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Trial Title
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E-Commerce Integration and Household Welfare: Evidence from Taobao's 100 Thousand Villages Project
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E-Commerce Integration and Economic Development: Evidence from Taobao's 100 Thousand Villages Project
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Abstract
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Since 2000, more than half of China's population have been connected to and by the internet. Over this period, the number of Chinese buying and/or selling products online has grown from practically zero to more than 400 million in 2015, surpassing the US as the largest online retail market. Despite this trajectory, we currently have limited empirical evidence on the economic consequences of e-commerce as a channel of market integration. This paper brings to bear a new collection of microdata in combination with a randomized controlled trial (RCT) that we implement in collaboration with the Chinese internet firm Alibaba. Alibaba owns the dominant Chinese e-commerce platform Taobao through which consumers and producers can buy and sell products of all kinds. Taobao's 100 Thousand Villages Project (HTVP) aims to build the necessary transport logistics to ship products to and sell products from 100,000 villages that were previously unconnected to e-commerce. As part of this operation, Alibaba installs a Taobao terminal at a central village store where households can buy and sell products through the store manager's Taobao account. We were given authorization to randomly select control villages in several Chinese counties from a list of candidates that had been extended by the number of control villages for the purpose of this research. We collect household and store price survey data for treatment and control vilalges, and complement these data with online transaction records from Taobao. We plan to use this empirical setting to answer three central questions: i) what are the household economic gains from e-commerce integration?, ii) what are the channels underlying these effects?, and iii) what is the distribution of the gains from e-commerce across different groups of households?
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Since 2000, more than half of China's population have been connected to and by the internet. Over this period, the number of people buying and/or selling products online in China has grown from practically zero to more than 400 million in 2015, surpassing the US as the largest online retail market. In this context, the Chinese government has recently made the expansion of e-commerce to the countryside a policy priority to foster rural economic development, and entered a collaboration with the internet firm Alibaba as part of the so called 100 Thousand Villages Project (HTVP). This project combines a new collection of microdata with a randomized control trial (RCT) to study the impact of this program on household economic welfare. Alibaba owns the dominant Chinese e-commerce platform Taobao through which consumers and producers can buy and sell products of all kinds. The HTVP aims to provide the necessary transport logistics to ship products to and sell products from 100,000 villages that were largely unconnected to e-commerce. As part of this operation, Alibaba installs a Taobao terminal at a central village location where households can buy and sell products through the terminal manager's Taobao account. We were given Alibaba's authorization to randomly select control villages in several Chinese counties from a list of candidates that had been extended for the purpose of this research. We collect household and store price survey data for treatment and control villages, and complement these data with online transaction records from Taobao. We plan to use this empirical setting to answer three central questions: i) what are the household economic gains from e-commerce integration?, ii) what are the channels underlying these effects?, and iii) what is the distribution of the gains from e-commerce across different groups of households?
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Last Published
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October 06, 2016 05:14 PM
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February 09, 2017 09:37 PM
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Intervention (Public)
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Taobao's 100 Thousand Villages Project aims to build the necessary logistics to ship products to and sell products from villages that were previously unconnected to e-commerce. The objective is to bring the transport costs of e-commerce related shipments to and from the participating villages to the same level as for the urban parts of the county in question. As part of this operation, Alibaba builds warehouses, subsidizes transport fares to and from the villages, and installs a Taobao terminal at a central village store where households can buy and sell products through the store manager's Taobao account. Households can pay or be paid in cash at the store upon arrival or pickup of the products without the need for online payments.
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After
The 100 Thousand Villages Project (HTVP) is a collaboration between the Chinese government and the internet firm Alibaba. The program aims to build the necessary logistics to ship products to and sell products from villages that were previously largely unconnected to e-commerce. The objective is to bring the transport costs of e-commerce-related shipments to and from the participating villages to the same level as for the urban parts of the county in question. As part of this operation, Alibaba with support from the government builds warehouses, subsidizes e-commerce-related transport fares to and from the villages, and installs a Taobao terminal at a central village location where households can buy and sell products through the store manager's Taobao account. Households can pay or be paid in cash at the store without the need for online payments.
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Intervention End Date
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October 31, 2016
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December 31, 2017
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Primary Outcomes (End Points)
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Local retail prices, household incomes, household consumption expenditure shares on e-commerce across different product groups. All these serve to inform the measurement of changes in household real incomes.
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The objective is to evaluate the effect on household real incomes, the underlying channels, and their heterogeneity across pre-existing household and village characteristics. The main outcomes of interest are household use and expenditure shares on e-commerce across 10 retail product groups, local retail prices in pre-existing establishments and household incomes broken up by source. We also plan to investigate the heterogeneity of these effects across pre-existing household and village characteristics (income, education, age, distance to the terminal, commercial delivery status of the village, characteristics of the terminal operator).
