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Procedia Engineering 165 ( 2016 ) 1556 – 1562

15th International scientific conference “Underground Urbanisation as a Prerequisite for Sustainable Development” Social commerce as a driver of sustainable development of the information economy of the city

Evgenia Oleynikovaa,*, Yuliya Zorkina

aInstitute of Economics, Far Eastern State Transport University, Khabarovsk 680021,

Abstract

The purpose of this article is to determine notion of social commerce, find out state of social commerce in Russia and to define its place in the city economy. Social commerce implies use of Web 2.0 technologies and in some way is similar to e-commerce. This article compares these two types of activity, shows the importance of social commerce for information economy and elicits special features of this phenomenon in Russia. The authors research competitive structure of some segments of markets in the Russian Far East and determine some features of distribution logistics of collective buying in Russian Far East. © 20162016 The The Authors. Authors. Published Published by byElsevier Elsevier Ltd. LtdThis. is an open access article under the CC BY-NC-ND license Peer(http://creativecommons.org/licenses/by-nc-nd/4.0/-review under responsibility of the scientific). committee of the 15th International scientific conference “Underground UrbPeer-reviewanisation under as a responsibility Prerequisite offor the Sustainable scientific committee Development of the. 15th International scientific conference “Underground Urbanisation as a Prerequisite for Sustainable Development Keywords: Information economy; Sustainable development; Social commerce;Social media; Collective buying; Group buying.

1. Introduction

The urban economy is a subsystem of the national economy and is determined by the type of its major limiting factor. The modern era of the information economy presents the dominant and most promising type of economic development.

* Corresponding author. Tel.: +7-914-773-8853. E-mail address: [email protected]

1877-7058 © 2016 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review under responsibility of the scientific committee of the 15th International scientific conference “Underground Urbanisation as a Prerequisite for Sustainable Development doi: 10.1016/j.proeng.2016.11.893 Evgenia Oleynikova and Yuliya Zorkin / Procedia Engineering 165 ( 2016 ) 1556 – 1562 1557

The information economy could be defined as a system aimed at obtaining information, its analysis and use for the production of economic goods with high informational capacity to meet the needs of society and the generation of reactions to preserve, strengthen and transform the system itself [1]. Information economics as a science studies the economic activity of the person, which includes extensive use of electronic technologies in the processes of social production, distribution and consumption of public goods. with new media and social media serve as information and communication base of information economy. Here we are to note that information resource is a necessary but not sufficient factor for the effective implementation of innovative economy based on knowledge and their intellectual media - high-level specialists who able to turn ideas into innovative new products and effectively create and use competitive technologies [2]. And that means also shift to new level of Internet development implemented in Web 2.0 technologies with new role of people in economy and society in general. Despite of the short history of the information economy there is understanding of its importance on most levels of state and municipal authorities. Even medium-sized municipalities devote their attention to necessity of informational component in their strategic plans for the development of a range of aspects of the information economy. Taking strategic plan for sustainable development of Khabarovsk city as an example we can see that practically all the main directions could be linked with the evolution of information economy. The plan is intended to enhance the modernization and innovation processes of the city economy, creation of favourable conditions for the population, shifting from quantitative to qualitative, comfortable and accessible conditions of public services based on innovative technologies, elaboration of unified city Internet space, creation of new mechanisms of interaction with the use of electronic technology. All these alongside with the development of logistics system must facilitate transition to modern state of economy and sustainable development of the city. Sustainable development of urban economy requires balanced development of its economic, technological and social components using self-employment mechanisms and increasing the level of satisfaction of the diverse needs of the population.

