Social Commerce vs E-Commerce: What are the Differences Modern Business Must Know and Does Your Brand Need Both?
We’ve been familiar with the term ‘E-Commerce’ for some time, but now we have ‘Social Commerce’. So, what’s the difference when you consider social commerce versus e-commerce. Are they different? Do they matter to you as a business owner? This article explains it all.
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What Is E-Commerce?
E-commerce, or electronic commerce, simply involves the selling and purchasing of products and services via the internet. In general, e-commerce business models operate in three ways:
Selling via your own e-commerce system
Some business owners may have an existing website and then set up an additional e-commerce system. Others start off by creating their e-commerce site purely in order to sell their products and services. Businesses of all sizes can adopt this model because the cost to create a website nowadays is relatively low. If you can hire a skilful freelance website creator, you can easily get your own e-commerce website.
In other words, anyone – from big businesses with branches throughout the country like airlines, cinemas, and theatres, to local SMEs or individuals wanting to sell their goods – can create their own e-commerce website as long as they have the budget or skills in this field.
Selling via other e-commerce platforms
This type of business model can be operated using third-party marketplaces or e-commerce platforms.
2.1 Third-party marketplaces
Some of you might already be customers of third-party marketplaces. Famous examples include Shopee, Lazada, JD Central, and worldwide ones like Amazon and Alibaba. Selling via third-party marketplaces allows you to sell your products without hiring a website creator. You just need to have legal goods that meet the requirements of the platform you choose. Then, you can register for membership to open your own online storefront and start selling right away.
On that note, third-party marketplaces generally charge GP (Gross Profit) fees, which vary according to the terms of each platform. Therefore, if you are a business with physical products or an offline shop, you need to add the GP into your pricing when selling your goods on this kind of platform.
2.2 E-commerce platforms integrated with the existing website
Creating a new website may not require a large budget, but the e-commerce system itself can be quite complicated as it involves finances, customer data, and many other factors. Hence, most big businesses will have their own e-commerce sites, while smaller ones that don’t want to exceed their budget would opt to integrate an e-commerce platform with their existing site.
Some examples of e-commerce platforms you can integrate with your existing website include Shopify, WooCommerce, and Magento. These platforms charge monthly or annual subscription fees. There are packages with different prices for you to choose from according to your business size and needs.
Selling via your own e-commerce system along with other e-commerce platforms
Numerous businesses have their own e-commerce sites, and also partner with other e-commerce platforms to sell their products.
If you’re interested in e-commerce but still don’t know which model is right for your business, we can help you decide by giving you the pros and cons of each e-commerce business model mentioned above.
The first model: Selling via your own e-commerce system. This model allows everything to be under your control. You can design and create your own data storage as you want. However, the drawback is that you need a high budget, especially if you’re starting everything from scratch. Small businesses with lower budgets and no e-commerce or online skills are not recommended to choose this model as it requires a team of specialists to set up and take care of the system, plus update and fix it regularly.
The second model: Selling via other e-commerce platforms. This is the easiest and most convenient model for businesses to sell their products, with GP (Gross Profit) fees charged by the platforms in return. This model, therefore, requires a well thought out price structure. And if your brand is very new, you may need to also rely heavily on social media channels to promote your products and build brand awareness because there are tons of new arrivals being sold on big e-commerce platforms every day, making it hard for new products to be discovered.
The final model: Selling via your own e-commerce system along with other e-commerce platforms. To be very honest here, this model is NOT recommended if your budget is limited and your teams are not ready nor efficient enough to handle both. You’re better to choose either to sell on your website or use other e-commerce platforms. Doing both is not a mistake but you need teams of people ready to manage things like customer service, system administration, and shipping and delivery.
What Is Social Commerce?
We’ve already covered e-commerce in detail. Now let’s move on to social commerce, which sounds like a similar story to e-commerce. But when you consider social commerce vs e-commerce, how are they different? The answer is the platforms. Social commerce involves selling products and services via social media platforms.
If you mentioned social commerce 5-10 years ago, people would be unlikely to know what you were talking about. Social media at that time was generally used to keep in touch with friends and families, no one thought of using it to sell products. As these platforms gained more users, people started to use them to start their businesses. Then, social media channels like Facebook, Instagram, and even Google launched their business platforms in response to these changes in customer behaviour.
Facebook has a Facebook Shop feature for your online store where you can upload product images and prices. It comes with a system that allows customers to make purchases just like the e-commerce system does. Likewise, Instagram comes with an Instagram Shopping feature for business owners to sell their goods, but for the time being, you are required to connect your account with an e-commerce platform. Last but not least, Google has launched Google Shopping which provides a list of products based on the keywords that users have searched for. The products that match with the searched keywords are then displayed to the users.
How has customer behaviour changed? To answer that, we have to take a look back. In the past, people would believe whatever brands told them. Later on, brands gained their reliability and high sales by hiring famous superstars as product ambassadors. Now it has transitioned to the era of influencers, who, of course, have become influential mostly from social media by promoting products for people to buy.
However, nowadays, we can see that influencers, at times, can no longer convince people or motivate consumers’ desire to buy. Although influencer marketing is still profitable today, no one can guarantee the future. These days, consumers rely more on real product users who review products and share them with friends on social media. People also buy and use those products if the reviews prove real results for “normal” people, not just superstars.