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Effect of Live Chat on Traffic‐to‐Sales Conversion: Evidence from an Online Marketplace

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  • Haoyan Sun
  • Jianqing Chen
  • Ming Fan

Abstract

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.

Suggested Citation

  • Haoyan Sun & Jianqing Chen & Ming Fan, 2021. "Effect of Live Chat on Traffic‐to‐Sales Conversion: Evidence from an Online Marketplace," Production and Operations Management, Production and Operations Management Society, vol. 30(5), pages 1201-1219, May.
    • Handle: RePEc:bla:popmgt:v:30:y:2021:i:5:p:1201-1219
    DOI: 10.1111/poms.13320
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    1. Huang, Lingchen & Liu, Bin & Zhang, Rong, 2024. "Channel strategies for competing retailers: Whether and when to introduce live stream?," European Journal of Operational Research, Elsevier, vol. 312(2), pages 413-426.
    2. Liu, Baolong & Wang, Weilong, 2023. "Live commerce retailing with online influencers: Two business models," International Journal of Production Economics, Elsevier, vol. 255(C).
    3. Joshi, Raunak & Basu, Sumanta & Jonnalagedda, Sreelata & Avittathur, Balram, 2023. "Multichannel retailer’s channel choice and product pricing: Influence of investment in fit-disclosing technology by competing retailers," International Journal of Production Economics, Elsevier, vol. 262(C).

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