The impact of reputation system on C2C online sales: Evidence from China

Despite the wide research of reputation system of C2C online markets, there are few empirical studies outside the United States. Whether theories of C2C online sales which are developed in the US could be applied to a different national and cultural context is still open to question. With the fast growth in Chinapsilas electronic markets, especially in the C2C online markets, it has become increasingly important to study the determinants of C2C online sales in China. This paper focuses on one of the most important factors, namely, reputation system to make conclusions and comparison between China and the US. An empirical study is conducted based on data from Taobao - the largest C2C auction site in China. Reputation system has been shown to have significant effect on C2C online sales. Positive ratings have been demonstrated to result in better selling performance, while the impact of negative ratings is volatile and not significant in some cases.