•Use theoretical models and laboratory experiments to study the promotion strategies.•The optimal promotion strategy varies regularly with an increasing commission rate.•The impact of different ...promotion scenarios on joint promotion are compared.•Subjects’ promotion decisions in the experiment support theoretical conclusions.•Subjects demonstrate contrasting decision patterns across different scenarios.
This paper considers three promotion scenarios, namely seller-leading promotion, platform-leading promotion, and no-leader promotion, and reveals the optimal strategy and decision patterns for these three scenarios using a stylised model and lab experiments. We focus on three research questions for the seller and platform as follows: (1) Which is the optimal choice between unilateral and bilateral promotion under different promotion scenarios? (2) How will the promotion scenarios affect their joint promotion? (3) To a seller/platform, is it always better to proactively initiate promotion event? Result shows that the optimal promotion strategy varies from Seller Promotion Only to joint promotion and then to Platform Promotion Only, along with an increasing commission rate. Joint promotion is optimal only when the commission rate is moderate and when the product's list price is relatively high. The promotion scenario affects the scope and intensity of joint promotion and the profit of the entities. The joint promotion leader has the first-mover advantage, which helps him/her offer fewer coupons but obtain higher profits. To a platform or seller, launching promotion events proactively is not always the best choice. Experiments show that the subjects behaved as predicted. Moreover, the subjects demonstrate distinct decision patterns under different promotion scenarios. Ultimately, our conclusions can provide valuable decision-making guidance to marketing managers in the online marketplace. They can also choose appropriate scenarios on the basis of certain promotion objectives with knowing decision patterns under each scenario.
The platform model of business has allowed peer-to-peer interactions that expand the universe of opportunity for providers and users of goods and services. In addition to the numerous benefits of the ...platform model, it has been fraught with its share of unanticipated challenges to consumer equality – a critical measure of the social welfare. Grounded in the Power-Responsibility Equilibrium framework, this study examines the most aggressive form of consumer action, filing a lawsuit against the platform company, in response to discrimination experienced by consumers on the platform. An analysis of the five legal cases brought by consumers against Roommates.com, Airbnb, and Uber highlights how current laws may be ineffective in addressing the problem of discrimination in the online marketplace against members of protected categories such as race, sexual orientation, and disability. We provide implications for platform companies and public policy makers for changes to promote equality in the sharing economy.
The online marketplace industry in Indonesia is growing rapidly, becoming an important contributor to Indonesia's economy. However, the massive discount price strategy and the dearth of face-to-face ...interaction in the online marketplace make it harder for any online retailer to build a stronger relationship with their consumers to retain them. Our study offers several contributions and new insights to the marketing literature as few studies have addressed this issue by analyzing it with perceived electronic trust, satisfaction, and repurchase intention into a single framework. This study aims to describe and extend previous studies on the effect of perceived price and trust on repurchase intention by specifically including satisfaction in the middle of associated constructs. This study uses purposive sampling as a sampling technique and a five-point Likert scale survey as a data collection method. A total of 387 valid data were collected and then analyzed by PLS-SEM to test the proposed model. The results of this study strengthen the previous claims that there is a positive partial effect between perceived price, trust, and satisfaction on repurchase intention in the online marketplace. Also, the level of customer satisfaction proved to be a significant construct in forming the association between perceived price, trust, and repurchase intention in the study.
•Luxury brands forgo the online marketplace if the copycat is of high quality.•Luxury brands forgo the online marketplace if the copycat closely resembles them.•The online marketplace accommodates ...copycats in the absence of external pressure.•The luxury brand’s consideration of the online marketplace benefits consumers.
The strategic interaction between authentic luxury brands and their copycats has evolved since the proliferation of online marketplaces. Using a game-theoretic framework, we examine how an authentic luxury brand, observing the strategic behavior of its competing copycats, should make its optimal entry decision to a third-party online marketplace. Our findings reveal that the authentic luxury brand does not sell on the online marketplace when either the quality or the physical resemblance of the copycat to the authentic luxury brand is high. This contributes to the related literature by offering an explanation for the increasing quality of copycats amid the e-commerce boom —improving the quality of the copycat can deter the authentic luxury brand from selling on the online marketplace. Furthermore, by comparing our equilibrium outcome with the benchmark case where the authentic luxury brand does not consider selling on the online marketplace at all, we show that the authentic luxury brand’s potential entry to the online marketplace is sufficient to induce the copycat to improve its quality and lower its price, thereby improving the aggregate consumer surplus. In addition, the online marketplace can always be better off allowing the entry of the copycat if there is no external enforcement against copycats. We show that our key results are valid in various extensions and they offer multiple managerial implications.
Online marketplaces are rapidly shifting the trajectory of the e‐commerce landscape. Brand manufacturers are starkly more dependent on online marketplaces, and for most brands, marketplace presence ...is not optional but mandatory. At this point, brand executives face a pivotal question in addressing their marketplace presence: What product selling (or distribution) approach should be adopted to leverage this channel for their brand? At its core, there are effectively two options offered to brand executives: selling to the online marketplace (as a 1p vendor); and selling on the marketplace platform (as a 3p seller). Whereas the conventional 1p vendor model is quintessentially the entry point to an online marketplace, some brand manufacturers migrate to the 3p seller model. Many others, however, avoid pulling the 3p trigger. In this paper, we address these two options a brand manufacturer has for selling (or allowing sales of) his product on a marketplace. On the grounds that online marketplaces retain brands at distinct price/quality tiers so as to be both comprehensive and robust, we propose a model of competition between two brand manufacturers whose products (in a category) are vertically differentiated on a quality/performance attribute and a convex marginal production cost is incurred for providing the higher quality. Given there is no single selling strategy on a marketplace that is ideal for all brand manufacturers and strategies would work the best under different market and competitive conditions, we investigate the impact of where a brand stands (vis‐á‐vis his competitor) on the two dimensions of a product‐attribute space on the transitions of 1p brands to 3p sellers on the marketplace platform. We also extend the analysis to the setting where an online retailer decides on whether or not to add a marketplace platform to her existing online marketplace and (if so) on the referral fee percentage at which the product category would be listed.
