Do Social Networks Improve e-Commerce?

A Study on Social Marketplaces

Gayatri Swamynathan, Christo Wilson, Bryce Boe, Kevin Almeroth, and Ben Y. Zhao
Department of Computer Science, UC Santa Barbara, CA 93106

The writers of the article are interested in examining the way social networks improve e-commerce;
in order to do so, they studied connectivity and behavior through a large dataset of users from
Overstock Auctions – an auction site that has integrated social links into user profiles. The users in
this site are encouraged to create a personal profile in which they can have their pictures, present
their hobbies and so on. Users in this site can have social network, business network or both.
The writers evaluated that the impact of social connections on business transactions will be realized
through the buyers satisfaction after making a transaction. Their results show that while the majority
of users do not engage in social networking, those who transact with friends from their social
network generally obtain significant benefits in the form of higher user satisfaction.
The writers believe that connections between socially linked transaction partners serve to filter out
unscrupulous cheaters in the system. Interestingly, the same success does not occur for partners
connected on the Overstock business network. This sharp drop in transaction satisfaction indicates
that trust in the FOF business network degrades much faster than trust in the social network. While
users can selectively choose other users to include in their personal networks, business FOF
relations are only indicative of one or more prior transaction between the two users. Although there
is much more to study and examine, evaluation of the writers came through.

In my opinion, this short article is just a drop in the ocean of options that the internet and social
networks has to offer. We are witnessing now a period in which the face of economics and social
relationships are changing dramatically. One of the biggest changes in economics is the invention
of e-commerce. As mentioned in the article, many believe that augmenting online marketplaces with
social networking features should improve trust between transaction partners and improve user
satisfaction; in my opinion it also must increase transactions first and foremost.
There are almost infinite options of research that can be made in this context and the connection
this article examine – satisfaction in transactions between friends and FOF is just one of them.
Personally I think that we can try and study about this connection also from a different and reverse
direction – we can choose a social network that offers also business transactions (such as
Facebook) and examine it's success, the users satisfaction and the number of hops as an indicator
for the level of the satisfaction. That kind of research can complete the picture for this research we
saw above.
Our course is concentrating on marketing and networks which is the essence of the above article.
The social networks and the on-line market-places are the future of economics; that's where the
future business potential lies.
Links:
The article:
http://ucsbsocialcomputing.pbworks.com/f/swamynathan,+et+al.pdf

Overstok website:
http://auctions.overstock.com/