Impacts of Logistics Information on Sales: Evidence from Alibaba

Forthcoming in Naval Research Logistics

60 Pages Posted: 1 Jul 2020

See all articles by Jifeng Luo

Jifeng Luo

Shanghai Jiao Tong University - Antai College of Economics and Management

Ying Rong

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management

Huan Zheng

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management

Date Written: October 16, 2019

Abstract

Facing fierce competition from rivals, sellers in online marketplaces are eager to improve their sales by delivering items faster and more reliably. Because logistics quality can be known only after a transaction, sellers must identify effective ways to communicate logistics information to consumers. Drawing on the accessibility-diagnosticity framework, we theorize that the sales impacts of logistics information depend on its relative diagnostic value. Using data on 1,493 items with 505,785 consumer reviews from an online marketplace, we examine how sales are affected by three information sources for logistics services: online word of mouth (WOM) about logistics, self-reported logistics services, and expected delivery time. We use an instrumental variable method to address the endogeneity issue between sales and WOM. We find that, ceteris paribus, consumers give more weight to WOM about logistics and delivery time when they make purchase decisions but less weight to self-reported logistics service. The effects of logistics information on sales are asymmetric for large and small sellers.

Keywords: online marketplaces, logistics services, delivery time, online WOM, instrumental variable

JEL Classification: L81

Suggested Citation

Luo, Jifeng and Rong, Ying and Zheng, Huan, Impacts of Logistics Information on Sales: Evidence from Alibaba (October 16, 2019). Forthcoming in Naval Research Logistics, Available at SSRN: https://ssrn.com/abstract=3622787

Jifeng Luo (Contact Author)

Shanghai Jiao Tong University - Antai College of Economics and Management ( email )

1954 Huashan Road
Shanghai, Shanghai 200030
China
+862152302519 (Phone)

Ying Rong

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management ( email )

No.535 Fahuazhen Road
Shanghai Jiao Tong University
Shanghai, Shanghai 200052
China

Huan Zheng

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management ( email )

No.535 Fahuazhen Road
Shanghai Jiao Tong University
Shanghai, Shanghai 200052
China

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
31
Abstract Views
117
PlumX Metrics