Sellers with Limited Feedback Benefit the Most
INFORMS Journal Information Systems Research New Study Key Takeaways:
- Live chats between sellers and buyers can increase purchase probability of tablets by 15.9%.
- Sellers with low feedback scores benefit more from live chat conversations than sellers with high scores.
- Popular products sell even better after a live chat.
- Consumers are more likely to initiate a live chat conversation when the perceived risk of purchase is high.
CATONSVILLE, MD, January 8, 2020 – Live chat tools allow for communication between sellers and buyers. They are popular instruments for e-commerce sites that don’t have the advantage of face-to-face communication that brick-and-mortar stores do. New research in the INFORMS journal Information Systems Research says these live chats can actually increase sales and boost profits.
The study, “Impact of Live Chat on Purchase in Electronic Markets: The Moderating Role of Information Cures,” looked at data from Alibaba on consumers’ purchase decisions of Apple and Samsung tablets from March through June 2013.
“We found live chat can increase purchase probability of tablets by 15.9%,” said Xue (Jane) Tan of Indiana University. “We see that human interaction results in better sales performance.”
Tan, Youwei Wang of Fudan University and Yong Tan of the University of Washington say the fact that sellers and buyers cannot speak in person, like brick-and-mortar stores, leads to uncertainty about product quality and seller credibility. Live chat tools allow e-vendors to communicate with customers in real time.
The data source, Alibaba, has a reputation of being similar to eBay, where feedback is collected after each transaction. The data consisted of consumer browsing, live chat and purchase histories. The live chat tool is moderated by existing information cues: product sales volume and seller feedback score.
“Sellers with limited feedback benefit more from live chat conversations than sellers with a lot of feedback. And products with high past sales volume sell better after live chat, indicating a reinforcement effect,” continued Tan. “It is interesting that a seller can sell multiple products with varying levels of sales performance, and the seller feedback is measured based on all products.”
About INFORMS and Information Systems Research
Information Systems research is a premier peer-reviewed scholarly journal focused on the latest theory, research and intellectual development to advance knowledge about the effective and efficient utilization of information technology. It is published by INFORMS, the leading international association for operations research and analytics professionals. More information is available at www.informs.org or @informs.
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