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• Article | Journal of Marketing Research (JMR) | December 2019

  The Impact of Increasing Search Frictions on Online Shopping Behavior: Evidence from a Field Experiment

  Donald Ngwe, Kris J. Ferreira and Thales Teixeira

  Many online stores are designed such that shoppers can easily access any available discounted products. We propose that deliberately increasing search frictions by placing small obstacles to locating discounted items can improve online retailers’ margins and even increase conversion. We demonstrate using a simple theoretical framework that inducing consumers to inspect higher-priced items first may simultaneously increase the average price of items sold and the overall expected purchase probability by inducing consumers to search more products. We test and confirm these predictions in a series of field experiments conducted with a dominant online fashion and apparel retailer. Furthermore, using information in historical transaction data about each consumer, we demonstrate that price-sensitive shoppers are more likely to incur search costs to locate discounted items. Our results show that increasing search frictions can be used as a self-selecting price discrimination tool to match high discounts with price-sensitive consumers and full-priced offerings with price-insensitive consumers.

  Keywords: e-commerce; online retailing; friction; effor; search costs; price discrimination; Marketing; Consumer Behavior; Strategy; Price; Retail Industry; Fashion Industry;

  Citation:

  Ngwe, Donald, Kris J. Ferreira, and Thales Teixeira. "The Impact of Increasing Search Frictions on Online Shopping Behavior: Evidence from a Field Experiment." Journal of Marketing Research (JMR) 56, no. 6 (December 2019): 944–959.  View Details

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• Case | HBS Case Collection | February 2019 (Revised June 2019)

  Where to Grow Next at Online Marketplace OLX

  The CEO of OLX Brazil, an online classifieds platform business, is debating among multiple paths to grow sustainably (i.e., profitably) without the need for investor money. The options under consideration are (1) penetration growth by focusing on the core, (2) new markets growth by entering adjacencies, or (3) new products growth by developing new services. Each of these options carries a series of benefits and risks. How should OLX’s CEO compare the options and choose the best path to grow his platform business?

  Keywords: online marketplace; Growth; customer acquisition; Facebook; two-sided network; e-commerce; classifieds; Naspers; Schibsted; innovation; Startup; Market Platforms; Online Technology; Growth and Development Strategy; Business Model; Innovation and Invention; Business Startups; Decision Choices and Conditions; Brazil;

  Citation:

  Teixeira, Thales, Leandro A. Guissoni, and Samy Dana. "Where to Grow Next at Online Marketplace OLX." Harvard Business School Case 519-064, February 2019. (Revised June 2019.)  View Details

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• Case | HBS Case Collection | June 2019

  Airbnb, Etsy, Uber: Expanding from One to Many Millions of Customers

  By 2019, two-sided online platforms (or marketplaces) were among the highest-growing internet startups around. These marketplaces sought to match suppliers of assets for rent, physical products, or services with customers demanding them. Among the most notable two-sided platforms that quickly reached millions of customers were Airbnb, Etsy, and Uber. They offered short-term property rentals, handcrafted goods, and car rides, respectively. As two-sided markets grew past the 1 million customer mark, challenges of typical large businesses appeared. Among the challenges facing Airbnb, Etsy, and Uber were maintaining the fast pace of customer acquisition, reducing customer retention problems, and avoiding regulatory issues. How did these platforms balance their fast growth and massive size with so little time to adapt to ever mounting challenges? How did they adapt and change their customer acquisition tactics to grow from 1 million to many millions of customers so quickly? This is the third and final instalment of the Airbnb, Etsy, Uber trilogy.

  Keywords: Airbnb; Etsy; Uber; Growth hacking; Two-Sided Markets; digital marketing; customer acquisition; Two-Sided Platforms; Growth Management; Marketing Strategy; Customers; Acquisition; Organizational Change and Adaptation;

  Citation:

  Teixeira, Thales S. "Airbnb, Etsy, Uber: Expanding from One to Many Millions of Customers." Harvard Business School Case 519-087, June 2019.  View Details

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