Online and Offline Information Service Provision in the Presence of Product Fit Uncertainty

基於產品匹配不確定性的線上線下資訊服務及其整合研究

Student thesis: Doctoral Thesis

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Award date27 Sep 2018

Abstract

Product experiential attributes are hard to communicate via the Internet, which makes consumers uncertain about the product fit to their preferences and hence leads to the fit-related product returns/exchanges. These issues have attracted significant attention in the last decade along with the dramatic growth of the online market. In order to address these issues, numerous information technologies are introduced to the online market. The Internet-based visualization technologies (e.g., multimedia, virtual fitting-room) and the collaborative shopping systems (e.g., consumer review systems) provide opportunities for firms to disclose product information online with higher efficiency and lower costs; meanwhile, empowered by mobile Internet technologies, the online firms are able to provide additional information service in physical showrooms. However, both in research and in practice, firms’ strategies of information service provision through virtual showrooms, consumer review systems, and physical showrooms have received very little attention. Moreover, with the prevalence of online selling platforms and omni-channel retailing, firms’ integration of multi-source information services (i.e., seller-generated content (SGC), user-generated content (UGC), and store assistance (SA)) and multi-channel information services (i.e., online information service and offline information service) which provides consumers with more complete information is continuously gaining importance. Meanwhile, little attention has been paid to studying firms’ information services integration. Thus, it is worthwhile to systematically study firms’ information services and propose effective strategies.

Regarding the issue of consumer uncertainty in the online channel, this study investigates the provision of information services both online and offline. By incorporating firms’ information service into consumers’ purchase decisions under uncertainty, this study endeavors to offer specific insights into firms’ information service provision in various scenarios (virtual showrooms, consumer review systems and physical showrooms) and via different sources (SGC, UGC and SA). Moreover, this study considers the aggregated effect of multi-source information services on consumer purchase decisions, which develops the research on information service integration and generates implications for online selling platforms and omni-channel retailers.

Specifically, the main findings and contributions are fourfold.

First, this study provides firms’ strategies of information tools deployment in virtual showrooms, which reveals the mechanism of online SGC-based information service provision. As SGC is the primary source of firms’ information service online, this study first investigates the online selling platform’s SGC-based information service and explores the approach to firms’ information service improvement. (a) Our findings suggest that the competitive sellers are always willing to disclose sufficient product information; meanwhile, the equilibrium information service in the platform is product-/cost-specific and may be at a low, high or medium level. This study enriches the unravelling theory by highlighting the effect of competition and the role of product characteristics (the value and return cost). (b) Our study highlights the role of revenue sharing fraction in the platform’s information service provision and finds that a modified revenue sharing fraction may lead to firms’ Pareto improvement and empower an information-rich platform. Hence, by investigating the vertical interaction of information service provision between the intermediary and sellers, this study counters the research shortage of information disclosure mechanism within the platform.

Second, this study examines firms’ strategies of information service provision via consumer review systems, which reveals the mechanism of online UGC-based information service provision. Given the seller-provided information in virtual showrooms, this study further investigates the platform’s information service provision in consumer review systems, i.e., the issue about how to design and manage the review system and provide consumers with both product fit information and product quality information. (a) We find that quality information reduces sellers’ profits but significantly enhances consumer welfare, while fit information benefits sellers more than it hurts consumers. Being different from the unravelling theory that suggests firms should disclose product quality information but withhold product fit information under certain conditions, this study develops the traditional literature by extending to the UGC-based product information disclosure. (b) Based on the difference between SGC and UGC in information generating and processing, this study examines the aggregated effect of these dual-source information services on sellers and consumers, which combines the studies on SGC-based and UGC-based information services and generates implications of information service integration for the platform.

Third, from the perspective of multi-channel information service integration, this study provides strategies of physical showroom deployment for the online retailer, which extends the scope of firms’ information service from online to offline. By considering the integrated effect of online and offline information services, this study investigates the retailer’s deployment of physical showrooms in conjunction with the online selling channel. (a) This study identifies the showroom accessibility as an important factor that influences the retailer’s decision on the startup of physical showrooms; besides, this study identifies consumers’ behaviors of intra-product showrooming and inter-product showrooming which determine the retailer’s decision of physical showroom assortment. From the perspective of online and offline information services integration, this study offers a new angle to examine the offline store assistance, i.e., aiming to benefit from consumer showrooming rather than struggling to defeat consumer showrooming. (b) This study also presents the reaction of prices and information services to different showroom deployment strategies, which highlights the role of consumers’ return costs when they make purchases in pure online channel. Our findings, therefore, shed light on the effect of offline information service on consumer uncertainty in the online channel.

Fourth, from a supply chain perspective, this study provides strategies of showroom information service provision for the omni-channel retailer, which also reveals the impacts of supply chain on the retailer’s information service provision and integration. This study mainly focuses on the impacts of consumer showrooming behavior and manufacturer-retailer coordination on the retailer’s information service provision in physical showrooms. (a) We take a holistic view on the supply chain and find that, by encouraging consumer inter-product showrooming, the retailer’s fully integrating the offline information service into online channel has asymmetrical impacts on upstream manufacturers, which may lead to either an increase or a decrease in the retailer’s profit. (b) We investigate the upstream manufacturer’s motivation for compensating downstream information service provision when the retailer conducts omni-channel operations. The findings show that the performance of vertical information service coordination is determined by two effects, namely the utility-increasing effect and the service-differentiating effect. In general, this study not only fills the research gap of omni-channel retailing with respect to offline information delivery and online product fulfillment, but also extends the research scope to a supply chain structure and provides a better understanding on the information service provision in omni-channel supply chain.

By investigating online product fit uncertainty and firm’ information service strategies, this study aims to bridge some research gaps in the literature and respond to the practical needs for preferable strategies of information service provision online and offline. The findings in this thesis will provide qualitative and quantitative insights to support managerial decision-making.