Social Commerce - A new online business model gaining momentum
With the help of social networking tools, there's a new business ecommerce model being utilized by many entrepreneurs and companies that want to test new products.
New businesses that don't have the research and development budgets or brand recognition are relying on social networking to provide an indication of how much people like a specific product by voting for it. For every positive vote received, the product's cost is often adjusted. The more people vote for a product, the more popular it seems and the more likely the company is to reduce cost and sell it at a lower price to the customer. Earlier I wrote an article on different online business models, I would classify this new strategy as a subset of eCommerce called, Social Commerce. Although ecommerce and social networking tools have been around for over a decade, the combination of them to the net effect on price adjustments is a relatively new development. Wikipedia defines Social Commerce as an online media that supports social interaction and user contributions to assist in the online buying and selling of products and services. I would add that Social Commerce also may affect the cost of online buying and selling through for instance, customer ratings, reviews, user recommendations and referrals, social shopping tools, forums, and others. This new ecommerce angle utilizes the popularity of a product with the principles of economy of scale, and gives the power to the customer. Though more safeguards would need to be implemented to protect from abuse, the idea is gaining momentum and is a great way to launch new products and receive feedback. I have seen smaller companies implement social commerce, but not yet in the more well known brands. With the marketing budgets supporting many of the big brands, this could really add a boost to a brand’s web presence. With some great PR, this new model could go mainstream and be the future of ecommerce. Let's see how long it takes.