Deriving Value from Social Commerce Networks

Abstract:     
Social commerce is an emerging trend in which sellers are connected in online social networks, and where sellers are individuals instead of firms. This paper examines the economic value implications of a social network between sellers in a large online social commerce marketplace. In this marketplace each seller creates his or her own shop, and network ties between sellers are directed hyperlinks between their shops. Three questions are addressed: (i) Does allowing sellers to connect to one another create value (i.e., increase sales), (ii) what are the mechanisms through which this value is created, (iii) how is this value distributed across sellers in the network and how does the position of a seller in the network (e.g., its centrality) influence how much it benefits or suffers from the network? We find that: (i) allowing sellers to connect generates considerable economic value, (ii) the network's value lies primarily in making shops more accessible to customers browsing the marketplace (the network creates a "virtual shopping mall"); and (iii) the sellers that benefit the most from the network are not necessarily those that are central to the network, but rather those whose accessibility is most enhanced by the network.

Number of Pages in PDF File: 57

Keywords: social commerce, marketing, e-commerce, social networks

JEL Classification: C32, C34, L10, M31

working papers series