Three Studies on Online Consumer Behavior: Product Scarcity, Price Expectation and the COVID-19 Pandemic
Abstract:
The emergence of Internet has provided great opportunities for businesses and organizations to get in touch with the public. E-commerce, or online shipping websites, makes it easy for companies to improve their presence among consumers and increases their sale opportunities. Online crowdfunding enables individuals and charities to raise money from a large group of people. Study One and Study Two each explores an important feature of online shopping, the product quantity and the price. The COVID-19 pandemic has put the human being into an unprecedented crisis. Though people are stuck inside to contain the transmission of the virus, they are able to make donations online via crowdfunding to support disadvantaged groups, medical workers, and vaccine research. Study Three examines individuals' online prosocial behavior when confronted with such a disaster.
Specifically, Study One identifies the research gaps in the literature of product scarcity and consumer purchase behavior. To understand how mobile users will respond to product scarcity cues, we conduct a field experiment in collaboration with a leading travel meta-search platform. In the experiment, we operationalize the product scarcity information using the number of remaining seats and display manipulation messages to mobile app users. Results show that, product scarcity messages can significantly increase mobile app users' flight booking decisions. In addition, the positive effect of product scarcity messages is stronger for flight deals with higher prices.
Study Two attempts to gain insights into how price expectation affects consumers shopping behavior. Still in collaboration with the same travel meta-search mobile app, we conduct another field experiment where consumers' expectation about future price is manipulated using price "nudge". We implement two types of "nudge" about future price fluctuation: (1) price reassurance comforts consumers that the future price is unlikely to drop; and (2) price alert reminds consumers that price may surge in the future. Findings reveal that price alert can effectively increase consumers' flight bookings and the effect is stronger when the flight ticket price is higher.
By combining online donations data from a leading online donation platform with COVID-19 cases data in the United States, Study Three examines how people's online donation behavior changes with the spread of COVID-19 in different areas, around donors and around donees. It also compares donors' donations to physically close donees and those to physically distant donees. The findings show that, the spread of COVID-19 around donors decrease donations count and donations amount, while the spread of COVID-19 around donees enhance donations. When the donees are geographically distant to donors, the negative effect of COVID-19 in the donors' area on donations gets stronger, and the positive effect of COVID-19 in the donees' area gets weaker.
Overall, Study One develops a deep understanding on the use of product scarcity cues to increase sales, and Study Two reveals the value of price "nudge" in encouraging consumers to make purchases. Study Three shows how a disaster like COVID-19 can alter people's online prosocial behavior. Contributions and implications of the studies are summarized and directions for future work are also discussed.