Cross channel effects of search engine advertising on brick & mortar retail sales: Meta analysis of large scale field experiments on Google.com

We investigate the cross channel effects of search engine advertising on Google.com on sales in brick and mortar retail stores. Obtaining causal and actionable estimates in this context is challenging: Brick and mortar store sales vary widely on a weekly basis; offline media dominate the marketing budget; search advertising and demand are contemporaneously correlated; and estimates have to be credible to overcome agency issues between the online and offline marketing groups. We report on a meta-analysis of a population of 15 independent field experiments, in which 13 well-known U.S. multi-channel retailers spent over $4 Million in incremental search advertising. In test markets category keywords were maintained in positions 1-3 for 76 product categories with no search advertising on these keywords in the control markets. Outcomes measured include sales in the advertised categories, total store sales and Return on Ad Spending. We estimate the average effect of each outcome for this population of experiments using a Hierarchical Bayesian (HB) model. The estimates from the HB model provide causal evidence that increasing search engine advertising on broad keywords on Google.com had a positive effect on sales in brick and mortar stores for the advertised categories for this population of retailers. There also was a positive effect on total store sales. Hence the increase in sales in the advertised categories was incremental to the retailer net of any sales borrowed from non-advertised categories. The total store sales increase was a meaningful improvement compared to the baseline sales growth rates. The average Return on Ad Spend (ROAS) is positive, but does not breakeven on average although several retailers achieved or exceeded break-even based only on brick and mortar sales. We examine the robustness of our findings to alternative assumptions about the data specific to this set of experiments. Our estimates suggest online and offline are linked markets, that media planners should account for the offline effects in the planning and execution of search advertising campaigns, and that these effects should be adjusted by category and retailer. Extensive replication and a unique research protocol ensure that our results are general and credible.     

From Fatwallet to eBay: An investigation of online deal-forums and sales promotions

Sales promotions are an important part of retail advertising strategy. Traditionally, research on sales promotions has generally assumed that the buyers are end consumers who do not engage in reselling, in large part due to high transaction costs. However, the recent Internet related technologies have dramatically lowered the cost of transferring goods between consumers, leading to relative ease of reselling activity amongst individual consumers. Little is known about the impact of this phenomenon on retailer's sales promotion strategy. In this research we investigate the reselling activity in online auctions for products that active deal seekers can obtain at deeply discounted prices from retailers. We further investigate the role of deal-forums in the resale process. Data is collected from an online deal-forum (http://www.fatwallet.com/) and eBay to test various reselling-related hypotheses. The results show that there is a significant abnormal increase in the number of newly posted auctions of a product after the deal information of this product is posted on deal-forum website. We also find that there is a significant price incentive for individuals to resell. The implications for sales promotion research and practice are discussed.     

考虑零售商销售努力的双渠道供应链定价策略研究

随着电子商务市场的日益成熟,制造商建设线上直销渠道来适应新的商品销售环境成为趋势。制造商线上直销渠道的建立占领了部分原本属于线下零售渠道的市场份额,对线下零售渠道造成冲击。针对双渠道供应链中的竞争,将零售商销售努力行为考虑在内,通过构建博弈模型分别研究了在集中决策模式和分散决策模式下,制造商与零售商的定价策略。研究发现,在集中决策模式下,线下零售渠道与线上直销渠道之间的价格差异随着两个渠道潜在需求量之间差异的增大而增大,并且两个渠道的最优价格分别与其市场潜在需求成正比。在分散决策模式下,两个渠道的最优价格亦与潜在需求成正比,并且线下零售渠道的最优价格随零售商销售努力程度的增加而增加,线上直销渠道的最优价格随着零售商销售努力程度的增加而减少。     

How online reviews and coupons affect sales and pricing: An empirical study based on e-commerce platform

