The underexplored impacts of online consumer reviews: Pricing and new product design strategies in the O2O supply chain

Yimeng Li, Yu Xiong, Franco Mariuzzo, Senmao Xia

Research output: Contribution to journalArticlepeer-review

20 Citations (Scopus)
148 Downloads (Pure)

Abstract

In recent years, online consumer reviews have become popular in platform sellers to increase product sales, and the literature has widely recognized those reviews’ positive impacts. Nevertheless, this paper identifies online consumer reviews’ negative impacts on the intra-brand competition (multi-product), and aims to study such effect on wholesale prices and product design strategies of players in the FMCG (Fast Moving Consumer Goods) O2O (online to offline) supply chain. We model the decentralized O2O supply chain facing intra-brand competition that consists of a platform seller (follower) and a manufacturer (leader) when the new product entries. We find that the intra-brand competition driven by the reviews’ increased-sales effect on the incumbent product causes the conflict. The platform seller prefers to limit such an effect if the new product’s consumer valuation is not sufficiently high, but the manufacturer benefits from it. Manufacturers can reduce the product line’s wholesale prices or lower down the new product quality to pre-empt the platform seller from limiting RE-I to coordinate the channel. This study contributes to O2O supply chain management literature by examining the possible negative impacts of online consumer reviews. Also, this study presents a new perspective to combine consumer reviews, pricing and product design strategies to coordinate the O2O channel.
Original languageEnglish
Article number108148
JournalInternational Journal of Production Economics
Volume237
Early online date3 May 2021
DOIs
Publication statusPublished - Jul 2021

Bibliographical note

NOTICE: this is the author’s version of a work that was accepted for publication in International Journal of Production Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in International Journal of Production Economics, 237, (2021) DOI: 10.1016/j.ijpe.2021.108148

© 2021, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/

Keywords

  • Cannibalization
  • Consumer reviews
  • FMCG O2O supply Chain management
  • Product design
  • Vertical relationship

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

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