Does sampling influence customers in online retailing of digital music?

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Abstract
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Online retailers have taken recourse to many smart marketing strategies to sell digital music. This paper investigates the strategic decisions of online vendors for offering different mechanisms such as sampling and online reviews of digital music to increase their online sales. In this research we seek answers to the following research questions (1) should online retailers offer sampling for experience goods such as music CDs; (2) under what circumstances is offering sampling more important than offering reviews. Our empirical study shows that online markets behave as communication markets, and consumers learn about product quality information both passively (by reading online reviews) and actively but subjectively (by listening to music sampling). Using data from Amazon.com , we empirically show that sampling is a strong product quality signal that reduces product uncertainty and attracts interested shoppers. Products with the sampling option enjoy a higher conversion rate (which leads to better sales) than those without it. Second, the impact of online reviews on conversion rate is lower for experience goods with a sampling option than those without. Third, when the uncertainty of the online reviews is higher, sampling plays a more important role because it mitigates the uncertainty introduced by online reviews. We believe this paper makes an important contribution by comparing and studying the interactions between two commonly adopted online marketing strategies (i.e., sampling versus online reviews) and provides important insights on which strategy is beneficial for vendors in the context of online selling of digital music.

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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 option than those without. Third, when the uncertainty of the societal reviews is higher, sampling plays a more important role because it mitigates such uncertainty introduced by online reviews.

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As E-Commerce becomes a trend and habit in people's lives, online reviews have become a useful marketing tool and important factor of business success. Based on recent research, this paper categorizes experience products into popular and less popular classes, and makes an empirical study on online reviews on sales for different popularity products. Through collecting data on dangdang.com, and linear regression and empirical analysis, this paper gets the conclusion that comparing to popular products, less popular products' sales were more easily affected by online reviews. The B2C companies could optimize their marketing strategy by encouraging users to remark more on less popular goods. On the other hand, this paper contributes to the online review area on the idea of categorizing products and making analysis respectively.

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