Operations Strategies on Retail and B2B Platforms
I will present two papers that study how operations strategies reshape consumer or supplier behavior on both retail and B2B platforms. In particular, I will talk about (1) the value of logistics quality to retail platforms, and (2) the value of information to B2B platforms.
The first paper, entitled “Value of High-Quality Logistics: Evidence from a Clash between SF Express and Alibaba,” explores how much customers value a high-quality delivery experience when shopping on a retail platform. We exploit a natural experiment: a clash between SF Express—the largest private logistics service provider with the highest reputation in both speed and reliability in China—and Alibaba—the largest online retail platform in China. The clash resulted in SF Express removed as a shipping option from Alibaba’s retail platform for 42 hours. Using a difference-in-differences design, we analyze the market performance of 129,448 representative SKUs on Alibaba to quantify the economic value of a high-quality delivery service to sales, product variety, and logistics rating. We find that the removal of the high-quality delivery option decreased sales by 16.42% and its resumption increased sales by 18.83%, but it did not impact the variety and the logistics rating of sold products. We also find that the removal of SF Express is more obstructive for (i) star products than longtail products, (ii) expensive products, and (iii) less-discounted products.
The second paper, entitled “Wholesale Price Discrimination in Global Sourcing: Field Experiment on Alibaba,” studies suppliers’ pricing behavior on B2B global sourcing platforms. We investigate whether there exists wholesale price discrimination, by conducting randomized field experiments on Alibaba.com, the world largest online global trade platform. We find there is no significant difference in the wholesale prices charged by suppliers to U.S. and South Africa buyers. We also find that suppliers charge a significantly higher wholesale price to White buyers than Asian or Black buyers. Moreover, both market information—providing the lowest wholesale price offered by other suppliers in the market—and market information—indicating the buyer is recommended by a previous customer—can help buyers obtain a lower wholesale price. However, only the market information can eliminate the wholesale price discrimination.