With rapid economic growth largely fueled by digital technologies, online reviews are among the new wave of technologies that still make a significant contribution to this new digital economy. However, there is scarce academic research in promoting or responding online reviews using reduction coupons with threshold issued by sellers and pricing decisions. We employ a three-stage least squares (3SLS) model to estimate the effects of online reviews and coupons on online product sales and price. We also extend our research using the data of two product categories. Our results mainly include: (1) Negative impact of negative online reviews on sales is moderated by price, and consumers are more tolerant of negative reviews of high-priced products. (2) Consumers' perceived usefulness of online coupons helps promote more sales and weaken the relationship between negative reviews and sales. (3) Positive online reviews weaken the negative relationship between online negative reviews and the price of product. (4) Consumers’ increased perceived usefulness of online coupons will encourage sellers to set a higher price and weaken the negative relationship between negative reviews and the price of product. (5) Compared with the search product, sellers regard negative reviews from the product with experience attributes as less helpful and apply less effective coupon promotion to response to negative reviews. Our study clarifies the interaction between online reviews and online coupons on e-commerce platforms under the operation scenario. We also provide empirical support for accurate promotion and higher sales revenue through reasonable pricing decisions and specified reduction coupons.     

Substitution or Promotion? The Impact of Price Discounts on Cross-Channel Sales of Digital Movies

Technology is transforming the marketing function in many ways, and this transformation is particularly apparent for information goods such as movies where digital technologies provide marketers with new distribution channels, which in turn create new opportunities for cross-channel effects. However, these digital channels also provide researchers with new opportunities to measure micro-level customer behavior to understand the impact of cross-channel effects in real-world settings.In this paper, we study cross-channel effects between movies sold in digital purchase (commonly known as Electronic Sell Through or EST) and digital rental (commonly known as Video-On-Demand or VOD) markets. We do this using a unique sales dataset from a major digital movie retailer provided by a major movie studio. Our analysis takes advantage of a 14-week field experiment that allows us to measure the impact of price discounts on own- and cross-channel sales. We use this experiment to estimate own and cross price elasticities, whether price discounts cannibalize future sales, and most importantly whether price discounts in one channel affect sales for the same product in a presumably competing channel.Our analysis indicates that digital movie consumers are highly sensitive to price promotions. However, we also find that, contrary to expectations, price promotions in a digital sales channel for a movie do not seem to cannibalize digital rentals. Indeed, our results suggest that, if anything, price promotions for digital movie sales can increase digital rentals. We explore a variety of explanations for this counterintuitive result, including the possibility that the ease of information transmission online through third-party websites, blogs, and online discussion areas may create information spillovers such that price discounts in one channel may increase product awareness in other competing sales channels. From a managerial perspective, our results suggest that cross-channel cannibalization can be reduced or even reversed in the presence of information spillovers, and that there are many new opportunities for marketers to directly measure these cross-channel effects using experimental data from online platforms.     

Market Reaction to Information Shocks—Does the Bloomberg and Briefing.com Survey Matter?

Bloomberg and Briefing.com provide competing forecasts for prescheduled macroeconomic announcements. This study examines the accuracy of these forecasts and market reactions to announcement surprises. Our results show that the Bloomberg survey is slightly more accurate than the Briefing.com survey. More importantly, although announcement surprises based on both surveys have a significant effect on the trading activities and returns of S&P 500 futures contracts, the Bloomberg survey subsumes the explanatory power of the Briefing.com survey. The findings suggest that on average Bloomberg forecasts are more consistent with the market consensus view. In addition, we provide evidence of asymmetric market reactions to positive versus negative announcement surprises. In particular, the market reacts strongly to inflation news in the Consumer Price Index (CPI) and Producer Price Index (PPI) announcements and negative shocks in housing price, personal spending, and retail sales.     

