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Purchase behaviors are of paramount importance in the monetization of social media platforms. Monetization can be achieved through sales design, promotions and advertising (Kim, 2013), but these approaches must also address the central issue of how purchase decisions are made by social platform users. Conversion rates are the first critical factor in selecting the optimal advertising channel. Social platforms such as Facebook and Twitter may have the highest traffic rates in comparison to other major online platforms, but they also have the lowest ad conversion rates (Priceonomics, 2018). According to a recent survey (Parikh, 2018), the average conversion rates (in brackets) of major social platforms such as Facebook (4.7%), Instagram (3.1%), Twitter (0.9%), Snapchat (0.6%) and YouTube (0.5%) are lower than those of traditional digital advertising channels such as Google (8.2%) and Bing (7.6%). Brands and retailers would be more willing to run their ads on a social platform and pay higher ad fees if the platform was able to convert ads into more direct purchases. Second, content is king. Direct purchase behaviors provide content creators with financial incentives to create and share original content where otherwise they would be reluctant to continually offer premium content for free (Team Laal Patti, 2018), and this could eventually lead to a social platform losing its most prized asset: premium content. This could be why Facebook is testing a paid subscription feature that requires users to pay for access to exclusive premium content in interest groups. Likewise, Weibo has launched paid question answering services to motivate content creators as well as profit from them. For example, a follower can ask a movie star a question (e.g. “What is your favorite food?”) for a fee of around 15 US dollars. Other followers then pay around 15 US cents to access the answer, and all revenue is shared between the questioner (45%), the star respondent (45%) and the platform (10%). Third, sellers who use a social platform to merchandise their product are not willing to tolerate cross-channel free-riding (Chiu et al., 2011), whereby social platform users are interested in items in their messages or posts, but go to other channels (e.g. e-commerce sites, bricks-and-mortar stores) to complete their purchases. It is reported, for example, that over 80% of Instagram users who discovered a brand on Instagram later purchased the item on other channels, such as the brand’s own website, Amazon, or bricks-and-mortar stores (Garcia, 2018). In a word, it is imperative for social platforms to find a way to increase direct sales, thereby resolving these three critical issues. This would explain why many social platforms have rolled out, or are experimenting with, buy buttons (e.g. Facebook buy buttons) to allow users to make direct purchases by clicking on a button that directs them to the seller’s website to complete their purchase without leaving the platform.
The idea is appealing, but relevant practices are far from satisfactory. Previous research has not found e-commerce to be an appealing monetizing opportunity for social platforms, concluding that people are not willing to purchase items while engaged in their online social gatherings (Clemons, 2009). Regarding Facebook and Twitter’s buy buttons, a study revealed that 45% of respondents did not intend to use them (Business Insider Intelligence, 2016). Twitter aborted its e-commerce operations and is sticking with social networking services (Lunden, 2017). Over 30% of social platform users state they have never bought anything directly on a social platform (Statista, 2017). People may believe that social platforms are a good source of information referral for business, but might not trust them for making direct purchases due to risk-related concerns such as security and privacy (Cha, 2009; Sharma, Menard & Mutchler, 2017; Zarouali et al., 2017; Zhu & Chen, 2015). This paper, therefore, will study how social platform users’ direct purchase behaviors are affected by risk- and trust-related factors, and thus determine how to increase direct and actual purchases through social platforms. It will show how platform risk and seller risk influence purchase intention, and the role that trust plays in this causal path to purchase. Understanding this influential relationship can help to make social platforms aware of the factors that significantly inhibit their s-commerce practices, as well as how to improve the social shopping environment and achieve better s-commerce performance.