An Analysis of Hit List Effects: Field Experiments in an Electronic Marketplace

Abstract

Electronic marketplace has recorded tremendous growth, and apparel sales are rising rapidly. Two sequential field experiments in an apparel online shopping mall on Taobao, the most dominant marketplace in China, are carried out to analyze the effects of online promotion on hit list. This study conduct one pilot test for 17 products and second experiment for 290 products and record the daily sales for each by posting selected products on hit list. Difference-in-Differences method and Propensity score matching method are used to analyze the data. D-in-D estimation is effective both in identifying causality and precisely measuring its impact. In the settings of e-commerce web sites, the method identifies the difference brought by the treatment between two groups. This study finds that once the products are displayed on hit list, product sales increase by 1.8 units per day. Utilizing Propensity score matching method, the sales promotion effect was measured as approximately 0.99 to 1.05 units depending on the matching algorithm. Furthermore, our analysis shows that the treatment is more effective when the price of a product is more than 200 and less than 300 Chinese RMB and the cardigan and T-shirt categorical groups show the larger sales promotion. This study empirically proved the effect of hit list in online shopping mall and estimated the effect of it. This study can also provide extremely practical implications and give better insights into the understanding of the impact of online promotion on hit list.