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

Yimeng Li, Yu Xiong, Franco Mariuzzo and Senmao Xia

International Journal of Production Economics, 2021, vol. 237, issue C

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.

Keywords: Cannibalization; Consumer reviews; Product design; FMCG O2O supply Chain management; Vertical relationship (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0925527321001249
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:237:y:2021:i:c:s0925527321001249

DOI: 10.1016/j.ijpe.2021.108148

Access Statistics for this article

International Journal of Production Economics is currently edited by Stefan Minner

More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().