The Value of Pop-Up Stores in Driving Online Engagement in Platform Retailing: Evidence From a Large-Scale Field Experiment With Alibaba

20 Pages Posted: 5 Mar 2018 Last revised: 17 Jun 2018

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: February 24, 2018

Abstract

Short-lived and experiential-oriented pop-up stores have become a mainstream retail strategy. We provide the first causal evidence on how pop-up stores affect consumers’ subsequent behaviors. In a randomized field experiment involving approximately 800,000 consumers with Alibaba Group — China’s largest e-commerce company — we randomly assigned consumers to either receive a message about an upcoming week-long pop-up store event organized by Alibaba (the treatment group) or not receive any message about the event (the control group). For brands that participated in the event and non-participating brands in the same product category, we track consumers’ searches and purchases at these brands’ online stores on Alibaba’s retailing platform (Tmall.com). We find that our messaging treatment increased foot traffic to the pop-up store and, more importantly, online traffic to participating brands’ Tmall stores. Using WiFi tracking technology to track customer foot traffic, we causally estimate that visiting the pop-up store significantly increased consumers’ searches and purchases at participating brands’ Tmall stores during the post-opening period. New consumers showed a larger relative increase in online activities after receiving our messaging treatment, as compared to existing consumers. Furthermore, from a platform perspective, we find that our messaging treatment increased consumers’ searches and purchases at non-participating brands’ Tmall stores, which was driven by the positive spillover effects of actually visiting the pop-up store on consumers’ online engagement with non-participating brands. We discuss the theoretical and practical implications of our findings for omni-channel retailing.

Keywords: pop-up stores, platform operations, omni-channel retailing, field experiment, 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 in Driving Online Engagement in Platform Retailing: Evidence From a Large-Scale Field Experiment With Alibaba (February 24, 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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