The Value of Pop-up Stores on Retailing Platforms: Evidence from a Field Experiment with Alibaba

17 Pages Posted: 5 Mar 2018 Last revised: 17 Sep 2018

See all articles by Dennis Zhang

Dennis Zhang

Washington University in St. Louis - John M. Olin Business School

Hengchen Dai

University of California, Los Angeles (UCLA) - Anderson School of Management

Lingxiu Dong

Washington University in St. Louis - John M. Olin Business School

Qian Wu

Alibaba Group

Lifan Guo

Alibaba Group

Xiaofei Liu

Alibaba Group

Date Written: June 22, 2018

Abstract

Omni-channel retailing has become an essential strategy in modern-age retailing. We study the value of short-lived and experiential-oriented pop-up stores, a popular type of omni-channel retail strategy, on both retailers that participate in pop-up store events and retailing platforms that host these retailers. We conducted a large-scale randomized field experiment with Alibaba Group involving approximately 800,000 customers and used advanced Wi-Fi technology to track every customer’s visit to a pop-up store—a missing component from past research that commonly relies on point-of-sales data. With our field experiment and advanced tracking technology, we provide the first causal evidence that pop-up store visits substantially increase customers’ subsequent searches and purchases at participating retailers’ online stores. We also find that such effects are heterogeneous across customers: new customers showed a larger relative increase in online activities after the experiment compared to existing customers. Furthermore, from a platform perspective, we show that pop-up store visits increase customers’ searches and purchases at non-participating retailers on the same platform, which is a pleasant surprise for the platform owners. We discuss how our results can stimulate future research in omni-channel retailing and platforms, and offer implications for how to implement and optimize retail strategies surrounding pop-up stores.

Keywords: omni-channel retail, platform operations, randomized field experiment, pop-up stores, internet of things

Suggested Citation

Zhang, Dennis and Dai, Hengchen and Dong, Lingxiu and Wu, Qian and Guo, Lifan and Liu, Xiaofei, The Value of Pop-up Stores on Retailing Platforms: Evidence from a Field Experiment with Alibaba (June 22, 2018). Available at SSRN: https://ssrn.com/abstract=3129506 or http://dx.doi.org/10.2139/ssrn.3129506

Dennis Zhang

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

Hengchen Dai (Contact Author)

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

Lingxiu Dong

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1156
St. Louis, MO 63130-4899
United States

Qian Wu

Alibaba Group ( email )

Lifan Guo

Alibaba Group ( email )

Xiaofei Liu

Alibaba Group ( email )

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