Online Product Sampling on E-Commerce Platforms: An Empirical Analysis of Sales Spillover Effects

55 Pages Posted: 26 Jun 2018

See all articles by Ying Zhang

Ying Zhang

National University of Singapore (NUS) - Department of Information Systems

Khim Yong Goh

National University of Singapore (NUS)

Zhijie Lin

Tsinghua University

Date Written: June 12, 2018

Abstract

Despite the increasing popularity of product sampling promotions in e-commerce, empirical research investigating its sales impacts and mechanism still lags. The objective of this paper, therefore, is to investigate the economic impact of online product sampling promotions on e-commerce platforms. Adopting the insights from marketing promotion and online word-of-mouth (WOM) literature, we propose that online product sampling promotions lead to in-store and cross-store sales spillovers on an e-commerce platform through two effects, sampling publicity effect and sampling appraisal effect. Using data from the largest e-commerce platform in China, we employ multiple identification strategies and model estimation methods to disentangle and quantify these two effects in driving in-store and cross-store sales spillovers. Specifically, we use metrics of sampling reviews to capture sampling appraisal effect and find that a one-unit increase in the valence (volume) of sampling reviews decreases (increases) the sales of other products in the focal store by 8.9% (2.2%). On the other hand, we use customer participation to capture sampling publicity effect and find that customer participation (in terms of sample requests or applications) in the focal product’s sampling promotion does have a negative effect on the sales of an identical product in other stores during the campaign period. Moreover, we find that sampling reviews can also induce negative cross-store sales spillovers at the store level. Our notable new findings provide important theoretical contributions to the product sampling literature and critical implications for online retailers.

Keywords: product sampling, product trial, spillover effect, electronic commerce, econometric analysis

Suggested Citation

Zhang, Ying and Goh, Khim Yong and Lin, Zhijie, Online Product Sampling on E-Commerce Platforms: An Empirical Analysis of Sales Spillover Effects (June 12, 2018). Available at SSRN: https://ssrn.com/abstract=3194453 or http://dx.doi.org/10.2139/ssrn.3194453

Ying Zhang

National University of Singapore (NUS) - Department of Information Systems ( email )

13 Computing Drive
117417
Singapore

Khim Yong Goh

National University of Singapore (NUS) ( email )

15 Computing Drive
Singapore, 117418
Singapore
65-65162832 (Phone)
65-67791610 (Fax)

HOME PAGE: http://www.comp.nus.edu.sg/~gohky

Zhijie Lin (Contact Author)

Tsinghua University ( email )

Haidian District
Beijing, Beijing 100084
China

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