Social Media, Flash Sales, and the Maker Movement: An Empirical Analysis
50 Pages Posted: 27 Aug 2016
Date Written: July 25, 2016
The emergence of the maker movement has democratized the production of goods and increased consumer demand for designer goods, leading to the founding of e-commerce platforms such as Etsy, Fab, and Gilt. Designers with little brand recognition have to overcome high buyer search costs in order to succeed in these markets or on their own websites. We study two mechanisms that designers use to promote their products — flash sales and social media — by collecting data for 24,446 products sold from June to July 2013 on a popular US-based e-commerce platforms specializing in the sale of products made by local designers. We find that social media activities predict success in product launches. Using two different identification techniques, we find that social media activities such as Facebook Likes, Pinterest Pins, and Faves have positive but different magnitudes of impact on sales, moderated by product type. Also, flash sale promotions increase average daily sales on the designer’s primary website by up to 0.8 units in the first week after a flash sale is initiated.
Keywords: flash sale, maker movement, new product development, search and experience goods, social media, word of mouth
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