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  • 2022
  • Working Paper

Algorithmic Assortment Curation: An Empirical Study of Buybox in Online Marketplaces

By: Santiago Gallino, Nil Karacaoglu and Antonio Moreno
  • Format:Print
  • | Language:English
  • | Pages:32
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Abstract

Most online sales worldwide take place in marketplaces that connect sellers and buyers. The presence of numerous third-party sellers leads to a proliferation of listings for each product, making it difficult for customers to choose between the available options. Online marketplaces adopt algorithmic tools to curate how the different listings for a product are presented to customers. This paper focuses on one such tool, the Buybox, that algorithmically chooses one option to be presented prominently to customers as a default option. We leveraged the staggered introduction of the Buybox within a prominent product category in a leading online marketplace to study how the Buybox impacts marketplace dynamics. Our findings indicate that adopting Buybox results in a substantial increase in marketplace orders and visits. Implementing Buybox reduces the frictions customers and sellers face. On the customer side, we find a reduction of search frictions, evidenced by an increase in conversion rates and a higher impact of Buybox on the mobile channel, which has significantly higher search frictions than desktop channel. On the seller side, the number of sellers offering a product increases following the implementation of Buybox. Customers benefit from lower prices and higher average quality levels when competition in Buyboxes is high. After the introduction of the Buybox, the marketplace also becomes more concentrated. Our paper contributes to the burgeoning literature on the role of algorithms in platforms by examining how algorithmic curation impacts the participants of the marketplace as well as the marketplace dynamics.

Keywords

Algorithms; E-commerce; Sales; Digital Marketing; Internet and the Web; Customer Satisfaction

Citation

Gallino, Santiago, Nil Karacaoglu, and Antonio Moreno. "Algorithmic Assortment Curation: An Empirical Study of Buybox in Online Marketplaces." Working Paper, September 2022.
  • SSRN

About The Author

Antonio Moreno

Technology and Operations Management
→More Publications

More from the Authors

    • 2023
    • Faculty Research

    Operational Consequences of Customer Interaction Design: Evidence From Last-Mile Delivery Services

    By: Natalie Epstein, Santiago Gallino and Antonio Moreno
    • May–June 2023
    • Operations Research

    Need for Speed: The Impact of In-Process Delays on Customer Behavior in Online Retail

    By: Santiago Gallino, Nil Karacaoglu and Antonio Moreno
    • March 2023 (Revised August 2023)
    • Faculty Research

    Majid Al Futaim: Adapting the Shopping Mall to the Digital Era

    By: Antonio Moreno and Gamze Yucaoglu
More from the Authors
  • Operational Consequences of Customer Interaction Design: Evidence From Last-Mile Delivery Services By: Natalie Epstein, Santiago Gallino and Antonio Moreno
  • Need for Speed: The Impact of In-Process Delays on Customer Behavior in Online Retail By: Santiago Gallino, Nil Karacaoglu and Antonio Moreno
  • Majid Al Futaim: Adapting the Shopping Mall to the Digital Era By: Antonio Moreno and Gamze Yucaoglu
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