基于门限分位数回归的网上商品销量影响因素探析

网上商品销售与线下商品销售存在较大不同,为探索其消费模式,需要研究各影响因素对网上商品销量的作用机制。文章基于心理抗拒、贝勃定律、卢因人类行为理论等,对网络消费行为进行系统分析;综合运用分位数回归和门限回归方法,建立了门限分位数回归模型,揭示商品价格、商家信誉评分、商家信誉等级、保障标记数量、商品收藏人气、口碑数量和口碑分数等对销量的非线性异质影响。以受众广泛的iPad air2网上销售为研究对象,实证结果表明：提高商家的信誉等级、增加口碑数量能使高销量商家的销量更高,而保障标记数量的增加对热销有阻碍作用;在非热门商品转向热销品的过程中,增加收藏人气、增加口碑数量和一定价格范围内的提价对低销量商家的销量有促进作用。     

网上商品热销的影响因素探析——基于分位数回归的实证研究

本研究从网上销售的影响因素出发,采用搜索程序获取了淘宝网的4059个货架1周的销售数据,通过分位数回归方法对不同热门程度产品的价格、信誉、保障标记以及口碑的需求弹性进行了实证分析。研究结果表明,随着产品热门程度的提高,信誉的需求弹性不断增强,而价格、保障标记以及口碑的需求弹性却不断减弱。由此表明,产品的价格降低,保障标记级别和口碑的提升都能使销售趋于分散,而提高商家的信誉却能加速销售向热门产品集中,使得"热门更热"。     

引入运费险参数的电商利润优化模型分析

在网购盛行的同时,网购行为中更为常见的退货行为也给电商的利润带来了较大的不利影响。运费险诞生后,基于运费险的电商最优决策成为运营管理中的热点问题之一。将退货率及退货运费险引入经典报童模型当中,基于报童模型给出考虑退货运费的电商利润预测模型。基于商家是否购买运费险的决策,推导出不同情境下,商家的最优订货量及对应利润。通过具体算例,给出了电商利润的数值模拟。结果表明,商家在决策是否购置运费险时,应当考虑商品性价比、原有销量和利润、退货率、退货处理成本等因素。在对采购策略进行决策时,应当考虑最优订购量、进货成本。     

Estimating cannibalizing effects of sales promotions: The impact of price cuts and store type

To evaluate the financial impact of supermarket sales promotions, managers must estimate how much new demand comes from cannibalizing the base product compared with other sources. However, investigations into cannibalization are scant. Using vector autoregression analytical framework applied to three years of supermarket scanner data, and sales promotions for pound cake, we estimate cannibalization effects for two common price reductions (10% and 15%), across large, medium and small supermarkets. The sales bumps varied across supermarkets for each price cut while cannibalization effects were substantial only in large supermarkets, with moderate effects in medium stores and no effects in small supermarkets.     

Why Consumers Hesitate to Shop Online: Perceived Risk and Product Involvement on Taobao.com

Heralded as one of the fastest-growing regions in e-commerce sales, Asia has received increasing attention from online retailers as a promising e-commerce market. Therefore, to provide better insight into Asian online marketplaces, this study focuses on Taobao.com (hereafter referred to as “Taobao”), a major Chinese online marketplace, and attempts to shed light on consumers’ perceptions of Taobao. More specifically, this study examines (a) what consumers in China think about Taobao as an online marketplace when purchasing high- or low-involvement products; (b) what types of risk are associated with each product; and (c) how online consumers’ risk perceptions consequently influence both their trust toward Taobao and their purchase intention. Multidimensional perceived risks (financial, privacy, product, security, social/psychological, time) were considered in the research. Participants were 217 Chinese university students. The results indicate that product risk and social/psychological risk were negatively associated with consumers’ trust and purchase intention, regardless of their degree of product involvement. Interestingly, financial risk was positively related to trust and purchase intention. Findings are discussed with managerial implications, followed by limitations and future studies.     

