Learning Objectives

By the end of this chapter, you will be able to:

  • Define social networks and online communities as e-commerce institutions, not only as ad channels.
  • List core features and main revenue models.
  • Classify communities (affinity, sponsored, industry, practice) for short answers.
  • Contrast this unit with Unit 6 social marketing.
  • Use Nepal examples (Facebook, TikTok, Marketplace, groups) without calling every Page a “community.”

Unit 6 versus Unit 7 (exam trap)

Unit 6 social marketing is how firms use social platforms: content, ads, influencers, measurement.

Unit 7 social networks and communities is how platforms and groups work as businesses and social systems: profiles, graphs, feeds, community types, and how commerce happens inside the network (groups, Marketplace, live selling).

A 3-mark answer that only lists “run Facebook Ads” is Unit 6, not Unit 7.

What is a social network?

A social network site lets people (1) create a profile, (2) articulate a list of connections, and (3) view and traverse that graph (news feed, stories, groups). An online community is a set of people who interact around a shared interest or identity, often hosted on a social network (a Facebook Group of trekking guides) or on a dedicated forum.

Commerce appears when the graph is used to discover products, build trust, or complete a sale (inbox orders, Marketplace, shop tabs).

Features (write these in exams)

  • Profiles — identity, photos, bio; for businesses, a Page with catalogue.
  • Connections — friends, followers, or one-way fans.
  • News feed / algorithm — ranked updates; this is how attention (and ads) are allocated.
  • Messaging — private close of the sale in Nepal (many orders still complete on Messenger).
  • Groups and communities — membership, moderators, rules.
  • Social commerce tools — Marketplace listings, shops, live video selling, in-app checkout where available.

Types of online communities

Laudon-style categories that appear in model papers (affinity community is a 1-mark item):

  • Affinity / interest communities — people who share a hobby or identity (Nepali stamp collectors; campus alumni). Trust is high; selling can be informal.
  • Sponsored communities — built or paid for by a brand (a paint company’s decorator group). The firm sets rules and often uses the group for support and upsell.
  • Industry / practice communities — professionals (logistics managers, Shopify merchants in Nepal) sharing know-how; B2B lead generation.
  • Practice / learning communities — courses, Discord/Viber communities around a skill.

Do not confuse community provider (a B2C business model from Unit 2) with a Facebook Group. A community provider’s site may host communities; Facebook is the network.

Business and revenue models of social platforms

  • Advertising — the dominant model (sponsored posts, ads in feed/Reels).
  • Premium / subscription — fewer ads, extra features (where offered).
  • Transaction / take-rate — commission on Marketplace or in-app shops.
  • Data and lead tools — business manager, boosted posts (sold to SMEs).
  • Virtual goods / tips — more common on live and short-video apps.

For a 5-mark question: name the model, explain the user-side “free” product, and note the merchant-side cost (ads or commission).

Social networks in Nepal

  • Facebook remains the default public network for SMEs: Pages, Groups, and Marketplace. Many “stores” have no independent website.
  • Instagram is catalogue-heavy (fashion, food, crafts); checkout often leaves the app (eSewa/Khalti or bank).
  • TikTok is discovery and live selling; conversion still often happens in chat.
  • Messaging (Viber, WhatsApp, Messenger) hosts communities and order flow; that is community + C2C/B2C process, not a portal.
  • LinkedIn is thinner in Nepal than Facebook but relevant for B2B services.

Marketplace versus community: Marketplace is a listing and discovery product (C2C classifieds at scale). A community has ongoing membership and norms. A seller can use both.

Sample 5-mark outline

“Explain social networks as an e-commerce business with Nepal examples.”

  1. Definition: profile + connections + feed.
  2. Two features that enable commerce (messaging, groups/Marketplace).
  3. Revenue: advertising (primary) and take-rate on listings.
  4. Community type: affinity group of sellers vs sponsored brand group.
  5. Nepal: Facebook as default storefront; contrast with Unit 6 (ads) vs this unit (the platform itself).

Risks (short list for 3 marks)

Moderation and scams; fake shops; privacy of graph data; addiction/attention; dependency of SMEs on one algorithm change. Link to Unit 4 threats (phishing via fake Pages). Network effects also lock merchants in: leaving Facebook can mean losing the only customer list they have.

Summary

Social networks supply identity, connections, and feeds. Communities are the persistent groups inside or beside those networks. Revenue is mostly advertising plus some take-rate. In Nepal, Facebook Groups and Marketplace are how informal commerce scales. Unit 7 asks how the institution works; Unit 6 asks how to market on it.

Key Takeaways

  • Profile + graph + feed = social network; shared identity + interaction = community.
  • Affinity vs sponsored vs industry/practice is exam vocabulary.
  • Ads are the default revenue model; Marketplace adds transaction fees.
  • Do not answer Unit 7 with only an ad-campaign plan.

Discussion Questions

  1. Define an affinity community and give a Nepal example.
  2. How is a sponsored community different from buying ads (Unit 6)?
  3. Why do so many Nepali SMEs never leave Facebook?
  4. Is Facebook Marketplace a community, a market creator, or both? Explain.
  5. List three revenue models a social platform can use.