Today's keyword is social commerce. We have defined what social commerce is when we talked about Levi's before. Groupon is a leading social commerce service provider in America. In Korea, Ticketmonster is gaining popularity, especially by people in their 20s and early 30s. Why these social commerce services are becoming popular these days?
First, we need to understand the dynamics of social commerce. Three entities are involved in this process: local service provider, social commerce service provider, and customers. Local service providers register their services at social commerce websites. Customers glance over the registered services and buy the services they like. Social commerce is taking advantage of these customers' buying power. If a certain number of customers is willing to buy a certain service, local service providers bargain the service's price and customers can buy it at a much cheaper price. It is a sort of group purchasing. Social commerce service providers give back the profits after they receive a commission.
Customers can enjoy many different services that they really wanted to use but were too expensive without paying much. Local business providers can market their services and earn profits at the same time. Social commerce service providers, of course, yields profits during this transaction. All the entities involved benefit from social commerce.
Yet, there are potential dangers in social commerce business. The quality of services provided by local service providers might be poor. Thus, social commerce service providers must make sure that registered services are of good qualities. If people keep feeling disappointed or unsatisfied, social commerce business is bound to perish. It is of utmost importance for social commerce service providers to have many different local service providers because a variety of services provided matters to their customers. At the same time, the management of those local service providers should be rigorous enough to guarantee the quality of services provided.
It is an undeniable truth that social commerce is on the rise. Many people even commented that social commerce is the most brilliant business model after Google. In order to further thrive, social commerce service providers should be wary of many potential dangers hidden in the industry and deal with those perils wisely.