“同品不同价”:价值感知与定价差异——基于当当网自营与入驻商家的比较

平台经济发展日益加剧网络零售市场竞争和价格离散,商家间同商品定价差异背后的理论逻辑亟待厘清。由于消费者对商品各价值特征存在差异偏好,从而产生不同程度的溢价意愿。研究表明:商家在质量、服务、评论反馈方面所代表的价值感知差异对不同商家商品定价差异的传导机制有显著影响。其中,商家间的服务体验价值差异对网络商品定价的提升影响效用明显,评论反馈所代表的信息价值在初次购买后的影响力减弱。面对价格分档,市场上价格敏感者更看重功能价值,追求物美价廉;中高价位商品的消费者更注重增值服务的体验价值感知。互联网零售商要有针对性地制定相关价值感知提升策略;相关管理部门要防范"感知过度"式哄抬物价以维护市场竞争秩序。     

Value‐driven Internet shopping: The mental accounting theory perspective

When faced with competition and the ease with which customers can compare prices across sellers, Internet vendors often lower prices in a bid to increase sales. However, recent research reports that even price‐sensitive customers do not always purchase from Internet vendors offering the lowest prices. In contrast, value has been considered a key motivator of customer decision making in economics and marketing. However, little is known about the role and effect of value in Internet shopping. This study examines online customer purchase decision making from the value perspective based on mental accounting theory. This study also identifies monetary (perceived price) and non‐monetary (perceived risk, convenience, and pleasure) determinants of value. This study further explains how the individual determinants affect online purchase decision making directly and indirectly though value perception. The findings of this study offer Internet vendors practical suggestions for increasing online sales. This study, with its results, also helps advance knowledge of electronic commerce. © 2009 Wiley Periodicals, Inc.     

Bayesian Analysis of Simultaneous Demand and Supply

In models of demand and supply, consumer price sensitivity affects both the sales of a good through price, and the price that is set by producers and retailers. The relationship between the dependent variables (e.g., demand and price) and the common parameters (e.g., price sensitivity) is typically non-linear, especially when heterogeneity is present. In this paper, we develop a Bayesian method to address the computational challenge of estimating simultaneous demand and supply models that can be applied to both the analysis of household panel data and aggregated demand data. The method is developed within the context of a heterogeneous discrete choice model coupled with pricing equations derived from either specific competitive structures, or linear equations of the kind used in instrumental variable estimation, and applied to a scanner panel dataset of light beer purchases. Our analysis indicates that incorporating heterogeneity into the demand model all but eliminates the bias in the price parameter due to the endogeneity of price. The analysis also supports the use of a full information analysis.     

The Impact of Search and Recommendation Systems on Sales in Electronic Commerce

The Internet and related technologies have vastly expanded the variety of products that can be profitably promoted and sold by online retailers. Furthermore, search and recommendation tools reduce consumers’ search costs in the Internet and enable them to extend their search from a few easily found best-selling products (blockbusters) to a large number of less frequently selling items (niches). As a result, Long Tail sales distribution patterns emerge that illustrate an increasing demand in niches. We show in this article how different classes of search and recommendation tools affect the distribution of sales across products, total sales, and consumer surplus. We hereby use an agent-based simulation which is calibrated based on real purchase data of a video-on-demand retailer. We find that a decrease in search costs through improved search technology can either shift demand from blockbusters to niches (search filters and recommendation systems) or from niches to blockbusters (charts and top lists). We break down demand changes into substitution and additional consumption and show that search and recommendation technologies can lead to substantial profit increases for retailers. We also illustrate that decreasing search costs through search and recommendation technologies always lead to an increase in consumer surplus, suggesting that retailers can use these technologies as competitive advantage.     

Using Groupon for health and wellness businesses

Social merchants are small business owners and entrepreneurs who adopt social shopping as a new sales channel. They employ social shopping intermediaries, such as Groupon and LivingSocial, to promote their products or services to price-sensitive customers at large discounts. The success of social merchants depends in part on the reputation they gain at merchant review sites (e.g., Yelp, TripAdvisor, Angie's List), via which consumers post online product and merchant reviews. An analysis of social shopping provides insight regarding how social shopping works and what merchants must be aware of if they utilize social shopping intermediaries. This article shares these insights in the context of a set of health and wellness merchants that were studied for five years. Specifically, this article discusses how their Groupon daily deals affect merchant reviews, and how surviving vs. failed social merchants differ in terms of their review scores and number of reviews. Finally, this article provides recommendations about merchant review management to health and wellness merchants.     

