The Relationship Between Social and Commerce Networks
Source: http://arxiv.org/pdf/1104.0942v1
A recent study run by Stanford University scholars explored the relationship between social and commerce networks in an online setting by analyzing Taobao, the world’s largest e-commerce website. The use of social networks in the online shopping experience has grown drastically recently, from the appearance of group purchasing opportunities to the sharing of shopping lists on websites such as LivingSocial, Groupon, and Kaboodle. Social networking in the online marketplace has provided businesses with new revenue opportunities, and consumers with additional product information and rewards, both social and economic, for sharing. Researchers obtained data describing the behavior of one million Taobao users, showing how they interact via Taobao’s instant messaging platform for communication between buyers and sellers. The study provides insight into three aspects of the social-commercial dynamic: information passing, the price of trust, and consumer choice prediction.
Information passing, the delivery of information betweens users regarding items and purchasing experiences, was found to play a key role in the Taobao network. The experimenters discovered that the greater the success of information passing, the greater the communication strength between a buyer and a seller, and the lower the time between a recommendation and a purchase and the price of a product. Additionally, the investigation into the price of trust revealed that buyers are generally more wiling to pay extra for a transaction with a highly rated seller. Finally, the development of a machine learning model that demonstrates consumer choice predictions showed that the social network is the most important feature in predicting how consumers will choose who to buy products from.
Many of the principles we learned in class regarding graph theory provide an explanation for the results found in this study. If each buyer and seller were thought of as nodes and the communication and transactions that occur between the buyers and sellers are thought of as edges, many of the findings from the study could be explained from a graph approach. A buyer and a seller initially form a weak tie when they first begin interacting once a buyer asks the seller about a product that they are interested in. Strong ties are then created as they communicate more via messages and IM, and eventually when purchases are made. These strong ties can be further reinforced if the buyer is happy with the purchasing process’ (i.e., payment, delivery, condition of the product) success, and wear off if the purchasing process does not go smoothly. A sense of trust is formed as these ties get stronger. Furthermore, buyers will inform their friends about how their shopping experience went with a certain seller, thus attracting or deterring other potential buyers from purchasing from that seller. This leads to the development of triads amongst a buyer, their friend, and the seller. Such triads are generally balanced because two friends who like each other can have a mutual like or dislike for a seller, due to one of the friends’ good or bad experience with the seller. These sorts of relationships between buyers and sellers, as depicted through graph theory, show that as strong ties are formed, recommendations can be given, prices can be negotiated, and trust can be formed between buyers and sellers through the social network that is created in an e-commerce website.
The relationships found between social and commerce networks can promote further use of social networking tools in the online marketplace. Such developments could lead to increased sales and satisfaction amongst consumers. A supplemental area of research could be determining how social networking could be used to market certain products and sellers in order to boost sales and increase trust amongst buyers and sellers.
thus attracting or deterring other potential buyers from purchasing from that seller. This leads to the development of triads amongst a buyer, their friend, and the seller. Such triads are generally balanced because two friends who like each other can have a mutual like or dislike for a seller, due to one of the friends’ good or bad experience with the seller. These sorts of relationships between buyers and sellers, as depicted through graph theory, show that as strong ties are formed, recommendations can be given, prices can be negotiated, and trust can be formed between buyers and sellers through the social network that is created in an e-commerce website.iphone 5 cases