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

39 Pages Posted: 20 Sep 2019

See all articles by Brian Rongqing Han

Brian Rongqing Han

University of Southern California - Marshall School of Business

Tianshu Sun

University of Southern California - Marshall School of Business

Leon Yang Chu

University of Southern California - Data Sciences and Operations; Cheung Kong Graduate School of Business

Lixia Wu

Alibaba Group

Date Written: July 01, 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 for commercial activities and connect customers and merchants in the physical world by leveraging the spontaneous walk-in traffic (organic interaction) and by prompting nearby 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/natural experiment across 1,032 stations and a randomized field experiment among 189,019 customers — to examine the causal effects of organic and induced interactions, respectively. We find that both organic and induced interactions significantly increase customers’ online engagement with the focal merchants (direct impact) as well as the platform (online spillover). In addition, organic interaction significantly increases customers’ usage of last-mile stations (offline spillover). We further explore the mechanism underlying the differences between these two interactions. In particular, 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 (as compared to those under organic interaction). 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. In summary, our study provides concrete guidelines on how platforms can leverage organic and induced interactions at the last mile to improve customers’ online engagement with merchants and offline utilization of logistics infrastructure.

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 01, 2019). Available at SSRN: https://ssrn.com/abstract=3452769 or http://dx.doi.org/10.2139/ssrn.3452769

Brian Rongqing Han (Contact Author)

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

701 Exposition Blvd
Los Angeles, CA 90089
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

University of Southern California - Data Sciences and Operations ( email )

701 Exposition Blvd
Los Angeles, CA
United States

Cheung Kong Graduate School of Business ( email )

Oriental Plaza, Tower E3
One East Chang An Avenue
Beijing, 100738
China

Lixia Wu

Alibaba Group ( email )

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