Inbox for Price – An Experiment

Abstract

ABSTRACT Cambodia is one of the most active countries on social media. However, unlike their peers in Southeast Asia, Cambodians prefer to conduct e-commerce over Facebook, rather than dedicated platforms such as Shopee, Lazada, or Zalora, which are extremely popular in neighboring countries. A peculiarity among Facebook merchants in Cambodia and other developing countries is inbox pricing, in which prices are not advertised or disclosed upfront, but only revealed to customers once they send a message to the merchant’s Facebook page. As the practice is very common among Facebook merchants in Cambodia, this paper aims to examine the effects of inbox pricing on sales revenue, and its implications for businesses. To this end, an experiment was conducted on the Facebook platform. Specifically, a merchant page was created and two parallel advertisement campaigns were run for a full week. In one group, price was clearly displayed on the advertisement (transparent pricing), while in the other group, price was not mentioned on the advertisement and only revealed in inbox messages (inbox pricing). Both campaigns were identical in each and every way, except for the price component. The results showed that, ceteris paribus, the number of customers, units sold and sales were substantially higher when prices were advertised upfront, as compared to inbox pricing. Inbox pricing not only resulted in fewer customers and less sales, but also required more effort and resources to serve the customers. Keywords: Inbox pricing; Transparent pricing; Value-based pricing; Dynamic pricing