'Live chats can increase online sales'

Live chat tools allow for communication between sellers and buyers. They are popular instruments for e-commerce sites that don't have the advantage of face-to-face communication, but these live chats can actually increase sales and boost profits, a new study suggests.

According to the findings, published in the journal Information Systems Research, the research team from Indiana University, Fudan University and University of Washington, looked at data from Chinese e-commerce giant - Alibaba, on consumers' purchase decisions of Apple and Samsung tablets from March through June 2013.

"We found live chat can increase purchase probability of tablets by 15.9 per cent, and we see that human interaction results in better sales performance," said study researcher Xue (Jane) Tan from Indiana University in the US.

According to the researchers the fact that sellers and buyers cannot speak in person, like brick-and-mortar stores, leads to uncertainty about product quality and seller credibility. 

Live chat tools allow e-vendors to communicate with customers in real time, they added.

The data source, Alibaba, has a reputation of being similar to eBay, where feedback is collected after each transaction. 

According to the study, the data consisted of consumer browsing, live chat and purchase histories. The live chat tool is moderated by existing information cues: product sales volume and seller feedback score.

"Sellers with limited feedback benefit more from live chat conversations than sellers with a lot of feedback. And products with high past sales volume sell better after live chat, indicating a reinforcement effect," said study researcher Yong Tan from the University of Washington.

"It is interesting that a seller can sell multiple products with varying levels of sales performance, and the seller feedback is measured based on all products," Tan added.