An analysis of popularity information effects: Field experiments in an online marketplace Byungjoon Yoo a , Seongmin Jeon b,⇑ , Tongyo Han c a College of Business Administration, Seoul National University, Republic of Korea b College of Business, Gachon University, Republic of Korea c Korea Information Society Development Institute, Republic of Korea article info Article history: Received 3 April 2014 Received in revised form 25 March 2016 Accepted 25 March 2016 Available online 26 March 2016 Keywords: E-commerce Field experiment Hit list Popularity information abstract Popularity information is identified as one of the important factors for businesses in the online marketplace and is normally expected to strengthen sales performance. At the same time, the effects of popularity information are found to vary across product types. In this study, we attempt to identify the effects of popularity information on product sales through an analysis of the subgroups of category and price. Two sequential field experiments in an online apparel store on Alibaba’s Tmall, the most dom- inant online brand marketplace in China, are conducted to capture the causal effects of the popularity information on sales. After observing the possible existence of popularity information effects through a pilot test of 17 products, we conduct the main experiment with 290 products, recording the daily sales for each by posting selected products on the hit list. The difference-in-differences method and propensity score matching are used to analyze the effects. The results show that once the products are displayed on the hit list, product sales increase by an average of 1.3 units per day. One subgroup of the niche product category is found to be influenced more significantly by hit list information than are other subgroups in the broad appeal category. Furthermore, after the hit list information is presented, more units of mid-price products are likely to be sold than units of products with high and low prices. Ó 2016 Elsevier B.V. All rights reserved. 1. Introduction Popularity information is understood to be one of the crucial factors of success in the online marketplace, as such information is known to alleviate the issues of information asymmetry that result in consumers having a limited amount of information with which to identify what to purchase. The effects of popularity infor- mation differ across product types. We have undertaken field experiments in order to capture the causal effects of popularity information on product sales through an analysis of the subgroups of category and price in the context of the electronic marketplace in China. Online shoppers are likely to require a significant amount of knowledge and time to make an optimal buying decision from a selection of products. Theories regarding observational learning and herding present a social learning mechanism (Banerjee, 1992; Bikhchandani et al., 1992). These theories state that, because individuals make decisions with incomplete and inaccurate information, they refer not only to information that they possess but also to the actions of predecessors, without any knowledge of the predecessors’ decision making process. According to the informational cascades theory, referring to the choices of others could be efficient and rational (Li, 2004; Duan et al., 2009). Because popularity information is expected to alleviate information asym- metry, most online marketplaces provide popularity information based on past sales performance. Popularity information likely plays an important role in the rapidly growing Chinese electronic market. The growth of the online marketplace is outstanding in the case of China’s e-commerce market (Zhang et al., 2013). Over the past five years, online sales in China have increased 15 times over, amounting to RMB 1.8 trillion (US$288 billion) in 2013 (The Business Times, 2014). The Boston Consulting Group predicts that the size of China’s flourishing e-commerce market will surpass that of the U.S. in 2015 and will become the next e-commerce mover in the world (Walters et al., 2011; Mozur, 2013). The leading online marketplaces of the Alibaba Group have annually 255 million active buyers, eight million active sellers, and 12.7 billion orders (Alibaba Group Holding Limited, 2014). Obviously, in such an active market, consumers have difficulties in finding the right merchants for them. Furthermore, rapid quantitative expansion of the online market- place has resulted in a number of issues including information http://dx.doi.org/10.1016/j.elerap.2016.03.003 1567-4223/Ó 2016 Elsevier B.V. All rights reserved. ⇑ Corresponding author. E-mail addresses: byoo@snu.ac.kr (B. Yoo), smjeon@gachon.ac.kr (S. Jeon), tongyohan@kisdi.re.kr (T. Han). Electronic Commerce Research and Applications 17 (2016) 87–98 Contents lists available at ScienceDirect Electronic Commerce Research and Applications journal homepage: www.elsevier.com/locate/ecra