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New research on marketing and supplying goods from Harvard Business School faculty on issues including distribution channels, open source distribution, overcoming "last mile" challenges, and order-taking and fulfillment.
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The Impacts of Increasing Search Frictions on Online Shopping Behavior: Evidence from a Field Experiment

by Donald Ngwe, Kris J. Ferreira, and Thales Teixeira

This paper challenges the logic that making it easier for consumers to search across a wide assortment of products is the best strategy for online retailers. Experiments show that adding extra search costs to find discounted items can improve gross margins and sales by increasing the number of items inspected and serving as a self-selecting price discrimination mechanism among customers.

How to Use Free Shipping as a Competitive Weapon

by Kristen Senz

Free shipping is an increasingly important tool in the online retailer's marketing arsenal, but profit is lost when not done right, says Donald Ngwe. Open for comment; Comment(s) posted.

The Hidden Benefit of Giving Back to Open Source Software

by Kristen Senz

Firms that allow their software programmers to "give back" to the open source community on company time gain benefits—even though competitors might benefit too, says Frank Nagle. Open for comment; Comment(s) posted.

Amazon, Whole Foods Deal a Big Win for Consumers

by Jose Alvarez and Len Schlesinger

What does Amazon's $13.4 billion deal for Whole Foods say about the future of retail? Harvard Business School professors Jose Alvarez and Len Schlesinger see good times ahead for consumers as well as both companies. Open for comment; Comment(s) posted.

Money and Quotas Motivate the Sales Force Best

by Roberta Holland

Bonus programs are effective for motivating sales people, but also costly for companies to maintain. Doug Chung and Das Narayandas study several compensation schemes to see which work best. Open for comment; 11 Comment(s) posted.

Incentives versus Reciprocity: Insights from a Field Experiment

by Doug J. Chung & Das Narayandas

Sales force compensation is a key instrument available to firms for motivating and enhancing sales performance. What are the most effective forms of compensation? In a field experiment involving four regional sales forces of a prominent firm in India, the authors examined the impact of conditional and unconditional bonus schemes. Findings from this study provide guidance to firms on how to use conditional and unconditional compensation to enhance sales rep productivity and better manage the achievement of sales forecasts. Closed for comment; 0 Comment(s) posted.

Digital Initiative Summit: The Business of Crowdsourcing

by Dina Gerdeman

Gaining the community's trust is vital to building a successful business with crowdsourcing. Open for comment; 1 Comment(s) posted.

Where Did My Shopping Mall Go?

by Sean Silverthorne

The growing popularity of online shopping is remaking the world of offline shopping—stores are getting smaller, malls are getting scarcer. Rajiv Lal and José Alvarez look ahead five years at our radically transforming shopping experience. Plus: Book excerpt. Open for comment; 13 Comment(s) posted.

Retail Reaches a Tipping Point—Which Stores Will Survive?

by Sean Silverthorne

Part 1: The new book Retail Revolution: Will Your Brick and Mortar Store Survive? argues that ecommerce is about to deal severe blows to many familiar store-based brands—even including Walmart. Here's how retailers can fight back, according to Rajiv Lal, José Alvarez, and Dan Greenberg. Open for comment; 7 Comment(s) posted.

Why Do Outlet Stores Exist?

by Michael Blanding

Created in the 1930s, outlet stores allowed retailers to dispose of unpopular items at fire-sale prices. Today, outlets seem outmoded and unnecessary—stores have bargain racks, after all. Donald K. Ngwe explains why outlets still exist. Open for comment; 7 Comment(s) posted.

The Strategic Way To Hire a Sales Team

by Carmen Nobel

The equivalent of an entire sales force is replaced at many firms every four years, so it's critical that go-to-market initiatives remain tied to strategic goals. Frank Cespedes explains how in his book, Aligning Strategy and Sales. Closed for comment; 3 Comment(s) posted.

The Tricky Business of Managing Web Advertising Affiliates

by Kim Girard

Advertising through numerous website affiliates potentially helps marketers get more bang for their buck. But the far-flung systems can also lead to fraud, says Ben Edelman. What's the best way to manage your advertising network? Closed for comment; 2 Comment(s) posted.

How to Do Away with the Dangers of Outsourcing

by Ranjay Gulati

The collapse of the Rana Plaza garment factory in Bangladesh should be a warning to companies that embrace outsourcing, says Professor Ranjay Gulati. Closed for comment; 8 Comment(s) posted.

Learning Curve: Making the Most of Outsourcing

by Paul Guttry

Companies that view outsourcing as an easy way to offload commodity work are missing powerful improvements to be gained by working closely with service providers, says Professor Robert S. Huckman. Open for comment; 5 Comment(s) posted.

