Impacts of logistics information on sales: Evidence from Alibaba

Abstract

AbstractFacing fierce competition from rivals, sellers in online marketplaces are eager to improve their sales by delivering items faster and more reliably. Because logistics quality can be known only after a transaction, sellers must identify effective ways to communicate logistics information to consumers. Drawing on the accessibility‐diagnosticity framework, we theorize that the sales impacts of logistics information depend on its relative diagnostic value. Using data on 1493 items with 505,785 consumer reviews from an online marketplace, we examine how sales are affected by three information sources for logistics services: online word of mouth (WOM) about logistics, self‐reported logistics services, and expected delivery time. We use an instrumental variable method to address the endogeneity issue between sales and WOM. We find that, ceteris paribus, consumers give more weight to WOM about logistics and delivery time when they make purchase decisions but less weight to self‐reported logistics service. The effects of logistics information on sales are asymmetric for large and small sellers.