The Effect of Online C2C Markets on New Product Purchasing Behavior: An Empirical Analysis of Japanese Selling Apps

Abstract

This study quantitatively investigated the effect of purchases and sales on selling apps on the value of new product purchases, based on questionnaire data from 20,000 consumers. To sufficiently address endogeneity, individual consumer preferences were incorporated into the model and a GMM (generalized method of moments) model employing instrumental variables, was utilized. An analysis on six categories showed a substitution effect where an increase in the value of purchases on selling apps led to a decrease in the value of new product purchases for three categories of hair products: cosmetics, and fragrances, consumer electronics, smartphones, and toys and hobbies. Conversely, for sales, a complementary effect was found for all categories where an increase in the value of selling app sales (the value of items offered for sale and then sold) led to an increase in the value of new product purchases. The absolute value of the complementary effect was higher than that for the substitution effect for all categories except toys and hobbies. Subjective consumer assessment showed that the number of people who thought the value of new product purchases would increase due to selling app use was higher than those who thought it would decrease. The empirical analysis shows that selling app transactions complement, rather than substitute in the new product market. This implies that companies that develop products, which can be easily transacted, searched for, and accepted on selling apps can increase sales by using selling apps in marketing strategies such as information transmission, branding, and customer loyalty.