Social Media, Flash Sales, and the Maker Movement: An Empirical Analysis

50 Pages Posted: 27 Aug 2016

See all articles by Karthik Babu Nattamai Kannan

Karthik Babu Nattamai Kannan

Georgia Institute of Technology - Scheller College of Business

Yu Jeffrey Hu

Georgia Institute of Technology - Scheller College of Business

Sridhar Narasimhan

Georgia Institute of Technology - Scheller College of Business

Date Written: July 25, 2016

Abstract

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

Suggested Citation

Nattamai Kannan, Karthik Babu and Hu, Yu Jeffrey and Narasimhan, Sridhar, Social Media, Flash Sales, and the Maker Movement: An Empirical Analysis (July 25, 2016). Available at SSRN: https://ssrn.com/abstract=2829855 or http://dx.doi.org/10.2139/ssrn.2829855

Karthik Babu Nattamai Kannan (Contact Author)

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

Yu Jeffrey Hu

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

Sridhar Narasimhan

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

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