to social media over the internet is becoming more plus more popular within China (Feifei, 2019a).
The provided numbers evidence that will this form associated with cooperation becomes the potent factor with regard to the development associated with the Chinese economic climate that needs to be considered throughout its analysis (Crampton, 2011). Additionally, the particular recent surveys state that will sales revenue through various social business platforms that turn out to be more topical within the region accounts for 20% of the whole online retail market of the state (Feifei, 2019b). By the end of 2020, specialists forecast that this number will achieve 30%, which becomes a serious tendency of the region.
Another aspect that should be considered when researching the environment that promotes the fast rise of social commerce mentioned above is the gradual increase in the number of people who are engaged in the sector or affected by it. In 2019, 48. 01 million individuals can be associated with various forms of e-commerce in China (Fan & Backaler, 2019). It means that every year, the duplication of adherers of this mode can be noted (58. 3% per year) (Feifei, 2019).
The given speed will preserve during the following several years because of the proliferation of mobile technologies and tablets that replace computers and provide new opportunities to engage in online shopping activities (Fan & Backaler, 2019). Due to the combination of all these factors, social commerce becomes the most popular mode of e-commerce that is used by people in every region associated with China (Qu, 2019). Gradually it is a good integral part associated with the digital selling industry that helps to sell goods and generate stable income (Loven, 2019). In this regard, the growing interest in the framework, along with the creation of beneficial conditions and a powerful economy, creates conditions favorable for the future transformation of the sector and the involvement of new players and mass populations in Chinese social commerce.
Taobao can be considered one of the examples of the popularity of social commerce in China and its growth. It is the most successful and famous platform for online shopping launched in the country in 2003. In two years, it became the leader of the sector because of the mixture of some efficient strategies and smart use of present rends. It will be often accepted as the particular Chinese equivalent associated with Amazon due to the dimension of the company, its impact upon the marketplace, and possibilities for even more rise (Nitkoski, 2019).
One from the critical aspects preconditioning the quick regarding the support was the absence associated with the local negative based of this type of trade plus the complexity to a distribution route in China with regard to foreign brands (E-commerce China, 2018). In a way, Taobao became an effective option to function in China plus improve its bodily presence by disseminating items via a good online store.
The business design utilized by the company proves its usefulness as 54 mil new users show up each year (“Traffic summary, ” n. deb. ). In 2013, about 620 mil online users in The far east had the encounter of working along with Taobao and purchasing some goods right here. The main objective of this on the internet store may be the supply of the chance to bypass traditional obstacles of pints associated with sale and produce system for the particular cooperation of hundreds of thousands of Chinese purchasers, sellers, and stores communicating within the particular consumer-to-consumer model (Liu & Jitphrasong, 2016). The device allows numerous purchases between people, firms, and some other actors. Brands might open their shops using the website if they meet the current requirements and act within the existing legal field. This factor guarantees that the system will work productively and provide clients with all they need.
Taobao also managed to achieve success due to a perfect positioning that provided it with a chance to compete with other brands and attract a wide target population. This, as against other shopping websites focused on white-collar workers who have a high level of income, which is not typical for the majority of people in China, Taobao started to work with fashionable younger females as the most loyal clients (Liu & Jitphrasong, 2016).
It turned to be a great success because of the appearance of multiple possibilities for even more development. Very first, this niche has been not previously busy by similar manufacturers that considered higher income a warranty of strong purchasing power and steady income (Liu & Jitphrasong, 2016). Upon the contrary, the particular research conducted simply by Taobao says the bigger part associated with this platform’s customers and buyers possess less than 5000-yuan yearly income, that is used as low within the nation (Liu & Jitphrasong, 2016). With regard to this reason, focus on positioning in the particular low-income stage produced the basis with regard to the successful entry and the opportunity to further increase.
It displays that because associated with wise management plus the correct knowing of current manufacturers, Taobao managed in order to avoid competition along with such giants because eBay or Amazon . com. Today, the Web becomes available in order to wide populations, which includes communities with center or low income. It means that they should be taken as potential customers. For this reason, the platform occupied a market share of 90% of eBay and demonstrated 800% of annual growth (Liu & Jitphrasong, 2016).
Furthermore, it accounted for an 80% share of the customer-to-customer market and pushed out other European giants from the Chinese market. The positioning chosen by Taobao became more suitable for the state with its unique characteristics of the population. People are attracted by new proposals and reasonable prices that can help them to economize and engage in various e-commerce activities that presuppose communication, experience sharing, and the ability to select among a wide variety of products. Taobao transformed itself into a brand with outstanding perspectives for future evolution and multiple options for the rise.
Another factor preconditioning the overall success of the brand was the establishment of cooperation with banks. On October 27, 2003, Taobao and the Zhejiang department of the Industrial and Commercial Bank of China (ICBC) engaged in a partnership by signing the agreement needed to protect all users from frauds and other maleficent actions (Lixia & Xun, 2009). It became a significant step towards the improvement of customer service as clients acquired guarantees that they would be protected, and all their transactions will be secured. Bank became that intermediary in the given scheme and served as the guarantor for the national credit guarantee cooperation (Lixia & Xun, 2009). It increased the confidence of users and attracted them to the site.
