Algorithmic Assortment Curation: An Empirical Study of Buybox in Online Marketplaces

32 Pages Posted: 24 Sep 2022

See all articles by Santiago Gallino

Santiago Gallino

University of Pennsylvania - Operations, Information and Decisions Department

Nil Karacaoglu

Fisher College of Business, The Ohio State University

Antonio Moreno

Harvard University - Technology & Operations Management Unit

Date Written: September 14, 2022

Abstract

Most online sales worldwide take place in marketplaces that connect sellers and buyers. The presence of numerous third-party sellers leads to a proliferation of listings for each product, making it difficult for customers to choose between the available options. Online marketplaces adopt algorithmic tools to curate how the different listings for a product are presented to customers. This paper focuses on one such tool, the Buybox, that algorithmically chooses one option to be presented prominently to customers as a default option. We leveraged the staggered introduction of the Buybox within a prominent product category in a leading online marketplace to study how the Buybox impacts marketplace dynamics. Our findings indicate that adopting Buybox results in a substantial increase in marketplace orders and visits. Implementing Buybox reduces the frictions customers and sellers face. On the customer side, we find a reduction of search frictions, evidenced by an increase in conversion rates and a higher impact of Buybox on the mobile channel, which has significantly higher search frictions than desktop channel. On the seller side, the number of sellers offering a product increases following the implementation of Buybox. Customers benefit from lower prices and higher average quality levels when competition in Buyboxes is high. After the introduction of the Buybox, the marketplace also becomes more concentrated. Our paper contributes to the burgeoning literature on the role of algorithms in platforms by examining how algorithmic curation impacts the participants of the marketplace as well as the marketplace dynamics.

Keywords: algorithms, algorithmic curation, online marketplaces, empirical operations, Buybox

Suggested Citation

Gallino, Santiago and Karacaoglu, Nil and Moreno, Antonio, Algorithmic Assortment Curation: An Empirical Study of Buybox in Online Marketplaces (September 14, 2022). Available at SSRN: https://ssrn.com/abstract=4218952 or http://dx.doi.org/10.2139/ssrn.4218952

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)

Fisher College of Business, The Ohio State University ( email )

2100 Neil Avenue
Columbus, OH 43210
United States

HOME PAGE: http://sites.google.com/view/nilkaracaoglu

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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