The Effect of Online Shopping Platform Strategies on Search, Display, and Membership Revenues

Ju Yeon Lee, Eric Fang, Jisu J. Kim, Xiaoling Li, Robert W. Palmatier

Research output: Contribution to journalArticle

Abstract

Most online shopping platform firms generate revenue from three sources: pay-per-click search advertising, pay-per-impression display advertising, and membership fees. The strategies that influence these revenue sources typically are studied individually, rather than in a holistic fashion. In response, this study uses time-series data with 18 million buyers and sellers from 2010 to 2011 and undertakes a quasi-experiment to analyze how the distinct effects of buyer- and seller-side strategies on revenues (1) vary across all three revenue sources and (2) depend differentially on a platform's upmarket repositioning strategy. The results show that buyers that purchase through direct traffic (e.g., typing in the site address) yield more display advertising and membership fee revenues than those gained through organic traffic (e.g., landing from a search engine). Engagement strategies that appeal to established sellers (i.e., value-added services) yield more search advertising and membership revenue than those that appeal to new sellers (i.e., social forums). An upmarket repositioning strategy (i.e., eliminating low quality sellers) enhances the revenue effects of buyer traffic generation and seller engagement strategies. Post hoc analyses suggest that a 1% increase in direct traffic generates an additional $151,506 in display advertising revenue after (vs. before) the repositioning.

Original languageEnglish (US)
Pages (from-to)247-264
Number of pages18
JournalJournal of Retailing
Volume94
Issue number3
DOIs
StatePublished - Sep 2018

Keywords

  • Display advertising
  • Membership fee
  • Online shopping platforms
  • Search advertising
  • Two-sided markets
  • Upmarket repositioning

ASJC Scopus subject areas

  • Marketing

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