•Marketplace-based e-commerce dominates current social commerce economy.•The institution-based trust is vital for social commerce marketplaces.•Two macro-level factors of the institution-based trust ...are uncovered.•A high order construct – perceived social presence – is introduced.•It discloses a trust-building mechanism in social commerce marketplaces.
Trust has been seen as the foundation of e-commerce. While the interpersonal trust has gain a lot attention in literature, institution-based trust has been studied only infrequently. However, with the significance of the marketplace-based e-commerce, more attention should be paid to institution-based trust, particularly trust at the marketplace level. This study focuses on a specific type institution-based trust associated with marketplaces, termed as trust in marketplace. Based upon the institutional theory and the social presence theory, two categories of marketplace-driven factors, the institutional and social factors, are then proposed as antecedents of trust in marketplace in the new context of social commerce marketplaces. Two formative high-order constructs, perceived effectiveness of institutional structures and perceived social presence, are developed to account for the effects of these two sources on trust in marketplace, which in turn leads to transaction intention in social commerce marketplaces. The research model is examined via the free simulation experimental method where seven real social commerce marketplaces are duplicated. The findings suggest the positive impacts of both constructs in shaping institution-based trust that leads to social commerce marketplace transaction intention. This study then offers insightful understandings to the institutional trust building mechanism in the recent phenomenon of social commerce, as well as introduces the important but neglected social perspective to e-commerce research.
This study aimed to 1) analyze the information structure of texts concerning facial beauty in Chinese cosmetics advertisements, and 2) examine linguistic strategies employed within the ...advertisements. Language strategies in 150 Chinese cosmetic product advertisements from Taobao were analyzed, employing critical discourse analysis concepts as proposed by Norman Fairclough and Teun Adrianus van Dijk. By exploring the advertising language, the study offered valuable insights into the persuasive techniques used in the cosmetics industry. It categorized the strategies into semantic and discourse-pragmatic. Semantic strategies involved descriptive verbs, intensifiers, negation, and word formation through pinyin transliteration. Discourse-pragmatic strategies included presuppositions, figures of speech, claims, and rhetorical questions. These strategies mirrored beauty values in Chinese society, implying beauty was achievable through the products advertised. The study highlighted the significant impact of language strategies in forming beauty ideals, influencing consumer beliefs, and motivating the pursuit of beauty standards. This analysis of cosmetic advertising in China showcased the influential role of language in shaping societal views and consumer behavior.
Retailers seek to grow their online market by offering channels on multiple online marketplaces. However, little is known about the effect of this online channel expansion strategy on the retailer's ...performance. In this study, we collected a unique dataset from an online retailer that initiated web stores on three leading online marketplaces. Using propensity score matching and difference-in-differences analysis, we found that the retailer's online channel expansion increased existing consumers’ total purchases without changing consumer purchase frequencies on the original channel. Furthermore, we found the temporal effect of online channel expansion - the effect on total purchases, decayed over time.
This paper studies the optimal pricing strategy of a hotel that establishes an online distribution channel through cooperation with an online travel agency (OTA). The OTA promotes the hotel and sells ...hotel rooms through its website and receives commission from the hotel for rooms sold. Through a sequence game model, this paper derives the optimal decision on the unit commission of the hotel and the optimal response of the OTA to that commission. The paper notes management implications, including (1) occupancy rate of a hotel before opening online marketing is an important metric for securing cooperation with an OTA; that is, a hotel with lower occupancy rates is more inclined to cooperate with an OTA to achieve an improvement in profits; and (2) a hotel is inclined to establish an online channel through an OTA with many online customers and/or few listed hotels.
•Study the pricing game with OTAs when hotels open online marketing channel.•Propose a game model to describe the channel competition between hotels and OTAs.•Find the optimal pricing policy for hotels to maximize the profit.•Give suggestions for hotels how to choose appropriate online partners.
In this paper, we study how provision of product information and/or market information affects buyers' and sellers' behavior and the resultant sales in an online marketplace. We first identify the ...Pareto‐dominant equilibrium for the sellers' pricing decisions. Then, we study the impact of market parameters on the sales of the platform in equilibrium, under various information structures. We find that the platform's sales increase with the size of potential buyers but change nonmonotonically with the size of potential sellers. Next, we analytically characterize the platform's optimal information strategy as a function of the underlying market parameters. We find that while it is always optimal for the platform to reveal some information, it should be strategic about which information to reveal when faced with different supply and demand conditions. In particular, in a seller's market (high ratio of potential buyers to sellers), the platform should provide both product and market information to the sellers and buyers. However, in a buyer's market (low ratio of potential buyers to sellers), it is optimal for the platform to only provide the market information—providing both the product and market information would backfire on the platform by jeopardizing its sales.