2. Research Methods

In this study an ethnographic approach as a representative of non-positivistic methodology was used. This approach involves accustomization to the subcultural context and is long-term by nature, this is the method of the first choice in the study of hardly accessible communities. Within the limits of this approach classical ethnographical tool in the form of participant observation was employed for the research. The observation was carried out in the natural context of social environment by personal way and was semi-open and semi-structured by nature. The results of personal observations were complemented with audit of reserves method at online-marketplaces and so called off-line pickup points. Estimate-talk-Estimate – variation of Delphi method – was applied to elicit volumes of social commerce operations. In our field studies we observed and took part in social commerce services including its models like group buying, social shopping and purchase sharing [3] as well as in specific to Russian reality forms identified through retrospective analysis. Retrospective analysis has allowed us to establish the specificity and the genesis of social commerce in Russia. The observations were carried out from August 2008 to September 2016. Our research is mainly localized in the Far Eastern Federal district, namely the cities of Khabarovsk and Vladivostok. Some aspects of this phenomenon were studied on the example of social commerce in , St. Petersburg and Novosibirsk. These cities were chosen to maintain wide geographical coverage and because of their metropolitical value. The high prevalence of this phenomenon, the high user involvement in practices of social commerce and the high level of Internet penetration in these regions appropriate to the requirements of the sampling was also taken into account. Among the most frequently accessed web locations in the making of the research we can outline the following resources (to name a few): khabmama.ru, vladmama.ru, sibmama.ru, 100sp.ru, sp.babyblog.ru, sptovarov.ru, groupon.ru (rebranded to “frendi.ru” in 2016), biglion.ru, kupikupon.ru, irecommend.ru, otzovik.ru, livemaster.ru, scladchik.com, molotok.ru, etc. 1558 Evgenia Oleynikova and Yuliya Zorkin / Procedia Engineering 165 ( 2016 ) 1556 – 1562

3. Etymology and definition of social commerce

Despite the explosive development with the impressive pace and scope, the concept of social commerce (or s- commerce for short) has not been formed yet and one of the reasons is the brevity of existence of this socio- economic phenomenon, it has just one decade history. For the first time the term "social commerce" was introduced by Internet giant Yahoo on November 14, 2005 with the meaning of internet platforms system for people to come together in order to give and receive advices from people they trust, to search for goods and services and then buy them. Experts have not agreed yet with definite scientific determination of "social commerce" term and its subject area. Neither the economic nor the legal science has even defined the conceptual and categorical framework of this notion. To understand the essence of the phenomenon we are to turn to its etymology. The term "social commerce" is formed by attaching the word "social" from "social media" notion to the word "commerce" from the concept of "electronic commerce". Social media can be defined as set of internet-applications based on Web 2.0 for user content generation and sharing. Social media are part of new media, which include internet, computer games, digital films and photography, mobile technologies, etc. Social media include different types of online interactive geographically distributed means such as social networking sites, blogs and microblogs, forums, podcasts, photo and video hosting, file stores, recommenders, file hosting services, virtual games etc. In social media users can make their own pages, join to communities, communicate and share information. Every new Web 2.0 application has its own characteristics offering new opportunities for the users with new accessible and attractive resources. To understand the phenomenon of social media we are to turn to the characteristics of Web 2.0. This term was proposed by T. O'Reilly in comparison with the previous Internet era, known as Web 1.0 [4]. Web 2.0 space implies systems, which are becoming more efficient with the number of users growth. Web 2.0 emergence marks the transition from the model of information availability to the model of social availability, from the reader position to the position of the content creator, and this could be applied to all aspects of human life. Every individual pertaining to social media is also a consumer, so we may conclude that social media have noticeable impact to all stages of purchase process including prepurchase, purchase and postpurchase behavior. The same it noted by Mangold and Faulds [5] referring to social media influence to “various aspects of consumer behavior including awareness, information acquisition, opinions, attitudes, purchase behavior, and post-purchase communication and evaluation”. Zwass accentuated that Web 2.0 technologies encourage collective efforts to co- create consumer value. Thus we could consider the second integral part of the “social commerce” concept. E-commerce being a component of “social commerce” term means commercial activity of particular economic agents, aimed at making profit and carried out with the use of information technology and especially telecommunications networks. The most commonly e-commerce is used in a narrow sense comes to online trading. The most popular as it will be shown below is the understanding of social commerce as a part or special kind (with a higher level of development in many cases) of e-commerce in social media. Going back to the etymology of the term, we consider that this stage of e-commerce is called social not only because of social media applying but also because of so-called social impact on both individual (households) and at the institutional (societal) levels, i.e. social benefit. The authors presume to be eligible to talk about the social effect in relation to social commerce as this phenomenon is changing a sense of safety, the lifestyles of people, culture, including consumer socialization, and human communities. As far as social commerce occurs at the interface of e-commerce and social media, this phenomenon can be viewed from the standpoint of informatics, economics, , sociology, psychology and other fields of study. That explains the huge number of diverse definitions of this concept. So Dr. Paul Marsden analyzes 22 definitions of social commerce [6]. For instance in terms of computer science social commerce is online application that combine web 2.0 technologies like Ajax [7] and RSS [8] with interactive platforms such as online social media websites and content communities in a commercial environment. Sociologists understand social commerce as employment of web based social communities by e-commerce companies. It mainly focuses on the effects of social influence which shapes the interaction among consumers [9]. Evgenia Oleynikova and Yuliya Zorkin / Procedia Engineering 165 ( 2016 ) 1556 – 1562 1559

