Why Retailers Should Care about Net Neutrality: The Impact of Website Performance on Online Retail

15 Pages Posted: 31 Oct 2018

See all articles by Santiago Gallino

Santiago Gallino

University of Pennsylvania - Operations, Information and Decisions Department

Nil Karacaoglu

Kellogg School of Management, Operations Management Department

Antonio Moreno

Harvard University - Technology & Operations Management Unit

Date Written: October 3, 2018

Abstract

The share of e-commerce sales is rapidly increasing and so are the associated losses generated by website outages and slow websites. We leverage novel retail and website performance data to investigate the impact of website performance on online sales. This question is especially relevant in the current regulatory environment, given the ongoing policy debates around net-neutrality. Using two different research designs --- panel data with fixed effects and generalized synthetic control with elastic net --- we estimate sizable adverse effects of website speed slowdowns on online sales, especially in the mobile channel. Our results show that decreases in website performance make customers less likely to place an order and undermine retailers' quest to turn website traffic into sales. The findings have important implications for the net neutrality debate and retailers' website design decisions, specifically the selection of third-party content providers and the customized design of mobile and desktop channels.

Keywords: online retail, service operations, quasi-experiments, website performance, abandonment, synthetic control

Suggested Citation

Gallino, Santiago and Karacaoglu, Nil and Moreno, Antonio, Why Retailers Should Care about Net Neutrality: The Impact of Website Performance on Online Retail (October 3, 2018). Available at SSRN: https://ssrn.com/abstract=3260203 or http://dx.doi.org/10.2139/ssrn.3260203

Santiago Gallino

University of Pennsylvania - Operations, Information and Decisions Department ( email )

3730 Walnut Street
558 & 559 Jon M. Huntsman Hall
Philadelphia, PA 19104-5340
United States

Nil Karacaoglu (Contact Author)

Kellogg School of Management, Operations Management Department ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

HOME PAGE: http://https://www.kellogg.northwestern.edu/faculty/karacaoglu/index.htm

Antonio Moreno

Harvard University - Technology & Operations Management Unit ( email )

Boston, MA 02163
United States

HOME PAGE: http://www.hbs.edu/faculty/Pages/profile.aspx?facId=1029325

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