The analysis of the primary top features of the focus on audience also revealed two fundamental characteristics of buyers in China. The idea is that they first see goods and then cut the price as they are not sure about the online payment system (“Analysis of Taobao’s business strategies, ” 2008). In such a way, Taobao created its two vital services which are Taobao WangWang and Alipay (Richards & Li., 2018). The first one provided all clients with a platform to communicate and discuss the price, quality, and desired features of a particular item (Richards & Li., 2018). Moreover, all individuals can take part in high-quality activities that impact all members (Richards & Li., 2018).
Using Wangwang, all clients can create the discussion topic or enter into a dispute related to the price of goods, their qualities, and the level of trust peculiar to a certain seller. It contributes to the significant growth of confidence between all parties engaged in the work of Taobao and their decision-making.
For Chinese people, the ability to collaborate and communicate is the critical factor that preconditions their choices and the desire to buy a particular thing. Investigations show that due to the strong bonds between people, internet customers also choose to make use of services which are suggested by their buddies (Lixia & Xun, 2009). For this particular reason, the creation of Wangwang and its additional development add aspects of social commerce which are fundamental for the particular future evolution associated with e-commerce in The far east, and it’s getting more attractive in order to all users. Because of the combination of this tool and effective strategies, Taobao manages to hold its leading positions in the segment.
As for Alipay, its main idea is to ensure the security of all transactions and eliminate customers’ distrust and fears associated with this activity (CIW Team, 2019). It became possible due to the cooperation with ICBC, Agriculture Bank of China, and China Construction Bank (Richards & Li., 2018). As it has already been stated, the safety of money is a core component that is demanded to attract new clients and make them use a certain platform. Considering the unique positioning of Taobao, middle and low-income individuals are more concerned about the ability of the used site to protect their transactions and guarantee that the requested goods will be delivered to them.
In such a way, the creation and introduction of Alipay became a critical factor fostering the further evolution of e-commerce in the region plus the improvement associated with its image amongst potential customers (Lixia & Xun, 2009). The given design proved its usefulness as, since the particular implementation of Alipay in the function of Taobao, the amount of clients has developed significantly, and the particular problems with dealings have reduced substantially. Because of the particular utilization of this particular scheme, Taobao turns into a credit intermediary that will saves money prior to the final confirmation:
The given design guarantees the achievement of all procedures and attracts customers by its simpleness and effectiveness.
Finally, there is certainly an additional fundamental facet of any kind of e-commerce platform that will will serve because the main attraction to clients. The fact is that the majority of users want to get their goods as soon as it is possible. For this reason, the construction of a standardized logistics system that can help to solve the problem with delivery is a core component of any social commerce brand in China. At the moment, there is a lack of a complete and independent distribution system that can be used by various platforms (Lixia & Xun, 2009).
It also means that the quality of logistics can hardly be controlled, and the probability of fraud increases dramatically. As for Taobao, it also experienced similar problems that became a bottleneck for its further development. However, to ensure that the level of clients’ satisfaction will continue to grow, the platform tries to create a high credibility, independent, and powerful logistics union that incorporates several brands and meet the requirements to the quality of delivery.
The integration of multiple logistics resources can also assist to control the marketplace and work even more effectively, that is crucial in terms associated with fierce rivalry plus competition. Taobao will be now centered on assistance with Yuantong Show, ZhaiJisong, along with other strategies companies basically collectively, attempting the development of an efficient system that will certainly help to prevent the particular problems mentioned over (Lixia & Xun, 2009). Additionally, the particular given approach may help minimize the particular number of scams or corruption associated with various goods throughout their delivery in order to clients.
Additionally, Taobao tries in order to produce a specific strategies system and software program that delivers customers with an chance to trace their own orders and stay confident in shipping companies. The provided information system ought to also destroy obstacles between various sections and problematic relationships between brands from the same platform. In a way, Taobao’s efforts help the increase of clients’ level of fulfillment and improvement associated with the picture of web commerce in the condition, which is important for the additional evolution of the setting of trade (Lixia & Xun, 2009). Due to the particular all factors pointed out above, Taobao handled to evolve quick and became the potent actor within the e-commerce marketplace.
Xiaohongshu, or Little Crimson Book, or just RED, is an additional brand which is upon the rise within China now. Pursuing its description, the particular service is the lifestyle-sharing platform started in 2013 simply by Mao Wenchao plus Qu Fang within 2013 (Qu, 2019). The success associated with the project will be evidenced by the particular fact that within 2019, there are usually 200 million authorized users that are offered by the mainly young generation (Qu, 2019). The initial concept of the system was to offer individuals an chance to share their own experiences, videos, pictures, thoughts about style, beauty, travels, plus discuss many problems (Sentance, 2018a). In such a way, it can be considered a social network that affects broad populations. At the moment, it is one of the fastest-growing mobile platforms, which doubles the number of its users every year (Sentance, 2018b).
It also has its unique demographics as the majority of individuals registered in Xiaohongshu are females from the first and second-tier cities of China-born after 1995 (70%) (Sentance, 2018a). The given composition introduces specific peculiarities of the platform’s functioning.
The fact is that the bigger part of requests associated with traveling was also related to shopping activities, which is considered one of the main goals of any journey. The application was also used by people to ask for shopping recommendations even if they stayed at home. It provided the brand with the opportunity to introduce new online shopping features and enter the Chinese e-commerce market. This decision turned out to be a success as in 2016, RED managed to generate $200 million in annual sales, which created the basis for its further rise (Sentance, 2018b). It also means that Xiaohongshu transformed into a social commerce firm providing multiple opportunities both to buyers and sellers.