From the point of view of marketing experts social commerce regards the prominent trends in online markets; businesses use social media or web2.0 as a direct marketing method in order to support customers' decision making process and behavior [10]. Wang and Zhang [11] define social commerce as a form of commerce mediated by social media and including both online and offline environments. We consider social commerce to be a new and higher stage of electronic commerce as it is possible to identify the features that clearly distinguish s-commerce from traditional e-commerce [12]: 1. E-commerce is product-oriented while s-commerce is focused on the consumer, community and society; 2. The design of business processes, products or services in e-commerce is limited to the enterprise or its partners. Value creation in social commerce is participatory and collaborative; 3. Value chain in e-commerce is made by limited number of participants while in s-commerce there are many actors with rewarded motivation of participation; 4. There is no communication from customer to business or another customer in e-commerce, in s-commerce there are online-communities or s-commerce itself grows from those communities; 5. For traditional e-commerce Web 1.0 platform and standards EDI are enough, whereas social commerce requires Web 2.0 environment; 6. In e-commerce customers use online discovery mechanisms (e.g., search) и navigation, in s-commerce they use tag, review, rank, rate, comment mechanisms. Narrowly defined social commerce is considered as recommendation economy, new synthetic field of communication combining advertising, sales promotion and direct marketing. In a broad sense social commerce being a branch and stage of development of e-commerce is a commercial income-generating activity of economic entities carried out with the use of social media based on Web 2.0 technologies.

4. Social commerce types in Russia

Trying to mark out the variations of social commerce we should turn to the retrospective analysis of its development. February 2007 is considered to be one of the first significant milestones in the world history of social commerce. At that time social networking site made its first sale of virtual gift for real money. About the same time the first Russian social commerce mechanisms emerged. Apparently social commerce in Russia has its own original way, coming out of what we call the mum-commerce. Historically this s-commerce type has evolved from mother forums. Mothers faced with expensiveness of childcare goods and that was one of the reasons for this type of s-commerce development. Properly s-commerce in social networks can be viewed as separate kind - social networking commerce due to technological, market, socio-cultural and psychological characteristics of user behavior in social networks in general, and as buyers in particular. In Russia in a number of characteristics of the mentioned groups of factors social networks and commercial activities in them vary greatly, which allows to pinpoint, for example, -commerce and ok-commerce (Table 1).

Table 1 – Sectors of social commerce and their representatives Sector Runet site(s) International reference site(s) Vk.com OK.ru Facebook.com Social networking (including professional and location-based My.mail.ru networking) Professionali.ru LinkedIn.com Altergeo.ru Foursquare.com Irecommend.ru iRecommend.com Recommendation services Otzovik.ru epinions.com Booking.com Hotel reservations Oktogo.ru Hotels.com Hand-made association Livemaster.ru Esty.com 1560 Evgenia Oleynikova and Yuliya Zorkin / Procedia Engineering 165 ( 2016 ) 1556 – 1562

Molotok.ru Peer-to-peer commerce Meshok.ru eBay.com Numizrus.ru Biglion.ru Daily deals Groupon.com KupiKupon.ru 100sp.ru Collective buying platforms Sptovarov.ru N/A Sp-mama.ru

Source: authors We are of the opinion that the most common forms of social commerce in Russia are daily deals web sites, commerce in social networking sites and special collective buying platforms derived from mum-commerce itself. Social networking commerce (f-commerce, vk-commerce, ok-commerce, etc.) and mum-commerce grows from properly social networking sites or forums where users initially co-operate not for the purpose of purchase but for other reasons (friendship, common interests, etc.). This is just one of the options of social commerce expansion. The second and in many ways the opposite organizing principle of social commerce on the contrary implies the co- operation of the people in place where they shop. It underlies daily deals sites, which are often referred to as a kind of s-commerce also known as group buying sites. Collective buying platforms in spite of being descended from mum-commerce also fit into the second group at this stage. As some authors underline digital technologies facilitate the development of online platforms for supporting consumer coordination on a large scale [13].

