Empirical study of cashback affiliate strategy: Evidence from a cashback website

• Main Author: LIU XINYONG
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2022
• Subjects: Cashback Affiliate; Merchant Reputation; Merchant Cashbacks; Product Return; Coupon; Business Administration, Management, and Operations; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/etd_coll/464; https://ink.library.smu.edu.sg/context/etd_coll/article/1462/viewcontent/GPBA_AY2017_DBA_Liu_Xinyong.pdf
• Institution: Singapore Management University

With the rapid development of internet technology, e-commerce has become increasingly prosperous with online shopping increasingly penetrating into the daily life of consumers. Online channel has become an indispensable channel for merchants to reach their customers. To improve sales performance and address competition from rivals, online merchants have developed various promotion methods. Cashback promotion has gradually become one of the popular promotion methods, and attracted attention from scholars. This paper aims to investigate the relationship between cashbacks and consumer behaviors using data on Taobao merchants on a large cashback website in China. Two studies with a large number of transaction data have been conducted. Using Discontinuity Regression Design (RDD), Study 1 identifies the causal effects of online merchants’ reputation on the level of cashback and examines the moderating role of competition intensity between merchants’ reputation and cashback level. Our results show that merchants with better reputation are less likely to provide high level of cashback. However, when the competition intensity is high, the impact of merchants’ reputation on the cashback level becomes smaller than when the competition intensity is low. Study 2 investigates the impacts of cashback on business operations. Specifically, we examine how cashback affects product return and how the effects differ from those of coupon discount. We then discuss the moderating effect of business reputation. The results show that although coupon discount has a positive impact on the product return rate, the cashback level has a negative impact on the product return rate. The effect cashback on the product return rate is further influenced by the reputation of the seller，for merchants with high reputation, the inhibition effect of cashback level on return rate is stronger，but the impact of coupon discount on the return rate isn’t moderated by the reputation of the seller.