Suppliers' Strategic Shifts by an Online Platform in a Fresh Product Market: Evidence from a Flower Marketplace

Project: Research

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Description

Since the offline wholesale/retail sector has suffered from the suspension by the pandemic, fresh product markets have been expanding online and showing rapid growth, even though fresh products as look-and-feel goods with variable quality, have been considered the last piece of e-commerce. While suppliers can find new sales opportunities by adopting an online platform, they also confront challenges such as quality issues, and high loss and return rates due to perishability and fragility. Despite the growing online platforms of fresh product markets, there is no empirical evidence on how suppliers have leveraged an online platform. Thus, this project seeks to explore how the adoption of the online platform affects a supplier’s product innovation strategies, which refers to how suppliers produce and allocate their products or services with innovative properties (i.e., patents) and which factors moderate the impact of such adoption. Employing the unique and proprietary data from Dounan Electronic Trading Center (DFETC), the second largest offline flower auction market in China, this project conducts a quasi-experiment design by utilizing DFETC’s implementation of an online platform that occurred in November 2021. Using the difference-in-difference approach, this project compares changes in suppliers’ strategies and performance before and after a supplier’s adoption of the online platform. The preliminary results show that suppliers provide more varieties of products as well as more sales of products in the post-online period in all products and innovative products. Regarding the characteristics of suppliers, the larger suppliers more extend product varieties and increase sales and quantities of products in the post-online period. A supplier’s joining cooperatives decreases the quantities and sales of both all and innovative products. The significant spillover effect between online and offline indicates that although the e-market for fresh products is filled with uncertainty and risks, the internet can be a tool for suppliers to advertise their products online and build their brand influence by raising the awareness of buyers, especially on innovative products. By understanding such contingent impacts, platform owners and suppliers can develop more contextual and customized − and therefore more effective − platform strategies that can mitigate the risks of an online platform.

Detail(s)

Project number9043599
Grant typeGRF
StatusActive
Effective start/end date1/01/24 → …