How Does the Mobile Channel Reshape the Sales Distribution in E-Commerce?

Abstract

Despite the prolitcratiun of studies on sales distributions in e-commerce, little is known about how such a distribution in online markets is affected by the presence of mobile channels, which have become a significant conduit for e-commerce. Using a large transaction data set from a leading e-marketplace in South Korea, this study empirically investigates (1) how the sales distribution in the mobile commerce channel is different from the sales distribution in the traditional personal computer (PC) channel and (2) how mobile commerce channel adoption (as a search and purchase channel) affects e-market users' search intensity and their aggregate sales distribution. Our analysis in comparing the sales distributions between the PC and mobile channels shows that transactions in the mobile channel are more concentrated on "head" products compared with PC channel sales. The subsequent user-level analysis, based on a difference-in-differences approach, reveals that mobile channel adopters search more but are less (more) likely to choose "tail" (head) products. This finding is contrary to our previous belief that more search activities lead to more tail product sales. The relationship between search intensity and head (tail) product sales, however, largely depends on the product categories. In the case of preference goods such as books, CDs, toys, and fashion items, adoption increased e-market users' search activities and resulted in more tail product sales. For quality goods such as PCs, phones, cameras, and digital appliances, however, adoption intensified the search activities but resulted in more head product sales. Finally, for convenience goods such as home supplies and processed foods, adoption discouraged search activities and decreased the choice of tail products. We discuss the theoretical implications of our findings.