A new study from Rice University's Jones Graduate School of Business finds customers of eBay who participate in the company's online communities become more conservative, more selective, and more efficient buyers and sellers.
This is perhaps the opposite of what eBay, and companies like it, thought would happen when trying to get users active in their chat rooms and forums.
"We know that companies like eBay create online communities with chat rooms and forums to increase customer participation on the site, with the conventional wisdom being that customers will become more loyal to the company and thus spend more money," said Siddharth Singh, assistant professor of marketing and co-author of the study.
Singh and the other study authors -- Sharad Borle, associate professor of marketing; Utpal Dholakia associate professor of management; and Rene Algesheimer from the University of Zurich -- decided to take an in-depth look at this practice to see if participation in these communities cause more buying and selling, thus increasing profits for the company.
To do this, the researchers started with data from a yearlong study of 13,735 new eBay Germany customers. The authors noted eBay Germany is set up almost exactly as eBay in the United States.
The researchers found the eBay's e-mail marketing campaign inviting people into its community pages was indeed a success -- customers were 23 percent more likely to join if they were invited, compared to the users who were not invited.
However, after customers joined the community pages, they weren't more likely to buy or sell more.
After analyzing the data, Rice researchers found customers who participated in eBay's community forums became more educated about the buying/selling process and thus became savvier users.
Buyers became more conservative and sellers became more selective and effective simply by hearing from other users.
Less buying and selling means less money for eBay.
The researchers found this trend, regardless of what forums the users participated in.
"While some of the community pages on eBay have nothing to do with buying or selling and more to do with social interaction, people still became smarter about the process of online merchandising," said Borle.
These communities could be helpful for some of the many eBay users who have submitted complaints against the virtual auction house to ConsumerAffairs.com over the years.
And while many users may be happier, it's not especially great news for eBay.
"Online companies that believe that community pages will increase use of their business side of the operation need to rethink how to use their social pages moving forward. After all, it's about making money for eBay, not necessarily creating new friends," said Borle.
The study, "The Impact of Customer Community Participation on Customer Behaviors: An Empirical Investigation," appeared recently in the journal Marketing Science.
