"Deriving Value from Social Commerce Networks": New Paper, Lessons from Online Porn, & Call for Papers

A new research paper on the commercial value of social commerce entitled “Deriving Value from Social Commerce Networks” has been published in AMA’s Journal of Marketing Research (abstract below and link to full paper here). Meanwhile, the quarterly journal Electronic Markets –  The International Journal on Networked Business, has posted a CfP (call for papers) for a special journal section on social commerce here (deadline for submissions August 2010).

In the “Deriving Value from Social Commerce Networks” paper the authors, Assistant Professor of Marketing, Olivier Toubia, at INSEAD and Associate Professor of Business, David W. Zalaznick, at Columbia University report research findings on whether or not it makes commercial sense for online vendors to collaborate together in networks.  The short answer – yes it does.

It’s worth noting that the paper (drafts of which have been floating around the web for the last year) has a rather different take on social commerce to the industry standard understanding of selling with social media. For the researchers – “The distinction between social shopping and social commerce is that while social shopping connects customers, social commerce connects sellers.”

Nevertheless, the finding that it makes commercial sense for sellers to sell together raises interesting possibilities for social commerce.  As a recent article on what social commerce can learn from the online porn industry suggested, the opportunity is for single-owner sites to work in co-ops with others of similar focus to build collaborative e-commerce networks (a common strategy in online porn, apparently…).

Another opportunity that comes to mind, apart from the obvious implications for developing affiliate marketing and co-promotions, is the possibility of establishing themed virtual malls and marketplaces on social media platforms (e.g. a virtual mall in Facebook) – perhaps sponsored, curated or moderated by brands?

Stephen, A.T, &  Toubia, O. (2010) ‘Deriving Value from Social Commerce Networks’ Journal of Marketing Research, Volume 47, Issue 2 (April), pp. 215-228.

Abstract

Social commerce is an emerging trend in which sellers are connected in online social networks and sellers are individuals instead of firms. This article 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: (1) Does allowing sellers to connect to each other create value (i.e., increase sales)? (2) What are the mechanisms through which this value is created? and (3) 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 he or she benefits or suffers from the network? The authors find that (1) allowing sellers to connect generates considerable economic value, (2) the network’s value lies primarily in making shops more accessible to customers browsing the marketplace (the network creates a “virtual shopping mall”), and (3) the sellers who benefit the most from the network are not necessarily those who are central to the network but rather those whose accessibility is most enhanced by the network.