Does sampling influence customers in online retailing of digital music?

Online retailers have taken recourse to many smart marketing strategies to sell digital music. This paper investigates the strategic decisions of online vendors for offering different mechanisms such as sampling and online reviews of digital music to increase their online sales. In this research we seek answers to the following research questions (1) should online retailers offer sampling for experience goods such as music CDs; (2) under what circumstances is offering sampling more important than offering reviews. Our empirical study shows that online markets behave as communication markets, and consumers learn about product quality information both passively (by reading online reviews) and actively but subjectively (by listening to music sampling). Using data from Amazon.com, we empirically show that sampling is a strong product quality signal that reduces product uncertainty and attracts interested shoppers. Products with the sampling option enjoy a higher conversion rate (which leads to better sales) than those without it. Second, the impact of online reviews on conversion rate is lower for experience goods with a sampling option than those without. Third, when the N. Hu � J. Shen School of Information Systems, Singapore Management University, 80 Stamford Road, Singapore, Singapore e-mail: [email protected] J. Shen e-mail: [email protected] L. Liu Department of Accounting and Finance, University of Wisconsin Eau Claire, Eau Claire, USA e-mail: [email protected] I. Bose (&) School of Business, The University of Hong Kong, Pokfulam Road, Hong Kong, Hong Kong e-mail: [email protected] 123 Inf Syst E-Bus Manage DOI 10.1007/s10257-009-0116-6