Abstract

Price increases during shopping sessions are increasingly common in online platforms (Uber, Lyft, Expedia), yet little is known about their profitability and their effects on customer behavior. We study a leading European online pharmaceutical marketplace where fulfillment constraints require that each order be sourced from a single pharmacy, which can trigger in-session price increases once users have started building their carts. We exploit a large-scale randomized field experiment that assigns new users to a Price Increase Group—who always see updated cart prices— or to a No Price Increase Group—where the platform absorbs price increases and keeps prices fixed. Displaying price increases reduces conversion rates and average expenditure but raises contribution margins by avoiding absorption costs. The negative effect on conversion is concentrated among users experiencing large price increases, and low basket values, while small price changes generate little measurable response. Our results reveal when the platform can display price increases without severely harming sales and when absorbing them is likely to be more profitable in the long run.

To attend, please contact us at dip.mkt@unibocconi.it