Data Shows Live, Online Chats Can Boost Ecommerce Sales

Live chat tools, which allow for communication between sellers and buyers, are popular instruments for ecommerce sites that don’t have the advantage of face-to-face communication as brick-and-mortar stores do. Data from Information Systems Research, a scholarly journal on the latest theory, research and development on the utilization of information technology, shows that these tools can increase sales by 15.9 percent.

The study, “Impact of Live Chat on Purchase in Electronic Markets: The Moderating Role of Information Cures,” which was published on December 6, 2019, looked at data from Alibaba on consumers’ purchase decisions of Apple and Samsung tablets from March through June 2013.

“We found live chat can increase purchase probability of tablets by 15.9 percent,” says Xue Tan of Indiana University. “We see that human interaction results in better sales performance.”

Tan, Youwei Wang of Fudan University and Yong Tan of the University of Washington, say the fact that sellers and buyers cannot speak in person, like in brick-and-mortar stores, leads to uncertainty about product quality and seller credibility. Live chat tools allow e-vendors to communicate with customers in real time. The study also identified that sellers with low feedback scores benefit more from live chat conversations than sellers with high scores, popular products sell even better after a live chat and that consumers are more likely to initiate a live chat conversation when the perceived risk of purchase is high.

The data source, Alibaba, has a reputation for being similar to eBay, where feedback is collected after each transaction. The data consisted of consumer browsing, live chat and purchase histories. The live chat tool is moderated by existing information cues: product sales volume and seller feedback score.

“Sellers with limited feedback benefit more from live chat conversations than sellers with a lot of feedback. And products with high past sales volume sell better after live chat, indicating a reinforcement effect,” adds Tan. “It is interesting that a seller can sell multiple products with varying levels of sales performance, and the seller feedback is measured based on all products.”

The full study is available here.

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