How to influence my customers?: the impact of electronic market design

This paper investigates the strategic decisions of online vendors for offering different mechanism, such as sampling and online reviews of information products, to increase their online sales. Focusing on measuring the effectiveness of electronic market design (offering reviews, sampling, or both), our study shows that online markets behavior as communication markets, and consumers learn product quality information both passively (reading online reviews) and actively but subjectively (listening to music sampling). Using data from Amazon, first we show that sampling along is a strong product quality signal that reduces the product uncertainty after controlling for halo effect. In general, products with sampling option enjoy a higher conversion rate (which leads to better sales) than those without sampling because sampling decreases the uncertainty of consuming experience goods. Second, the impact of online reviews on sales conversion rate is lower for experience goods with a sampling o...

• Type: Conference
• Year: 2008
• Where: WWW
• Authors: Nan Hu, Ling Liu, Bin Chen, Jialie Shen
• Keywords: Internet Technology, Music Sampling, Online Reviews, Sampling Option, WWW 2008