Diasporas and Outsourcing: Evidence from oDesk and India

Re: William R. Kerr

Diaspora-based exchanges have been important for centuries, but the online world reduces many of the frictions these networks solved. How do the Internet and diaspora networks connect? This study investigated the importance of Indian diaspora connections on the oDesk platforms for outsourcing. oDesk is the world's largest online labor market, processing $30 million per month in contracts as of May 2012. This research finds strong evidence that diasporas still matter and influence economic exchanges even when many frictions are minimized. In fact, the case study suggests more often than not that diaspora use increases as familiarity with the platform increases. This suggests a longer-term complementarity between diaspora networks and online tools that may aid the persistence of these networks. At the same time, the oDesk evidence also makes clear that the role of diaspora networks should not be overstated. While they contributed to India's success on oDesk, diaspora connections were clearly not a driving force in India becoming the top destination for oDesk contracts. Key concepts include: The frictions that online platforms like oDesk minimize are frictions that diaspora networks have historically been used to overcome. This makes their role for future economic exchanges uncertain. Diaspora connections still matter. Ethnic Indians working in countries outside of India are 32 percent (9 percentage points) more likely to choose a worker in India than non-ethnic Indians. Yet, even with the increased likelihood of outsourcing to India, diaspora connections played a very small role in India's rapid development on oDesk. In fact, diaspora connections appear to follow rather than lead the platform's development. Diaspora connections occur through the actions of many people in small ways and the extreme concentration of impact due to a few key people. Diasporas will continue to use online platforms in an effective manner, but diasporas will not be responsible for a country's overall success on the platform, at least in countries of moderate to large size. Closed for comment; 0 Comment(s) posted.

The Dynamic Effects of Bundling as a Product Strategy

by Timothy Derdenger & Vineet Kumar

This paper investigates the practice of bundling as a product strategy, and identifies how consumers make choices between products and bundles in a dynamic environment. Authors Timothy Derdenger and Vineet Kumar look at the handheld video game market to study bundling in a platform setting with the goal of investigating several key questions of interest to practitioners who make product decisions: First, do consumers value bundles over and beyond their component products, indicating a synergy, which some researchers have hypothesized? Second, have there been differing opinions on whether mixed bundling, that is offering both the bundle and individual products for sale, is more effective than offering only pure bundles or even compared to offering only the products for sale? Given the prevalence of bundling in technology markets, it is critical to understand whether bundling is more effective in environments with strong network effects or with weak network effects. Key concepts include: Consumers have a negative synergy effect, that is they are willing to pay less for the bundle than for the individual console and game, leading to the question of whether introducing such bundles can increase revenue. Because bundles act similar to damaged goods, they work well in dynamically segmenting consumers and allow for purchases to occur earlier in time—the presence of bundles induces consumers to purchase earlier rather than wait. The time shifting of hardware purchases has a strong effect on software sales, since more consumers who own consoles will purchase video games over a longer time frame. Mixed bundling is especially effective compared to pure bundling, and the authors find that moving to pure bundling would reduce sales by over 20 percent. Strong network effects do not enhance the value of bundling, suggesting that bundling may instead prove more useful in settings with weak network effects. Bundling is thus a strategy that could serve as a substitute to creating stronger network effects. Closed for comment; 0 Comment(s) posted.

Immigrant Innovators: Job Stealers or Job Creators?

by Carmen Nobel

The H-1B visa program, which enables US employers to hire highly skilled foreign workers for three years, is "a lightning rod for a very heated debate," says Harvard Business School professor William Kerr. His latest research addresses the question of whether the program is good for innovation, and whether it impacts jobs for Americans. Key concepts include: An uptick in the number of H-1B visas given to Indian and Chinese engineers correlates with an increase in the number of US patents. The H-1B program seems to have no overall effect on the number of jobs held by American-born scientists and engineers, nor does it affect the number of patents from inventors who have Anglo-Saxon names. Closed for comment; 37 Comment(s) posted.

How Mercadona Fixes Retail’s ’Last 10 Yards’ Problem

by Julia Hanna

Spanish supermarket chain Mercadona offers aggressive pricing, yet high-touch customer service and above-average employee wages. What's its secret? The operations between loading dock and the customer's hands, says HBS professor Zeynep Ton. Key concepts include: The last 10 yards of the supply chain lies between the store's loading dock and the customer's hands. Poor operational decisions create unnecessary complications that lead to quality problems and lower labor productivity and, in general, make life hard for retail employees. Adopting Mercadona's approach requires a long-term view and a leader with a strong backbone. Closed for comment; 0 Comment(s) posted.

Mixing Open Source and Proprietary Software Strategies

by Julia Hanna

Open source and proprietary software development used to be competing strategies. Now software firms are experimenting with strategies that mix the two models. Researcher Gaston Llanes discusses recent research into these "mixed source" strategies. Key concepts include: Software companies are taking a "best of both worlds" approach by creating products that use a combination of OS and proprietary software code. The researchers wanted to get a clearer sense of when a profit-maximizing firm should adopt a mixed-source business model and what that model might look like under different circumstances. Results indicate recurring patterns and strategies that managers can take into consideration when setting strategy. Closed for comment; 0 Comment(s) posted.

Tracks of My Tears: Reconstructing Digital Music

by Sean Silverthorne

Record labels have depended on album sales to boost profits. But in the digital music era, consumers prefer single songs over music "bundles." The result? Harvard Business School professor Anita Elberse says it is time for the industry to rethink its products and prices. Key concepts include: The unbundling of albums into a series of separately sold songs on digital music stores is hurting record label profits. Labels are less likely to get away with selling a bundle based on the strength of one or two tracks if the other songs are far less appealing. A strong artist reputation helps to curb the negative impact of unbundling. Labels might consider pushing for higher prices online and generally more flexibility in setting prices. Giving preference to quality over quantity and designing smaller, more consistent bundles may be beneficial. Closed for comment; 0 Comment(s) posted.