Retail Competition on Social Media: Insights from Analysis of Large-scale Twitter Data

Abstract

Social media platforms have been used by firms for a variety of purposes including for attracting new customers, communicating with existing customers, building firms’ brand image, among others. However, there is very little research on the content strategies adopted by traditional rival firms competing on online social media platforms and what the effects of such content strategies are on related outcomes. Our paper seeks to fill this gap by examining whether retailers that are close competitors in the traditional context also adopt similar content strategies on Twitter. In doing so, our study proposes a new measure of online social media competition based on content similarity. We find that traditional close competitors that have a higher degree of similarity offline, show greater divergence in their content strategies online. We also find that firms whose online content strategies are less similar to their close traditional rivals have higher online engagement and acquire new followers faster. We then examine why divergence in online content strategies from close traditional rivals leads to better online outcomes for firms on Twitter. We find that their superior online performance is attributable to their ability to leverage the higher-level affordances of Twitter more effectively as compared to their rivals. Our findings have important implications for firms’ competitive strategies in online social media platforms.