Investigating consumer responses to online group buying service failures

Abstract

Purpose The purpose of this paper is to explore the effects of consumer role (involved vs observing) on consumer responses in the context of online group buying (OGB) service failures. Design/methodology/approach A scenario simulation method with a 2×3 factorial design was used to investigate the impact of consumer role (i.e. involved consumers and observing consumers) on consumer responses (i.e. perceived quality, negative electronic word-of-mouth (eWOM), and switching intention). The moderating role of seller offering type (i.e. physical products, true services, and pseudo services) on the relationship between the consumer role and responses was also tested. Findings The differences in perceived quality, negative eWOM, and switching intention between involved consumers and observing consumers were significant. Further, seller offering type moderated the relationship between consumer role and consumer response. Practical implications These findings provide several important theoretical and practical implications in regard to OGB service failure and recovery. Originality/value This study enriches OGB and service failure literature by a pioneering investigation of how consumer roles respond to OGB service failures and how different seller offering types influence the relationship between consumer role and consumer response. The results will help service providers of OGB benefit from enhancing their service recovery strategies to cope with OGB service failures.

Factors affecting satisfaction and loyalty to online group buying

“…Much is said about dissatisfaction and high rates of complaints regarding group buying (Lin, Yen, Wang, & Yeh, 2018). This shows the need for more studies that identify the factors that lead to customers' dissatisfaction and an analysis of the weakening of the brand that may exist after collective purchasing campaigns are over.…”

“…The group buying business model has attracted attention form the market in a number of countries around the world, such as the United States, China, Taiwan, Canada, Russia, Germany and Brazil (Chiu, Chen, Du, & Hsu, 2018;Lin, Yen, Wang, & Yeh, 2018). In China, over a quarter of the country's internet usersmore than 180 m peoplehad already used group buying sites in 2015 (Xiao, 2018).…”

“…In China, over a quarter of the country's internet usersmore than 180 m peoplehad already used group buying sites in 2015 (Xiao, 2018). In the United States, it was estimated that the turnover of this sector in 2015 was over four billion dollars (Lin, Yen, Wang, & Yeh, 2018). Peixe Urbano, the largest player in the market, with over 31.5 m users in the country and over 20.5 m in the rest of Latin America (Mercado & Consumo, 2019), grew over 40% in 2016 and more than 30% in 2017 (Exame, 2018).…”

“…In China, the mortality rate was over 70% in 2015(Xiao, 2018. In the United States, 170 of the 530 group buying sites were taken over or went bankrupt in 2011 (Lin, Yen, Wang, & Yeh, 2018). A number of internal and external factors can lead to the failure of group buying sites.…”

Recovery Emotions on Perceived Justice

“…A psychological failure is a form of failure associated with expression of senses that is related to customer's senses and inclinations regarding the fulfillment of their needs. Whereas, tangible failure is due to incompatibility of services that can be measured with the economic losses (Hsin-Hui, Wan-Chu, Yi-Shun, & Yen-Min, 2018;Seung, 2018) When the service failure occurs, the customer can take two main steps, namely, take action or do nothing (Shangzhi et al, 2018;Hyunju et al, 2017). Whereas, take action can be divided into three set of actions (1) filing a grievance to the service provider which gives them an opportunity to make improvement for service failure and perfect service recovery in order to keep customers loyal (2) complaining to a relative or friend by giving denying WoM about the service provider and (3) filing a grievance to a third party service provider such as the government bureaus, customer institutions or lawyers (Brozovic, Nordin, & Kindström, 2016;Cansu, Bengu & Oznur, 2018).…”