Discounting to Win? The Impact of Team Purchase on Seller Performance

36 Pages Posted: 1 Nov 2023 Last revised: 3 Apr 2024

See all articles by Huiyan Chen

Huiyan Chen

University of Connecticut - Department of Operations & Information Management

Jing Peng

University of Connecticut - Department of Operations & Information Management

Mengcheng Guan

Huazhong University of Science and Technology - School of Management

Jianbin Li

Huazhong University of Science and Technology

Date Written: April 3, 2024

Abstract

Team purchase is a novel form of group buying that encourages customers to purchase deeply discounted products together with friends or family members. Over the past few years, team purchase has emerged as a compelling marketing strategy for online sellers to acquire new customers and enhance their visibility on e-commerce platforms. However, whether and how team purchase affects the sales and profits of sellers remain an open question. We answer this question using a dataset from an e-commerce platform, which started to allow sellers to enroll their products into team purchase since September 2019. Our empirical analysis reveals that engaging in team purchase has a positive spillover effect on the sales of sellers’ other products, and the effect varies substantially across different types of sellers. Specifically, the positive spillover effect is larger for diversified sellers and high-end sellers. The latter finding is surprising because conventional knowledge suggests that deep discounts tend to attract price-sensitive customers who are less likely to purchase high-end products. We further investigate the underlying mechanism and find that team purchase attracts more new customers for diversified sellers and high-end sellers. Additionally, we examine the impact of team purchase on profits and find that team purchase increases the overall profits of sellers, though they typically incur losses on the team purchase products.

Keywords: team purchase, spillover effect, diversity, market positioning, sales, profit

Suggested Citation

Chen, Huiyan and Peng, Jing and Guan, Mengcheng and Li, Jianbin, Discounting to Win? The Impact of Team Purchase on Seller Performance (April 3, 2024). Available at SSRN: https://ssrn.com/abstract=4592999 or http://dx.doi.org/10.2139/ssrn.4592999

Huiyan Chen

University of Connecticut - Department of Operations & Information Management ( email )

2100 Hillside Rd
Unit 407
Storrs, CT CT 06269
United States
06269 (Fax)

Jing Peng (Contact Author)

University of Connecticut - Department of Operations & Information Management ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States

Mengcheng Guan

Huazhong University of Science and Technology - School of Management ( email )

1037 Luoyu Road
Wuhan, Hubei 430074
China

Jianbin Li

Huazhong University of Science and Technology ( email )

Wuhan, Hubei
China

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