Yubo Chen

The imbalanced development of logistics and payment makes it difficult for an online retailer to reduce the uncertainty of online shopping in emerging markets. In response, some online retailers establish a hybrid e-commerce platform in the hope to reduce online shopping uncertainty, and thus to establish customers’ trust in the platform and increase their purchases. Based on two natural experiments arising from JD.com’s initiative of establishing its own delivery service, we examine how the setup of a hybrid e-commerce platform influenced customers’ shopping behaviors between 2009 and 2013. We find that the founding of a hybrid e-commerce platform led customers to increase purchases by 7 to 10 percent at city level. In addition, we find that the sales boosting effect is greater for (1) cities with less mature shipping service, (2) light-buyers, (3) categories with higher uncertainty, and (4) products with fewer discounts. The results are consistent with the interpretation that the establishment of a hybrid e-commerce platform improves shoppers’ trust in the online retailer. Thus, a hybrid platform does more than to speed up the delivery, but more importantly, it helps to build customer trust in the business.