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Effect of Live Chat on Traffic‐to‐Sales Conversion: Evidence from an Online Marketplace
Author(s) -
Sun Haoyan,
Chen Jianqing,
Fan Ming
Publication year - 2021
Publication title -
production and operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.279
H-Index - 110
eISSN - 1937-5956
pISSN - 1059-1478
DOI - 10.1111/poms.13320
Subject(s) - online chat , product (mathematics) , business , service (business) , brick and mortar , marketing , task (project management) , page view , test (biology) , computer science , advertising , the internet , world wide web , economics , paleontology , static web page , geometry , mathematics , management , biology , web server
Over the years, online retailers have increasingly embraced live chat to improve customer service and facilitate transactions. We examine how online sellers’ use of live chat influences their online traffic conversion into sales. Like brick‐and‐mortar stores, a fundamental task for online stores is to convert traffic into purchases, an important problem in retail service operations management. We argue that live chat can increase online sales conversion by performing the functions of informing and persuading . We explore how the two roles of live chat interact with existing information regarding sellers and their products, such as product descriptions, ratings, price, and reviews, as these types of information also influence consumers’ perceived product quality and help mitigate uncertainties in product fit to their needs. We apply a random‐coefficient model in a Bayesian hierarchical framework and test the model using a panel dataset from Taobao, the leading C2C platform in China. Our results suggest that live chat has a positive impact on conversion and that the strength of this positive effect depends on seller and product characteristics. The positive effect is stronger when product information on web pages is less comprehensive (where live chat manifests an informative role), and when the perceived value of the product is higher (where live chat manifests a persuasive role) with either a higher product rating or a lower product price. Our results provide relevant and useful implications for online merchants and platform owners.