“Lifting Growth Barriers for New Firms: Evidence from an Entrepreneurship Training Experiment With Two Million Online Businesses”, 2021-01-20 (; backlinks; similar):
[registry] The expansion of e-commerce presents new opportunities for SMEs to enter broader markets at lower costs, but the new entrants face barriers to growth after entry.
To help the new entrants to overcome these growth barriers, we implement a large-scale business training program as a randomized controlled experiment. The training focuses on practical skills specific to online business operations and reached over two million new sellers on a large e-commerce platform.
Treated new sellers with access to the training earn higher revenues and attract more consumers to their sites. These sellers become more engaged in marketing and improve their customer service. Leveraging detailed consumer-seller matched search and browsing data, we find that consumers have higher purchase probability when they encounter new sellers regardless of treatment status. When making purchases, consumers choose treated new sellers over incumbents. Moreover, doing so does not lower the quality of their purchases.
We use a structural model to characterize consumer demand and recover sellers’ underlying quality. Both treated and control new sellers have a higher quality compared to incumbents. The training increases new sellers’ likelihood of being encountered by consumers, which improves the matching outcomes between consumers and sellers.
The counterfactual exercise shows that the training leads to higher consumer surplus and sellers’ total revenues. As the operator of the online marketplace, the platform could earn more profits in both the short and the long run because of the training.
[Keywords: e-commerce, platforms, business training, growth barriers]
…The e-commerce platform with which we collaborate hosts millions of consumers and sellers. Sellers on the platform are mostly retailers that offer various types of products. We implement the training program at scale, taking advantage of the close to zero marginal dissemination costs online. To date, over two million sellers received access to the training. In contrast to typical business training that teaches generic best business practices, our training program focuses on practical online business operation and marketing skills. We randomly assign access to the training program when new sellers register on the platform. In our study cohorts, 24.9% of all the registered new sellers have access to the program, and 24.1% of sellers with access participated within 9 months.
…Interviews with multiple sellers on the platform suggest marketing spending could account for a substantial share of the operating costs. Larger sellers invest even more heavily than small sellers. Currently over 90% of consumers accessing the platform are from mobile devices rather than from the web. Therefore, competition for ranking is more intense because of the limited space per screen on the mobile device.
…The magnitude of the treatment effect on revenues is positive but small. Over the 9 months, treated sellers earned $1.8 million higher total revenues. Assuming the treatment effect is of a similar magnitude for all cohorts of new sellers, all two million treated sellers combined could earn about $4.7 million higher revenues.