The Effects of Non-proportional Fees: Evidence From Poshmark

Abstract

Fee framing changes the context of fee presentation without changing the fee itself. Using proprietary sales data from private online clothing sellers, we exploit random fee frame variation charged to sellers in a regression discontinuity design to estimate the causal effect fee framing has on seller outcomes. Switching from a fixed dollar to percentage fee structure decreases the number of days an item spends in inventory by approximately one month and increases return on investment more than twofold. Understanding potential behavioral biases that may drive these results gives managers the tools to increase sales, a requirement for collecting third-party seller fees.

Keywords: seller outcomes, fee framing, regression discontinuity design

JEL Classification: G40, D40, L11