At the moment, it can be considered a combination of Instagram and Pinterest, which are taken as popular and successful platforms attracting millions of users globally and providing multiple opportunities for cooperation. People using RED can also save posts, images they like, photos of goods, create their messages to share their ideas, and interact with their friends or members of the community. This element of social interaction becomes a vital factor that attracts users to the site and provides them with multiple benefits. To begin with, 90% of all purchasers prefer to discover and choose goods relaxing on the reputation plus feedback (Wong, Hallanan, & Li, 2018).
It indicates that RED gets a critically important platform that offers its users an opportunity to engage in the discussion, which is vital for decision making and other processes. Instead of using search engines to read about the desired good and look through various sites, clients can open their mobile applications and look for the demanded product. This ability to save time and convenience is highly appreciated by clients who contribute to the evolution of the platform.
In such a way, the success of this platform is often associated with its content-driven nature. In other words, when a person hears about an exciting brand, product, or service, he/she might simply check it out using RED. This feature becomes essential for the ability to survive and compete in terms of severe rivalry. As it has been previously stated, instead of using Google or its alternative and spending much time, individuals read reviews on the platform and decide on its purchase (Wong et al., 2018). Its availability impacts their readiness to pay using the shopping application and the desire to share information about the interesting item (Wong et al., 2018). The content-driven nature of the Little Red Book facilitates the gradual increase of its popularity and improvement associated with its image amongst potential clients, that is critical for any kind of e-commerce platform.
The critical element of success will be the existence associated with so-called shopping information that help customers to share their own positive feelings plus discuss their programs regarding new products. These messages offer details about each aspect of the product’s encounter, its qualities, plus main characteristics, rather than focusing on the particular purchase and shipping, that is typical with regard to other e-commerce websites (Wong et ing., 2018). This design became especially well-known among clients because they acquired an chance to learn more regarding any good they need and look with regard to the options hassle-free for them making use of the same web site. The existence associated with an engaged local community and trustworthy, comprehensive reviews for numerous products became essential factors for the particular rise from the software.
Additionally, the particular offered application will be non-commercial, which raises clients’ loyalty in order to it. There are usually no official brands’ accounts, annoying marketing, or commercial articles of other companies (Liu, 2018). That will is why almost all Xiaohongshu’s users may trust recommendations given by other people within their notes because they are not really thinking about selling the particular good (Liu, 2018). Research shows that will 8% of individuals purchase a certain product using the application after reading these types of very notes (Liu, 2018). Moreover, the particular link towards the great can be produced only if the company, or vendor, has a store on RED with no external links allowed. It guarantees that users will continue using the service in the future.
Xiaohongshu also succeeded in the promotion of the application by attracting celebrities and famous people. It turned out to be a potent strategy as the majority of users follow notes or pages of their idols and adhere to their recommendations. In such a way, the introduction of media stars’ opinions in the work of the service contributed to the gradual rise of its popularity and the increased level of people’s trust in it. The potency of this solution will be also evidenced simply by the fact that will nearly all goods that will are mentioned simply by celebrities within their information are sold away (Qu, 2019). Because of this, RED manages to mix elements of interpersonal communication and the particular ability to participate in discussion with an individual who can be respected, that is fundamental with regard to Chinese consumers, plus ensure that they can protect the high degree of interest in the particular site.
Another strength of CRIMSON that attracts manufacturers is the presence of promising choices for entering the Chinese language market and the particular empowerment of numerous firms’ positions. In the moment, international companies can enhance their cooperation along with clients in The far east by participating in conversation with them by using this very social system (Sentance, 2018a). It will help to answer the particular majority of issues that might appear throughout the collaboration and offer audience with the particular information they require. Furthermore, RED may be used because a cross-border web commerce marketplace that provides limitless opportunities with regard to corporations to market their products plus generate revenue (Sentance, 2018a).
Because China is the fast-growing region along with a robust economic climate, the majority associated with brands utilize this particular chance and begin in order to use Xiaohongshu in order to empower their on the internet presence and provide new goods in order to individuals. Because of the presence of this giving, the platform continues to be attractive for fresh brands that begin to cooperate from it and contribute in order to its further development.
Finally, Xiaohongshu monitors the market and the work of its rivals to be ready to introduce appropriate changes that will be able to attract new clients and guarantee that they will continue using its services. In June 2019, RED has launched its live-streaming feature that is designed to improve cooperation between clients and assist them in sharing their feelings and emotions related to a particular event, action, or produced (Qu, 2019). The given service lays the ground for the creation of a complex and multi-layered shopping experience that can be characterized as a combination of Facebook Live, Periscope, Instagram, or YouTube tutorials and guides (Qu, 2019).
It is expected that with the help of a live-streaming service, more clients will make purchases on the particular platform because associated with its convenience. People become able in order to find out in the live broadcast plus get their solutions immediately, which offers an impact on their own decision-making and purchasing choices. The employment associated with the given support also contributes in order to the transformation associated with RED from a good e-commerce to interpersonal commerce brand that will focuses on the improved communication at almost all levels.