Online Shoppers' Perceptions and Use of Comparison-Shopping Sites: An Exploratory Study

Comparison-shopping sites currently offer online shoppers various combinations of free services such as price comparisons, merchant ratings, links to e-tailers’ websites, and/or customer reviews in the search results page(s). The utility and market values of shopping comparison sites have attracted Internet giants such as eBay, Google, and Yahoo to the extent of developing or acquiring such sites. Scholarly research on comparison-shopping sites has focused on (1) trust in online recommendation agents, and (2) methods used by electronic agents to produce the recommendations. Our study explored how online shoppers’ attitudes toward comparison-shopping sites impact perceived credibility and usefulness of these sites. We also examined online shoppers’ merchant selection criteria and their likelihood to continue using comparison-shopping sites. One interesting finding from our study was that merchants need to be strong on site ratings and brand awareness to appeal to a wide online market. The finding dispelled the notion that e-tailers presented by shopping comparison sites need to compete, basically, only on price.     

生鲜O2O线下要素作用及其运营规律探析

生鲜O2O模式的兴起对于互联网时代农产品销售的模式创新产生了推动作用,对解决“三农”问题、促进我国农村商业经济升级转型具有积极意义。本文对生鲜O2O质量预期、配送效率预期与O2O模式接受度及重复购买意愿之间的关系进行实证分析,提炼生鲜O2O的关键经营策略。研究表明,质量预期是消费者对O2O模式接受度的首要影响因素,而配送效率预期是消费者对O2O价格接受度的首要影响因素,生鲜产品质量对价格接受度有重要影响,以上关系可以看出产品质量对于模式本身的认可是最重要的,只有优中选优的生鲜产品才能用来网上销售,唯有如此才能获得网购者对高于实体店价格与O2O模式的认可;只有用高于实体店的价格买到实体店中优中选优的生鲜产品,让网购者感到物有所值,这样的O2O模式才能够生存发展并逐步兴隆起来。网上营销的“优中选优”定律可为生鲜O2O模式构筑起足以支撑其发展壮大的比较优势。     

Social shopping promotions from a social merchant's perspective

Taking advantage of Web 2.0's user-participation and social networking capabilities, social shopping intermediaries have emerged as a promising online liaison between merchants and consumers by offering group discount deals to price-sensitive customers and early technology adopters. Our study compares the two most popular types of social merchants—restaurants and healthcare services—in terms of seven key factors that influence a merchant's sales using a Groupon promotion. We find that these two types of social merchants show significantly different characteristics for successful promotions. Based on a new proposed lifetime value model for social shopping promotions, this study also discusses its applicability with an illustration of the model and presents guidelines for social merchants who want to achieve the maximum lifetime value from a social shopping promotion. Finally, we discuss implications of our study for social merchants and social shopping intermediaries.     

When higher prices increase sales: How chronic and manipulated desires for conspicuousness and rarity moderate price's impact on choice of luxury brands

This study examines the impact of low, medium, and high prices on luxury brand choices by consumers very high versus very low in chronic desire for conspicuousness (CC) on selection of a luxury brand, namely, as well as the combination of very high versus very low chronic desire for rarity (CR). The research design tests and confirms the nomological validity of a system of relationships among chronic and manipulated conditions. High versus low manipulated desire for conspicuousness (MC) and manipulated desire for rarity (MR) conjoined with high versus low chronic desire for conspicuousness (CC) and chronic desire for rarity (CR) moderates the typically hypothesized negative main effect of price on demand and may cause a positive main effect of price on luxury brand choice across a relevant range of price-points. These findings confirm the applied theory that for some consumers, chronic psychological states in combination with manipulated related states allow for—perhaps demand that—merchants to charge higher prices to increase sales of luxury brands.