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

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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.

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Acknowledgments

This research is supported by the Philosophy and Social Science Research Project of Zhejiang Province under Grant No. 13NDJC054YB and the National Natural Science Foundation of China under Grant Nos. 71271188 and 71472163.

Conflict of interest

The authors declare that they have no conflict of interest.

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Authors and Affiliations

  1. School of Information, Zhejiang University of Finance and Economics, No. 18, Xueyuan St., Hangzhou, 310018, China

    Yuangao Chen, Shuiqing Yang & Zhoujing Wang

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  1. Yuangao Chen
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  2. Shuiqing Yang
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  3. Zhoujing Wang
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Correspondence to Yuangao Chen.

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Chen, Y., Yang, S. & Wang, Z. Service cooperation and marketing strategies of infomediary and online retailer with eWOM effect. Inf Technol Manag 17, 109–118 (2016). https://doi.org/10.1007/s10799-015-0237-1

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  • DOI: https://doi.org/10.1007/s10799-015-0237-1

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