In this type of way, becoming a customer-centric design, Little Red Guide can be accepted as an example associated with the successful interpersonal network’s transformation in to social commerce brand name with multiple viewpoints for further development. A combination associated with the active company model, the improved level of clients’ loyalty, and have confidence in create the floor for new possibilities. Moreover, the software always changes in order to meet new dominating requirements, as well as versatility helps to develop and provide people with new products that might become interesting to all of them. The content-driven character of the support helps to produce a setting that will be appreciated by clients as they obtain an opportunity in order to save some discover the information they require in one click on. That is the reason why you will find multiple possibilities for even more growth associated with RED as well as personal strength.
Another influential gamer in the Chinese language e-commerce market will be Pinduoduo that displays a higher speed associated with its development plus an increase within popularity. The company started in 2015 by Colin Huang in Shanghai (Fung Business intelligence (bi), 2018). The particular primary concept of the particular platform is in order to offer low cost group buying items for various groups of clients that might be fascinated in them. This can also become considered a thirdparty buying platform that will offers a broad range of items to users, which includes apparel, bags, clothing, food, electronic home appliances, devices, furniture, makeup products, and items for private care (Fung Business intelligence (bi), 2018).
A distinctive feature associated with this service will be that individual retailers, entrepreneurs, and providers can provide their own products to Pinduoduo to find innovative ways to offer all of them to people plus sell them (Peng et al., 2019). The company will be also centered on marketing off-season products associated with various brands, fresh popular offerings, plus unbranded items that will may be attractive in order to clients (Fung Company Intelligence, 2018). The particular given approach gets one of the particular factors preconditioning the particular overall success from the platform and possibilities for its increase.
Utilizing the group-buying business design, Pinduoduo managed in order to attract clients through lower-tier cities plus rural markets, which usually became an important element of achievement (Deagon, 2019b). Because against RED, that is focused on the particular high-tier towns associated with China, this support occupies a market that was formerly uncovered by comparable brands. Customers will find products with reduced or cheaper cost on the web site, which meets their own expectations and lead to the additional rise of the firm (Fung Business Intelligence, 2018). It becomes possible mainly due to the team purchase model that allows clients to form groups and buy demanded goods.
An individual can start a new process by placing an order with the initial payment and share information about it using WeChat (Tung & Zhang, 2018). The deal will be made if the desired number of buyers will show their interest and agree to share the price. The scheme also provides a chance to get a product for free if there are many friends in the pool of buyers (Chadha, 2019). In general, the following model is used in Pinduoduo:
The given pattern provides clients with new opportunities for cooperation and evidence that the site becomes a powerful representative of the social commerce sphere that rests on the discussion between potential buyers and their active participation in debates and decision-making. Additionally , Pinduoduo broadly employs WeChat as the application critical for its functioning. The bigger part of all traffic associated with the work of the company comes from this platform that provides users with an opportunity to engage in cooperation and communication activities (Graziani, 2018). For this reason, there is a critical need for further improvement of the elements of socialization to achieve new levels of performance.
It should also be stated that Pinduoduo is characterized by radically different preferences of its users if compare with Taobao or RED. By the statistics, 93, 1% of all these platforms’ users find interesting or demanded items through keyword search, which remains one of the most convenient modes to them (Graziani, 2018). Simultaneously, individuals that employ PDD because the platform for purchasing goods online care more about searching for unique deals and products that are offered every day time (Graziani, 2018). This helps them in order to economize money plus acquire multiple advantages from the make use of of the provided service.
The company correctly understands this difference within behaviors and mentalities and introduces a particular approach to the particular promotion of items. The AI managing the work of the platform pushes the desired and right products to the right users resting on the popularity, and purchase history (Graziani, 2018). The given method becomes an effective strategy that helps to create interest groups and engage in communication or other activities to decrease the price and buy a product.
Due to the adherence to this scheme, a specific meritocratic system for products is created. Excellent and high-quality products that are demanded by clients and that are given much attention are usually on the top of various lists and rankings, even if they do not belong to multiple brands or stores (Graziani, 2018). On the contrary, extremely fashionable items that are associated with well-known companies might remain unnoticed because of the absence of qualities that will be appreciated by users (Graziani, 2018).
The observation of this pattern is a core component of PDD’s functioning as it ensures that clients will be offered items that are appreciated by other group members and will make a purchase. At the same time, it empowers the social element as per this model, individuals form content and lists of the most popular goods by themselves, instead of looking through compilation of items that are useless but have strong support from companies or advertising agencies. The majority of people in this segment appreciate the given approach and report their satisfaction with the strategy utilized by PDD.
PDD also correctly realizes the need for the promotion of the service and elimination of safety concerns that might be related to e-commerce and its evolution in terms of fierce rivalry. Thus, responding to a wave of accusations in fraud and distribution of fake, or even low-quality goods, Pinduoduo conducted its analysis to find out firms that will might not notice the existing guidelines. As an outcome, about 36 companies were reported due to the fact of the violation of copyright guidelines, regarding 4, a few million listings had been removed to safeguard clients (Fung Company Intelligence, 2018).
This step turns into a vital strategic answer demonstrating that the particular brand takes treatment of its customers and tries in order to produce a safe plus protected environment that would encourage people to engage in various forms of online cooperation. PDD also emphasized its intention to keep monitoring all existing offerings using the pivotal aim in order to minimize the quantity of threats plus challenges that may deteriorate the picture of the organization or be stress filled for its clients.