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Primary Outcomes (Explanation)
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We plan to investigate heterogeneity using the following definition of bins: For continuous interaction variables (e.g. initial income per capita), we plan to report interactions using medians or quartiles as bins. For ages, we plan to use below 35, 35-60 and above 60 as the main thresholds of interest. For education, we plan to differentiate between below-Junior High, Junior High and above-Junior High as the main thresholds. For distance to the terminal we plan to differentiate between inner and outer zones (see methodology) as well as the continuous log distance to the terminal.
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Experimental Design (Public)
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The unit of randomization is the village. For each county, we obtain a list of candidates that had been extended by 5 promising village candidates that would have not been part of the list in absence of our research. The two main factors determining the village selection within a county from Taobao’s operational perspective are i) a sufficient level of local population, and ii) the presence of a capable store applicant (as measured by test score of applicant). Upon receipt of this extended list of village candidates for each county, we randomly select 5 control villages and 7-8 treatment villages from the list of candidates for each county. The remaining villages on the list also receive Taobao terminals as planned. We stratify treatment and control villages along four dimensions: pre-existing availability of commercial package delivery, local store applicants’ test scores, village population, and the ratio of non-agricultural employment over the local population. After obtaining the candidate lists, we have on average 2-3 weeks to run the randomization and send in enumerators for data collection in 5 control villages and the 7-8 treatment villages before the terminal installations take place and e-commerce begins in the treatment villages.
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The study is based on 8 counties in the three provinces of Anhui, Henan and Guizhou. These counties are: Huoqiu (Anhui), Linying (Henan), Linzhou (Henan), Minquan (Henan), Suixi (Anhui), Tianchang (Anhui), Xifeng (Guizhou) and Zhenning (Guizhou).
The unit of randomization is the village. For each county, we obtain a list of candidates that had been extended by 5 promising village candidates that would have not been part of the list in absence of our research. Upon receipt of this extended list of village candidates for each county, we randomly select 5 control villages and 7-8 treatment villages from the list of candidates for each county. The remaining villages on the list also receive Taobao terminals as planned. The full sample thus includes 40 control villages and 60 treatment villages across the 8 counties, which we selected from a total number of candidates of 432 villages (on average 54 villages per county). We restrict the list of villages entering the stratification and randomization to villages with at least 2.5 km distance to the nearest village on the county list. We then stratify treatment and control villages along four dimensions: existence of commercial delivery services, the local store applicants’ test score, the village population, and the ratio of non-agricultural employment over the local population.
After obtaining the candidate list for each county, we have about 2-3 weeks to run the randomization and send in the survey teams for data collection in 5 control villages and 7-8 treatment villages before the terminal installations take place and e-commerce begins in the treatment villages.
During the first round of data collection (December 2015 and January, April and May 2016), we collect data from 28 households per village. 14 of those households are randomly sampled within a 300 m radius (distance) of the planned Taobao terminal location, and 14 households are randomly sampled from other parts of the village. Household respondents are members with the most knowledge of household consumption expenditures and incomes. Households are offered a gift to thank them for their participation in the survey (e.g. box of premium sweets, soaps, hand towels, etc). The value of the gift is about 4.5 USD. In case the most knowledgeable respondent is not present at the time of the visit, a follow-up visit to the household is scheduled by the surveyor.
In the second round of data collection (same period but one year after), we collect data from the same households, and in addition add 10 randomly sampled households within the inner ring around the planned Taobao terminal location. This expansion of our sample served the objective to increase the statistical power in our estimations (and was possible due to remaining funds on the project). If either the survey respondent or the primary earner of the initially surveyed household no longer resides at the same address, we record this in our data and replace the household with another randomly sampled household within the same sampling zone (inner circle or outer). The 10 additional households were added by randomly sampling within the inner zone as in the first round of data collection.
For store prices, we aim to collect data on 115 price quotes for each village. 100 of these prices are from 9 household consumption categories for retail products (food and beverages, tobacco and alcohol, medicine and health, clothing and accessories, other every-day products, fuel and gas, furniture and appliances, electronics, transport equipment), and 15 price quotes are for local production/business inputs. The sampling of products across consumption categories is based on budget shares observed among rural households in Anhui and Henan that we observe in the microdata of the China Family Panel Study (CFPS) for the year 2012. The sampling across stores is aimed to provide a representative sample of local retail outlets (stores and market stalls). The sampling of products within stores is aimed at capturing a representative selection of locally purchased items within that outlet and product group. Each price quote is at the barcode-equivalent level where possible (recording brand, product name, packaging type, size, flavor if applicable).
In the second round of data collection (one year after the first round), we aim to collect the price quotes of the identical products in the identical retail outlet where this is possible. Where this is not possible (due to either store closure or absence of product in the store), we record the reason for the absence and then include a new price quote within the same product category that is sampled in the same way as in the first round.
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Planned Number of Observations
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2800 households, 11500 local price quotes per round.
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2800 households in first round, 3800 households in second round, 11,500 local price quotes per round.
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Additional Keyword(s)
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Trade integration, internet, e-commerce, welfare gains
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Trade integration, e-commerce, economic development
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