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December 12, 2008

Links Help Profits in Social Commerce

Catherine New
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Much like the brick-and-mortar American mall, where dozens, if not hundreds of shops are clustered together, social commerce sites such as eBay, Amazon and ZLiO.com bring together online shops via links.

Research from Professor Olivier Toubia, conducted with doctoral student Andrew Stephen, shows that having a relatively large number of links directed to a shop benefits that shop. They also found, more surprisingly, that when shops link to each other, there is a net positive effect — even though this may seemingly increase competition. “It makes sense to link to other shops, even though you’re sending customers away,” Toubia says. “It helps more than hurts, because in most social networks people link back.”

Read more about Toubia’s research in Ideas at Work.