The inclination towards appearance associated with numerous attempts in order to use the system for a few illegal actions proves the developing demand for the system and, simultaneously, shows the existence associated with a significant concern unusual towards the whole field in China. PDD attempts to reconsider the use the main goal aid the particular high level associated with clients’ loyalty because their satisfaction continues to be in the immediate correlation with security guarantees the organization can offer to the clients.
PDD also recognizes the particular need for the particular promotion of the particular service and the further development. With regard to this reason, this introduces a collection of activities developed especially for customers using the primary objective to improve their fulfillment levels and assurance that they are going to possess positive associations associated to the brand name. For example, it utilizes cash red papers to encourage customers who invite buddies and make all of them use the support (Graziani, 2018). The particular reward might differ and count with regard to 5-20 yuan, which usually might be a pleasing gift. Additionally, PDD creates its leaderboard with the listing of users that earned the largest amount by inviting fresh people (Graziani, 2018).
At as soon as, the most effective person managed in order to acquire 2, 940 yuan, sharing invites with 290 buddies (Graziani, 2018). Because the majority of mobile phone users in China have thousands of friends in WeChat, they become attracted by the promise to earn significant sums of money by simply inviting all people to their contact list. The given strategy becomes extremely useful in promoting PDD and the fast increase in the number of its users, which also contributes to the popularization of the platform and its empowerment. Moreover, because group purchases are taken as the main activity, this method becomes even more practical as it helps to form new communities that will try to decrease the price for a particular item and contribute to the future growth of PDD.
PDD also tries to remain in touch with clients through the use of Customer Service Messages. These are flexible and customizable messages that are usually sent 48 hours after an individual interacted with a particular account or followed it (Graziani, 2018). Different from other similar services, Pinduodue works more effectively as it uses these services to present new offerings to a consumer and contribute to the further rise of the service.
They are customized and designed regarding the current preferences of a person and can become a really helpful source of information that shows the existing discounts, group purchases, and opportunities for economizing. That is why the employment of Customer Service Messages becomes another potent tool that helps the platform to occupy its niche and remain popular among clients belonging to a certain target population.
PDD’s revenues reached about one, 7 billion yuan in 2017, which helped the company to become the third-largest representative of the e-commerce segment in China (Deagon, 2019a). Additionally, it engaged in cooperation with other companies to increase flexibility and suggest new possibilities for users. For instance, Tencent offers PDD-specific access points on the interface of its WeChat Pay to integrate effective payment solutions and protect the majority of transactions performed by clients (Fung Business Intelligence, 2018). The given agreement stimulates the further evolution of the brand and supports its growing popularity in China.
Altogether, combining the elements of social and e-commerce, the platform manages to evolve and generate stable revenues by attracting new clients every year and introducing new functions that will be appreciated by the target audience and individuals who look for group buying and lower prices.
Social Commerce Platforms
As it becomes clear from the examples provided above, the three most fast-growing brands Taobao, RED, and PDD employ social elements in their functioning with the primary goal to achieve higher levels of cooperation with clients and provide them with an opportunity to discuss various goods, share experiences, and emotions. To a greater degree, it became possible due to the rise of mobile platforms for social commerce that offer limitless opportunities with regard to collaboration and advancement (Jahanshahi, Mirzaie, & Asadollahi, 2011). The particular importance and recognition of social industry in China may be the result of a number of factors.
First, as it had been stated, the provided segment is increasing in the nation. The proliferation associated with mobile phone make use of reaches its report showings as 788 million people are usually now considered cellular users (McCarthy, 2018). It means there is an extremely broad population group that will can be impacted by companies that change their priorities in order to e-commerce activities.
Moreover, 57, 5% of citizens are usually active Internet customers that have constant entry to various websites and platforms (McCarthy, 2018). For like individuals, cell phones turn out to be a tool that allows them with a good opportunity to stay informed about the particular most of events plus fresh offerings. These types of numbers also proof benefit effectiveness associated with the establishment associated with network coverage within China, where cellular technology has was able to turn into a good indispensable element of the particular economic and daily life of individuals as well as the state (McCarthy, 2018). Statistics furthermore provide evidence that smartphones plus Online users actively make use of applications for discussing bikes, booking seat tickets, food delivery, taxi cab, and trade (Ngai & Gunasekaran, 2007).
In this kind of a way, the particular bigger part associated with the population will be ready to make use of their mobile products for various dealings or alternative activities presupposing purchases of products or even services. Mobile telephone provides a system for the transmission from the Internet plus various services that will offer a chance to create a transaction having a particular monetary worth and get the preferred good (Barnes, 2002). Due to the particular mixture of such elements as effectiveness, comfort, and simplicity, this particular mode of conversation stipulated a substantial growth in Chinese language e-commerce to become an additional important step within the introduction of social types of communication.
For instance, such an application as WeChat is nowadays one of the critical aspects of any significant e-commerce company in China. It is developed for smartphone users to communicate using access to the Internet and sent messages to each other (Liao, 2019). This social component is widely used by Taobao, PPD, or RED in their work as clients might form their interest groups or engage in cooperation via this very app.
