The Impact of Seller Reputation on the Performance of online sales

Abstract

The understanding of the seller reputation and sales performance relationship is an important topic in C2C market. Previous research has mainly focused on the C2C market in the U.S. The findings of that research have not been validated in countries with different cultural backgrounds such as China. With the explosive growth of electronic markets in China, the study of C2C online sales becomes increasingly important. This paper attempts to understand seller reputation effects on sales price, number of sales, and total revenue, based on But-It-Now (BIN) data collected from TaoBao.com, the largest online auction site in China. Multiple regression analysis is performed to test the significance of the effects. This study revealed cross effects of negative ratings on the performance of a seller. By separating the cross effects of magnitude and reputation of negative ratings, this study demonstrated that positive ratings have a significant positive impact on the performance of sellers, while negative ratings have negative reputation effects and positive magnitude effects. This is the first study that has focused on understanding the Buy-It-Now pricing and seller reputation relationship. Since the BIN feature is the most popular way of selling in online C2C markets in China, we believe the findings of this research will provide insight to researchers performing cross-cultural comparisosn between China and other markets.