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Service cooperation and marketing strategies of infomediary and online retailer with eWOM effect

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  • Yuangao Chen

    (Zhejiang University of Finance and Economics)

  • Shuiqing Yang

    (Zhejiang University of Finance and Economics)

  • Zhoujing Wang

    (Zhejiang University of Finance and Economics)

Abstract

In contemporary electronic commerce, an infomediary displays electronic word-of-mouth (eWOM) information of customers and links shoppers to retail websites, thus acting as an intermediary between buyers and sellers. This paper studies an online supply chain system in which the infomediary presents demand-referral services to online retailers based on eWOM of customer information. It is assumed that online demand is affected by retailer price, referral service effort, and eWOM. The demand function is extended and developed based on Bass’s model. A Stackelberg game model of service cooperation is presented, and then the optimal decisions on retailers’ prices and infomediary service efforts in the decentralized supply chain are analyzed. Moreover, the profits and cumulative sales in supply chain equilibrium are analyzed under several parameters. A computational experiment is implemented to verify the validity and effectiveness of the model. The results show that price sensitivity has a significant negative effect on cumulative retailer sales and the profits of retailers and infomediary, but the effect of service sensitivity and sales periods on profits is absolutely positive. Specifically, eWOM has two different impacts on the profit of the retailer and infomediary respectively. Finally, conclusions and management implications for supply chain parties are presented, along with some possible directions for further research.

Suggested Citation

  • Yuangao Chen & Shuiqing Yang & Zhoujing Wang, 2016. "Service cooperation and marketing strategies of infomediary and online retailer with eWOM effect," Information Technology and Management, Springer, vol. 17(2), pages 109-118, June.
    • Handle: RePEc:spr:infotm:v:17:y:2016:i:2:d:10.1007_s10799-015-0237-1
    DOI: 10.1007/s10799-015-0237-1
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    References listed on IDEAS

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    5. Hongpeng Wang & Rong Du & Jin Li & Weiguo Fan, 2020. "Subdivided or aggregated online review systems: Which is better for online takeaway vendors?," Electronic Commerce Research, Springer, vol. 20(4), pages 915-944, December.

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