Connecting Customers and Merchants Offline: Experimental Evidence From the Commercialization of Last-Mile Stations at Alibaba

39 Pages Posted: 20 Sep 2019 Last revised: 27 Jan 2020

See all articles by Brian Rongqing Han

Brian Rongqing Han

Gies College of Business, UIUC

Tianshu Sun

University of Southern California - Marshall School of Business

Leon Yang Chu

Cheung Kong Graduate School of Business

Lixia Wu

Alibaba Group

Date Written: July 1, 2019

Abstract

Many e-commerce platforms have established extensive networks of stations as their last-mile logistics infrastructure. In this study, we investigate how this last-mile infrastructure may serve as an offline platform to connect customers and merchants in the physical world and stimulate offline-to-online effect by leveraging the spontaneous walk-in traffic (organic interaction) and by prompting interested customers through online intervention (induced interaction). Using free sample distribution as an example, we design two large-scale experimental studies in collaboration with Alibaba---a quasi-experiment across 1,032 stations and a randomized field experiment among 189,019 customers---to examine the causal effects of organic and induced interactions on customers' subsequent online purchases at the focal brands, respectively. We find that induced interaction drives significantly more online sales compared with organic interaction. We further identify a \textit{screening} mechanism underlying its effectiveness. Because of the additional traveling cost on the customer side, induced interaction tends to attract customers who have a stronger preference over the focal products. Such advantageous self-selection, in turn, leads to a large increase in customers' subsequent online engagement. Finally, we propose a customized targeting framework using instrumental forest to further enhance the effectiveness of induced interaction at the last-mile stations.

Keywords: offline platform, last-mile logistics, natural experiment, randomized field experiment, induced interaction, instrumental forest

Suggested Citation

Han, Brian Rongqing and Sun, Tianshu and Chu, Leon Yang and Wu, Lixia, Connecting Customers and Merchants Offline: Experimental Evidence From the Commercialization of Last-Mile Stations at Alibaba (July 1, 2019). Available at SSRN: https://ssrn.com/abstract=3452769 or http://dx.doi.org/10.2139/ssrn.3452769

Brian Rongqing Han (Contact Author)

Gies College of Business, UIUC ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

Tianshu Sun

University of Southern California - Marshall School of Business ( email )

3670 Trousdale Parkway
Bridge Hall 310B
Los Angeles, CA 90089
United States

Leon Yang Chu

Cheung Kong Graduate School of Business ( email )

Building No.5, 1&2/F
Hongqiao Wanke Center
Shanghai, 201107
China

Lixia Wu

Alibaba Group ( email )

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