Change-point effect of seller reputation grade on the performance of online sales

Reputation system of electronic commerce presents a number of interesting research questions. The existing literatures have mostly focused on the C2C market in the U.S., suggests an impact of seller reputation rating on the final selling price or sales volume. Our work can be distinguished from most existing research. In this paper, we conduct change-point analysis of seller reputation grade effect on sales volume, using BIN dataset of auctions on TaoBao, the largest online auction site in China. We find that, the sellers with reputation grades above a certain change-point have more sales volume and lower selling price than other sellers with reputation grades below a certain change-point significantly. The results indicate that seller reputation grade has nonlinear effect on sales volume and the reduction of consumer search costs in electronic markets puts sellers under increased price competition.