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Abstract
In this study we investigate whether social reference systems, such as Facebook “likes” (FBLs), promote sales in social commerce, wherein adverse selection and quality uncertainty often severely damage consumer trust and impede efforts to achieve sustainable growth. We also examine the extent to which product characteristics (product uncertainty and product franchising) and deal characteristics (tipping points, discount rates, and deal durations) moderate the social selling stimulated by FBLs. On the basis of 1,327 samples collected from a major social commerce platform provider, we identify several interesting empirical regularities regarding the relationship between FBLs and social commerce sales. The findings suggest that FBLs drive traffic and increase sales. Information technology artifacts and social technologies, such as FBLs, can endow a consumer’s shopping experience with a socialization component and induce social selling in collective buying platforms. Nevertheless, significant variations occur across products and deals. For example, consumers who purchase experience goods more frequently depend on FBLs than do those who buy search goods. FBLs exert a far greater influence on the sales of goods from independent stores than those from franchise chains. Social commerce consumers are unaffected by heavy discount rates as they make purchase decisions, but they extensively rely on FBLs, particularly when purchasing products that have low tipping points. Our results suggest that social commerce can be a powerful marketplace when the economic utility that is driven by price incentives is further strengthened and protected by the social utility that originates from trust and sharing.
Notes
2. Other SRSs include the “Tweet button” (Twitter), “Google+ button,” and “Pin it button” (Pinterest).
4. Our work differs from Forman et al. [Citation30] in several ways. Forman et al. also examined the effects of identity-revealing on review performance. The present study focused exclusively on SRSs that are facilitated through social networks. In addition, we paid close attention to how such SRSs interact with contextual factors. Moreover, we used real sales data, whereas Forman et al. adopted sales ranks, which are less accurate to gauge review performance. Finally, while Forman et al. concentrated on e-book markets where information asymmetry does not pose a significant threat to the transaction, our work focused exclusively on social e-commerce markets in which consumers are confronted with high degrees of information asymmetry and quality uncertainty.
5. Some consumers may prefer deals with small tipping points because this enables them to avoid the risk of falling to purchase a product. In this study, we assessed tipping points from the perspective of quality signaling and collective actions because these are strongly related to the role of FBLs.
6. The specific coding scheme about search/experience classification is available upon request.
7. Some industry reports indicate that substantial portions of Facebook users are older than forty, and 68 percent of Groupon users are under thirty-four (http://www.groupon.com/pages/9). Age is not the only dimension where differences between these two groups can be seen; income and education levels also separate the two groups. See http://pewinternet.org/Reports/2013/Social-media-users.aspx.
8. The specific statistical results that pertain to the holiday effect are available on request.
9. Facebook declared that only 1 percent of Likes on a page will be removed following the implementation of their automated fraud detection system, which prevents merchants from providing perks for Likes on their sites [Citation68].
Additional information
Notes on contributors
Kyunghee Lee
Kyunghee Lee is a Ph.D. candidate in information systems in the College of Business at Korea Advanced Institute of Science and Technology (KAIST). He received his B.S. in electrical engineering and M.S. in management engineering from KAIST. His research interests include economics of information systems, business impacts driven by mobile technologies and social media, and health-care IT.
Byungtae Lee
Byungtae Lee (corresponding author: [email protected]) is a professor of information systems in the College of Business at Korea Advanced Institute of Science and Technology (KAIST) and has served as dean of the college. He was previously on the faculties of University of Illinois at Chicago and University of Arizona. He received his Ph.D. in business administration from the University of Texas at Austin. His research centers on the economics of information systems, IT productivity measurement, strategic IT investments, and electronic commerce. His papers have appeared in Information Systems Research, Journal of Management Information Systems, MIS Quarterly, Journal of Productivity Analysis, and others. He has served as an associate editor for Information Systems Research. He has provided consulting services to executives of global companies and has served on several government committees of Korea.
Wonseok Oh
Wonseok Oh is the KAIST C.B. Chair Professor of Information Systems in the College of Business at Korea Advanced Institute of Science and Technology (KAIST). He received his Ph.D. in information systems from the Stern School of Business at New York University. His research interests include network theory, economics of information systems, mobile app consumption, and social media. His research has been published in Information Systems Research, International Journal of Electronic Commerce, Journal of the Association for Information Systems, Journal of Management Information Systems, Journal of Strategic Information Systems, MIS Quarterly, Management Science, and Production and Operations Management. He has served as an associate editor for MIS Quarterly and is currently an associate editor of Information Systems Research.
