The Impact of Listing Location on Visits, Bids, and Final Prices in Online Auctions: A Field Experiment

Kil-Soo Suh, Izak Benbasat, and Eung-Kyo Suh
International Journal of Electronic Commerce,
Volume 17, Number 3, Spring 2013, pp. 87-108.

Abstract: Compared with traditional offline markets, online auctions constrain all sellers to compete within a similar environment in terms of interface, functionality, and market rules. One means for sellers to differentiate themselves is through a set of listing options. One such characteristic that has received little research interest, despite its economic importance, is location options. This paper describes the findings of a field experiment that investigates whether and to what extent locations have impacts on market outcomes. We auctioned 120 products in matched pairs at a public auction site, both as featured (i.e., items listed in the first page of search results) and as default (i.e., items listed after featured) listings using both low-priced and higher-priced products. Consistent with the effort minimization approach to decision making and the primacy effect, the products sold under featured listings received more visits, more bids, and sold for higher prices than the products sold under default listings. There was no evidence of the impact of a “product price level-location” interaction for the final price: buyers of both low-priced and higher-priced products were equally affected by featured listings. Our follow-up survey suggests that buyers did not have the ability to perform an exhaustive search to find the lowest price. The results imply that sellers can enjoy price premiums through featured listings and that development of better shopbots by third-party vendors is greatly needed for buyers.

Key Words and Phrases: Auction-listing location, cost-benefit theories of cognition, elaboration likelihood model, featured listing, field experiment, online auction.