Be Social! The Impact of Online Referral Program on Referrer Purchase Behavior

Despite the widespread presence of online referral programs, there is a notable gap in empirical research examining their influence on referrers. In this article, we explore the impact of participation in online referral programs on the subsequent purchasing behavior of referrers, utilizing data from Vipshop, a prominent e-commerce platform. Vipshop has successfully expanded its social commerce operations by incentivizing existing customers to endorse products on various social media platforms. Employing a difference-in-differences methodology, our findings reveal that involvement in an online referral program positively influences referrers to increase their purchases. Furthermore, this effect is significantly enhanced by the value of commissions and the ease of social referral. The article concludes by discussing the implications of these findings for both theoretical understanding and practical application.