Abstract
Unlike consumers in the mall or supermarkets, online consumers are “intangible” and their purchasing behaviors are affected by multiple factors, including product pricing, promotion and discounts, quality of products and brands, and the platforms where they search for the product. In this research, I study the relationship between product sales and consumer characteristics, the relationship between product sales and product qualities, demand curve analysis, and the search friction effect for different platforms. I utilized data from a randomized field experiment involving more than 400 thousand customers and 30 thousand products on JD.com, one of the world’s largest online retailing platforms. There are two focuses of the research: 1) how different consumer characteristics affect sales; 2) how to set price and possible search friction for different channels. I find that JD plus membership, education level and age have no significant relationship with product sales, and higher user level leads to higher sales. Sales are highly skewed, with very high numbers of products sold making up only a small percentage of the total. Consumers living in more industrialized cities have more purchasing power. Women and singles lead to higher spending. Also, the better the product performs, the more it sells. Moderate pricing can increase product sales. Based on the research results of search volume in different channels, it is suggested that it is better to focus on app sales. By knowing the results, producers can adjust target consumers for different products and do target advertisements in order to maximize the sales. Also, an appropriate price for a product is also crucial to a seller. By the way, knowing the search friction of different channels can help producers to rearrange platform layout so that search friction can be reduced and more potential deals may be made.
Highlights
In 2018, an estimated 1.8 billion people worldwide purchase goods online
I find that JD plus membership, education level and age have no significant relationship with product sales, and higher user level leads to higher sales
I mainly focused on two aspects: consumers’ purchasing behavior towards different products and strategy a producer can take to increase sales
Summary
In 2018, an estimated 1.8 billion people worldwide purchase goods online. This number is still increasing dramatically in recent years [1]. Tontini finds that the quality of e-services and online services are generally considered to be key determinants of competitive advantage and are related to measuring customers’ purchase intention [4]. These studies have made important contributions to the understanding of the key factors in online shopping. In my research, the focus is more on the consumer side, revealing how different characteristics of products and platforms will affect consumers’ purchasing behavior. It provides a framework for sellers to analyze the users’ behavior and design effective marketing strategies including allocating proper resources in different channels and designing pricing strategies.
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