Social networks improve e-commerce

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 {gayatri, bowlin, bboe, almeroth, ravenben}@cs.ucsb.edu

ABSTRACT
Social networks have made a significant impact on how Internet users communicate, search for and share data today.Numerous proposals have been made to improve existing distributed systems by leveraging the inherent trust built into social links. For example, many believe that by augmenting online marketplaces with social networking, we can improve trust between transaction partners and increase user satisfaction. In this paper, we perform a detailed study of Overstock Auctions, an auction site that has recentlyintegrated social links into user profiles. Using data on connections between roughly 400,000 Overstock users, we evaluate the impact of social connections on business transactions. Our 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.Categories and Subject Descriptors
J.m [Computer Applications]: Miscellaneous

General Terms
Human Factors, Measurement, Performance

Keywords
e-Commerce, Social Networks, Trust

1.

INTRODUCTION

Social networks such as MySpace, Facebook, and YouTube have made a significant impact on how today’s Internet users communicate, search for and share data. Users join these networks,publish and maintain their own profiles, and establish links to their friends. The resulting social links are evidence that a level of trust has been established between the connected users. Numerous proposals have been made to improve existing distributed systems by leveraging the inherent trust built into social links. In particular, many believe that augmenting online marketplaces with socialnetworking features should improve trust between transaction partners and improve user satisfaction. Customers

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on traditional online marketplaces such as eBay and Craigslist routinely transact with complete strangers, thus making them vulnerable to malicious cheaters out to defraud them.Despite their integration of reputation systems, prior work shows malicious users can artificially inflate their reputation values [3]. In contrast, a “social marketplace” would integrate features of social networks into an online shopping community, allowing customers to seek out purchases from their friends or friends of friends (FOF). To evaluate the potential impact of social networking ononline marketplaces, we study user connectivity and behavior through a large dataset of users from Overstock Auctions. Overstock Auctions is an online auction house similar to eBay and uBid, but is unique in its integration of a social network into the market community. Like other social networks, Overstock Auctions encourages users to establish an online presence through personalized homepage withpersonal history, photos and links to friends. Unlike typical social networks, Overstock Auctions user profiles often include their shopping preferences and return policies. Overstock Auction maintains two distinct networks of its members. Users can become members of the social network by becoming friends with other users. Users who buy or sell items become part of the business network, where each...