5. Position of social commerce in city economy

To understand the contribution of social commerce to the economy of the modern city we turn to the question of the competitive structure of some segments of markets of goods of Khabarovsk and Vladivostok cities (Table 2). Though social commerce is more than just collective buying here we consider only that part as most representative and comprehensive. The table 2 takes into account only the organizers of collective buying site khabmama.ru and 100sp.ru collective buying platform (the same organizers of Khabarovsk represented at both sites). Organizers, working on the basis of other SNS are not considered in this sample. These segments were selected by the method of simple random sampling. We considered only local internet-based retailers

Table 2 – Competitive structure of some segments of markets of goods in Khabarovsk and Vladivostok.

Number of business actors Market elements Vladivostok Khabarovsk

Tea & Coffee

Internet-based retailers 19 (21.1 %) 15 (29.4 %)

Collective buying organizers 14 (15.6 %) 10 (19.6 %)

Offline stores 57 (63.3 %) 26 (51 %)

TOTAL 90 (100 %) 51 (100 %)

Children's toys Evgenia Oleynikova and Yuliya Zorkin / Procedia Engineering 165 ( 2016 ) 1556 – 1562 1561

Number of business actors Market elements Vladivostok Khabarovsk

Internet-based retailers 16 (14.1 %) 20 (22.7 %)

Collective buying organizers 25 (21.9 %) 19 (21.6 %)

Offline stores 73 (64 %) 49 (55.7 %)

TOTAL 114 (100 %) 88 (100 %)

Children's apparel

Internet-based retailers 20 (10,6 %) 31 (17.1 %)

Collective buying organizers 24 (12.8 %) 25 (13.8 %)

Offline stores 144 (76.6 %) 125 (69.1 %)

TOTAL 188 (100 %) 181 (100 %)

Hosiery

Internet-based retailers 1 (1.96 %) 6 (11.3 %)

Collective buying organizers 11 (21.57 %) 8 (15.1 %)

Offline stores 39 (76.47 %) 39 (73.6 %)

Total 51 (100 %) 53 (100 %)

Offline stores expectedly prevail in all segments of both cities. At the same time in Khabarovsk in most cases internet-based retailers dominate over collective buying organizers in the market structure while in Vladivostok social commerce units win in three out of four cases according to the table 2. Historically s-commerce in Vladivostok emerged earlier and now is developing there more rapidly than in Khabarovsk. That fact is confirmed also by quality of distribution logistics structure and total amount of pickup points in both cities (Table 3).

Table 3 – Some features of distribution logistics of collective buying in Russian Far East.

City/Region Number of main pickup points Total number of working hours of pickup points of the city/region per week

Vladivostok 22 994

Primorskiy region (outside of Vladivostok) 25 N/A

Khabarovsk 7 339,5

Khabarovskiy region (outside of 5 N/A Khabarovsk)

City/Region Number of main pickup points Total number of working hours of pickup points of the city/region per week 1562 Evgenia Oleynikova and Yuliya Zorkin / Procedia Engineering 165 ( 2016 ) 1556 – 1562

If to compare number of pickup points it is evident that logistically social commerce in Vladivostok is presented in more developed variant. Additionally consumers may use other pickup points offered by some courier companies in both cities. There are also services of home delivery provided by Russian Post, courier companies and individual couriers. Self-employment of social commerce organizers and their assistants is an important element contributing to the city economy. Derived growth of employment in the distribution sphere: from the pickup points as the organized entities significant for the urban economy - to the logistics and distribution and transport subsystems of the national economy. Moreover as the demand creates supply and causes an increase in production that leads to the growth of macroeconomic indicators of the GRP and GNP level.

6. Conclusions

Social media give broad options for the human capital evolution on the large-scale basis and social commerce consequently is the appropriate mechanism for sustainable development of urban economy in current conditions. Social commerce is the embodiment of proportional development, its implementation in modern city economy leads to positive dynamics of development of transport and logistics infrastructure of the city, activation of employment (especially for such sensitive part of the population as young mothers – in the example of mum- commerce), improvement of human capital. Electronic and technological growth of information economy has resulted in e-commerce, and overtaking proportional socio-economic development is directly linked to social commerce. And social co

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