Seminar（Dept. of Trade Economics）

Title: Fostering Long-tenured Seller Value Creation:A Field Experiment on an Online Marketplace

Speaker: Zhe Yuan (School of Economics, Zhejiang University)

Time: 10:00 (Thursday), April 6, 2023

Venue: Online Meeting

Language：Chinese/English

ABSTRACT:

After decades of growth, long-tenured sellers have become a major part of the market share on mature e-commerce platforms. On the one hand, while these long-tenured sellers significantly contribute to platform sales volume, they gradually lose motivation to actively create value for the e-commerce market. On the other hand, e-commerce platform designers usually focus on new seller recruitments in order to take advantage of the cross-side network effect. Thus, as new seller entry slows down, mature platforms start to focus on designs that incentivize long-term value creation from existing sellers. In this study, we collaborated with one of the world's largest e-commerce platforms to examine the consequences of a new design in which the platform displays "long-tenured" tags on search engine results to emphasize sellers' tenure credits. A randomized experiment involving over 14 million customers was conducted to test the effects of the new design. The results showed that tagging long-tenured sellers led to significant increases in customer clicks and purchases in the short run, and motivated long-tenured sellers to increase product releases and category expansions in the long run. Further investigations revealed a reputation spillover effect from the tagged sellers to their long-tail products. This effect incentivized long-tenured sellers to introduce new products and expand categories in the long run. In addition, the tag also reduced moral hazard. Sellers introduced products with better ratings and lower refund rates after being rewarded a tag.