The special extension of this very program called Shopping List provides users with an opportunity to manage orders and shopping charts, which is also essential for social commerce (Lo & Tong, 2018; Pan, 2019). Furthermore, a new interactive module helps to recommend various items and socialize to discuss them. For this reason, WeChat becomes a fundamental platform for the rise of online forms of trade in China.
Finally, at the moment, China will be known as one of the main manufacturers of mobile phones with Xiaomi keeping the 6th placement in the listing of the world’s largest smartphone businesses (Pan, 2019). This particular factor also plays a role in the appearance associated with different models associated with social commerce because due to bulk production, devices turn out to be available and inexpensive to broad foule who utilize them in order to access the Web, communicate, and create purchases.
In such a method, China experiences an increase of mobile systems that can become employed by several brands to boost their online existence and provide their items to various categories of clients. This distinguishing characteristic, peculiarity shapes the additional evolution of web commerce and the way it will work in the long and short-term perspective.
Concerns with Social Commerce in China
As in any sphere of business, social commerce also has critical concerns associated with its evolution and rise. For instance, fierce, aggressive rivalry can be taken as one of the problems that occur when analyzing the issue. In China, competition is extremely complex because of the high speed of its economy’s growth and multiple opportunities related to it. For this reason, every month, new firms that follow successful models emerge and try to attract clients. There is also a threat of unfair competition or a critical decrease in the quality of offered goods or services because of the lack of experience or the desire to generate profit in the short term (Melton, 2019).
For instance, PDD reports that during its investigation about 50 clones of the company were found and issued because of multiple frauds, cheating, use of private information, or inability to satisfy clients’ needs (Soo, 2018). It might become a factor limiting social commerce in China because of the corrupted image of brands or decreased loyalty of clients. Unfair competition might also include fake news or fake negative comments about the work of the service to distract clients and make them use other companies available at the moment.
Another significant concern is the creation of hyper-social, viral, interactive, and extremely addictive shopping experiences by using mini-programs available in existing applications (Suen, 2018). One of the distinctive features of Chinese buyers is that will they will buy items suggested by their buddies and they want in order to be entertained throughout their shopping activities (Du & Tang, 2014; Soo, 2018). Utilizing these characteristics, designers create mini-applications or even programs characterized simply by viral-friendly features in order to ensure that customers will have good associations between this particular software and enjoyable feelings emerging throughout shopping (Vongsraluang & Bhatiasevi, 2017).
In this respect, there are many concerns regarding the increased additivity of platforms like as Taobao, PPD, or RED and the negative impact upon some buyers that are unable to quit and spend almost all their money upon items that are usually not needed for them but are recommended by their friends (Verot, n. d. ). The given feature is one of the significant problems of this sector in China as socialization is considered essential for smartphone users, and they have little chance to resist pleasant shopping experiences (Vongsraluang & Bhatiasevi, 2017). That is why a serious part of the population demonstrate their concerns with the growing popularity of social commerce and companies’ desire to earn money regardless of clients’ interest and their states.
Finally, there are many problems associated with the safety of transactions, poor quality of goods, fake items, or the inability of the government to regulate all aspects of the sector. The speed of its growth is too high, and the existing legislation is not flexible enough to consider all problems. For this reason, the problem with fake goods and cheating also becomes one of the significant concerns related to social commerce in China that should be solved.
The most popular sites such as Pinduoduo, Taobao, and RED report that every month, there are multiple attempts to sell fake goods or provide services of inappropriate qualities to clients who use their platforms. The given factor results in the growth of customers’ dissatisfaction and their desire to stop using sites that might be dangerous to them. In general, it also damages the whole e-commerce sector because of the deterioration of its image.
At the same time, the high speed of the market’s growth also means that malefactors will acquire new opportunities for interference with the work of credible services and their use to generate income using illegal schemes or providing products of extremely poor quality (Soo, 2018). This tendency transforms into a serious threat to all leading companies working in the Chinese social commerce segment as they are interested in its further promotion and attraction of new clients.
At the moment, there is an united effort to create an online environment free from the threat of unfair competition, poor quality, or fraud. Such companies as RED, PDD, or Taobao ensure their clients that they engage in monitoring of the market and activities that are focused on the protection of transactions and delivery of appropriate goods to all individuals using their sites. However, there is also the need for governmental regulation as one of the most powerful actors that might guarantee the stability of the segment and create the conditions under which law-breakers will face multiple challenges and barriers.
There is also a tendency towards the improvement of the cooperation between the companies mentioned above and the Chinese government aimed at the monitoring of social commerce and e-commerce platforms and the discovery of companies that act not by the existing regulations. The given collaboration is expected to improve the situation and guarantee protection to all users.
Another serious concern of social commerce in the state is the problematic delivery of goods that are ordered by clients. As it has already been stated in the section devoted to the analysis of Taobao’s strategy, the creation of a designed and effective logistic strategy is a primary element of the popularization and promotion associated with online trade within the country. Nevertheless , the fast velocity of the sector’s growth and the particular appearance of countless numbers of new customers using their orders expose a significant challenge in order to logistics companies, which usually have no obtainable resources to fulfill all requirements plus guarantee fast plus safe delivery associated with the purchased products (Amadeo, 2019).
