Online Product Sampling on E-Commerce Platforms: An Empirical Analysis of Sales Spillover Effects
55 Pages Posted: 26 Jun 2018
Date Written: June 12, 2018
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
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