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

Abstract

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: platform operations, randomized field experiment, pop-up stores, internet of things