In other terms, at the instant, no unified plus powerful logistics organization in China might be able in order to support the present velocity of social commerce’s rise. Because of this, several e-commerce platforms possess to cooperate along with smaller agencies to provide items to numerous regions. It may result in the particular prolongation of waiting around time, deterioration associated with the quality associated with goods, their reduction, and a reduce in the amount of clients’ satisfaction. The difficulty of the issue increases every 12 months due to the regarding the field plus the constant look of new stars.
Finally, an additional problem that may threaten the additional evolution of web commerce within the state will be the dominance associated with WeChat since the just effective application with regard to socialization and conversation. The majority associated with transactions of top e-commerce companies are usually completed with the aid of this very support. The absence associated with the alternatives may harm the entire market as WeChat transformations right into a monopolist that drives the particular further progress the particular sector.
From the previous areas, one can observe that PDD, RED-COLORED, and Pinduoduo vitally depend on the particular functioning of the particular given service plus its capability to fulfill clients’ requirements. Within other words, any kind of failure in the particular work of WeChat might slow up the additional growth of area because of the particular over-reliance about this software (Amadeo, 2019). This also means that will there exists a need with regard to the development associated with similar platforms that will would be regarded as alternatives to WeChat and attract customers by their simpleness, effectiveness, and several opportunities for socialization.
Altogether, the particular given factors ought to be considered since the major concerns limiting the evolution of social commerce in China. Because the existing environment is beneficial for the popularization of this form of trade, the elimination of these aspects will provide new opportunities for companies. Additionally, the rising popularity of various online platforms resulted in serious shifts in censorship that have traditionally been considered severe in the state.
The government correctly realizes multiple positive aspects associated with e-commerce and its positive impact around the economy. For this particular reason, there exists an indication of the enhancement and reconsideration associated with some strict guidelines that prevented individuals from engaging within social activities or even buying online (Amadeo, 2019). This inclination creates the foundation for further improvement in the field and market advancement.
Chinese Government’s Regulations
The increase of e- plus social commerce pointed out above becomes a good important feature from the Chinese economy that needs to be considered by the particular government to become able to keep track of and control the segment. For this particular reason, there are usually multiple attempts in order to create the lawful framework for that additional rise of those types of trade plus protect people through fraud or maleficent actions that may pose a danger for their financial balance.
For this particular reason, there are usually numerous achievements associated with e-commerce legal building that are regarded as positive steps plus appropriate regulations (Wu, 2016). However, presently there is also the problem that all those policies, coordination, plus offered environment with regard to the collaboration are certainly not comprehensive enough like a regulatory vacuum seems (“China’s new web commerce law, ” 2019). There is the need for additional improvement of the particular existing legal program to think about all habits and models that will are designed in order to work more efficiently and eliminate obstacles limiting opportunities associated with companies.
The basis for that advertising and acceptance associated with e-commerce since the trend was the formula of a collection of regulations plus rules firstly launched in 1999. Agreement Law accepted the particular validity of information messages and offered a chance to share all of them; in 2000, the particular People’s Republic of China Telecommunications Regulations also introduced regulations of the market order and enhanced the supervision and management of the Internet content and services (Wu, 2016). However, the fast speed of the sector’s growth preconditioned the creation of the Network behavior of commodity trading and related services Interim Measures in 2010 that became the fundament for all e-commerce operations and similar forms of trade (Wu, 2016). In 2011, the Ministry of Commerce offered another specification of the third-party e-commerce trading platform that outlines the paradigm for legal cooperation and collaboration between actors.
At the same time, these measures are not sufficient enough to cover all aspects of the fast-growing e-commerce segment in China. Legislation related to the sphere still has to be improved as there is no basic law, only some special laws, and regulations exist (Wu, 2016). There are still many gaps as the number of fake goods, consumer complaints, and problems increase every year and prove the need for some urgent regulations that might help to reconsider the existing approach to social commerce. Transactions should also be secured as there are still multiple problems with their protection and the creation of an appropriate environment.
One of the current steps made by the Chinese government to regulate the work of the sphere is the introduction of a new approach by the Standing Committee of the National People’s Congress. It would require the majority of vendors to be approved before offering various goods on Taobao, WeChat, Weibo (Hollingsworth, 2017). It might help to ensure that the quality of items will be in the appropriate degree, and all dealings will be guaranteed. In addition , a particular tax must be enforced to help the additional rise from the world. However, you will find a number of debates relating to this strategy as it may distract brands through the sector plus slow down the progress. Regardless associated with this fact, presently there is still the need for the particular Basic Law that will would be capable to implement e-commerce protection guidelines to make a paradigm for that modern operation plus protect all customers.
The current governmental regulations furthermore lack the safety of customers plus basics for assistance and e-commerce advancement. So far as social types of trade presuppose sharing private information plus its provision to 3rd parties, all clients’ data should become secured to prevent frauds or leakages (Hollingsworth, 2017). In the moment, personal privacy laws in The far east neglect to meet this particular requirement and produce a protected platform for cooperation. That will is why additional improvements are required to be successful and activate the near future rise associated with e-commerce.
Business Models for Sociable Commerce in China
Applying the explanation various types associated with business models utilized for social business, it is furthermore possible to define the Chinese web commerce sector. Taobao, because one of the particular largest companies well-known in the nation, adheres to the particular e-commerce oriented design. It uses the conventional platform and makes a specific community along with multiple active customers and loyal customers who might talk about various goods plus make their option resting on the experience of other users. Taobao fosters socialization and communication by adding social components and interactive with customers to attract them and guarantee a high level of their interest in the provided goods (Chiu et al., 2012). The effectiveness of the given model will be evidenced by steady and high earnings in order to the brand name to continue the evolution.
