Digital Platforms as Data Vendors:
Evidence from a Large E-commerce Platform
This paper studies a large e-commerce platform that has offered and commercialized seller-facing data analytics products. These products provide detailed information on customer sources and demographics as well as aggregate demand of a seller’s product category. We find that sellers, especially small ones, are incredibly sensitive to the cost of data acquisition. This is despite its positive revenue impact and ob- served influence on positioning, marketing, and pricing decisions. Our analyses rely on high-frequency event studies as sellers adopted and used data analytics products, combined with quasi-experimental variation in the cost of data acquisition. A counterfactual simulation shows that a uniform reduction in the cost of data raises overall platform sales while reducing market concentration on the margin.