As for Xiaohongshu, this adheres to the particular social network-oriented design that rests upon the use associated with its mobile software. All customers seek advice from communities or buddies searching for advice or even recommending a particular good or product. Real relations plus friendship between people also act as the particular ground for preferred buying behaviors because they help to advertise particular products. In the same period, the employment associated with ties between individuals helps you to share info much more effective methods and plays a role in much better promotion. This means that will RED becomes capable to enjoy several benefits of this particular model because of the popularity of the application. The popularity of this model preconditions the appearance of other adherers such as WeChat, which uses social collaboration between clients as a potent tool to recommend different products and generate income.
The group-buying business model is the third extremely popular framework in China. Its relevance is preconditioned by the fact that the population is characterized by strong bonds and the desire for cooperation to acquire benefits (Wu, 2016). At the same time, group participation in purchase might help to lower the price and ensure that a good is worth consideration as it meets all requirements to qualify. For this reason, Pinduoduo employs the given model as one of the possible ways to affect citizens living in rural areas and guarantee that are going to fascinated in offered plans. It becomes the key success element for many businesses working in the particular sphere of web commerce in China.
Finally, speaking regarding business models for social commerce in China, one should consider the fact that they all rest on the peculiarities of the local market and the mentalities of people who belong to the target audience.
In other words, the most effective approaches to working with online users and their attraction presuppose their involvement in a lively discourse that is critical for decision-making and their desire to buy a particular product. That is why the further appearance and evolution of e-commerce platforms in China are mostly associated with the fostering of socialization elements and their integration with business models (Amadeo, 2019). The practice of group participation in various processes proves its effectiveness and can be utilized by many companies to generate income and increase clients’ loyalty.
Business Strategies for Social Commerce in China
One of the important features of social commerce is the existence of various business strategies that can be utilized by companies with the primary goal to generate stable income and attract new clients. First of all, the majority of brands provide a continually increasing diversity of goods that can be offered to clients to satisfy their needs. It becomes one of the critical elements of the majority of e- and social commerce companies in China. The fact is that the core of their approaches is the existence of an extremely wide choice, reasonable prices, and convenience. These factors are taken as the main attractions for clients who use the Internet and mobile applications when looking for various goods and trying to choose among the existing offerings. This business strategy helps to attract new individuals every year.
Another vital business strategy that is currently employed by companies in China is the provision of clients with a chance to reduce prices for existing goods by participating in group purchases (TECH, 2017). In other words, clients become attracted by the chance to enjoy multiple benefits of e-commerce and save money. Following surveys, it becomes one of the factors that impact users’ decision-making and their preferences regarding the use of websites of systems such as PDD, Taobao, or Crimson (Barnes-Vieyra & Claycomb, 2001). That will be why all manufacturers that work within the sphere of web commerce in China focus on the introduction associated with low prices as part of their business technique that might assist to generate the competitive advantage plus overcome extremely solid rivalry.
Additionally, companies attempt to appeal to clients by providing all of them a chance in order to make money by welcoming friends or discussing special links along with them. Just because a typical WeChat user offers hundreds of people in his/her contacts, this strategy becomes potent to attract new clients and guarantee that old one will remain active and contribute to the future growth of the platform. Regarding the main features of customers in China, this approach is welcomed by all population groups and remains one of the main positive aspects of various companies.
Finally, social platforms offering multiple services to their clients try to remain flexible and adapting as these are the critical elements of their strategies. The modern market changes extremely fast, and customers acquire new requirements and features. Additionally , technologies also evolve and provide new opportunities for cooperation and trade. For this reason, the most influential brands such as Taobao, PDD, or RED try to introduce new options for their users with the primary goal in order to support their attention and make sure these people will remain pleased with the offered solutions.
Altogether, as it arrives from the info offered above, social business is one associated with the most quick-progress modes of industry today. It offers a number of opportunities for businesses to engage much more effective cooperation along with clients, monitor their own demands, promote products via such systems, and generate steady revenues. The achievement of such companies as Amazon, auction web sites, and Taobao evidences the existence associated with multiple opportunities with regard to firms to carry on their evolution plus improve their on the internet presence by growing new applications plus offering them in order to users. People’s needs for diversity, comfort, communication, and conversation help the increasing recognition of various press and create the floor for the introduction of recent business versions which can be employed in order to sell various products.
In The far east, social commerce will be one of the particular distinctive features associated with its economic atmosphere. The rise associated with Taobao, Little Crimson Book, and Pinduoduo proves the presence of advantageous conditions for that advancement of this marketplace segment. The provided platforms effectively utilize you will of purchasers who wish to enjoy the particular diversity of goods and reasonable prices. Using WeChat and other social networks, they provide an opportunity to discuss goods and share experiences associated with them. Due to the combination of these aspects, e-commerce becomes a power that should be considered by the government to ensure that this mode of trade will continue to evolve and to protect all customers from possible frauds or low-quality products. In the future, it is expected that the tendency will preserve, and social commerce will become a significant part of the Chinese economic landscape with high annual revenues and opportunities for the future rise.
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