Linking e‐service quality and markups: The role of imperfect information in the supply chain

Abstract

Consumers' access to the Internet has greatly expanded their ability to compare offers across a wide array of retailers. In some particular industries (i.e., music), the Internet has also provided consumers with unprecedented opportunities to consider retail offers involving physical goods (i.e., CDs) alongside specialized services. As shown in this paper, these circumstances have important implications for the design and management of customer relationships. These circumstances also permeate relationships across retail and wholesale echelons in music supply chains. In particular, an empirical analysis shows that online consumer access to information on CD retail markups compels retailers to market a level of service quality that is consistent with that markup information. However, limitations in consumer access to markup data, available only to wholesalers and to Internet retailers, allow retailers to inversely link their markups to the fulfillment service quality offered to consumers with wholesaler support. #

Service Quality and Price Perceptions by Internet Retail Customers

“…Internet retailers with multiple vertical menu bars in their home pages achieve significantly higher customer price perception. The finding is well aligned with that of previous studies that relate search efficiency to actual price (Rabinovich 2007;Rabinovich, Maltz, and Sinha 2008a). An effective home page format will increase search efficiency, which reduces price sensitivity during customer online shopping.…”

“…Consequently, customer knowledge of and experiences with different Internet retailers' service quality certainly influence the development of an internal reference price within an online customer's psychology (Janiszewski and Lichtenstein 1999;Monroe 1973). Likewise, as suggested by equity theory, online customers compare prices as a transaction input, anticipating service quality as one of the related outcomes (Bailey 2005;Lipsman 2007;Rabinovich 2007). Attribution theory and the dual entitlement concept are equally applicable to the retail context since customers are likely to view a high price as acceptable if it is accompanied by high service quality (Chen, Gupta, and Rom 1994;Li and Dinlersoz 2012;Rabinovich 2007).…”

Assessing Markups, Service Quality, and Product Attributes in Music CDs' Internet Retailing

“…Other researchers have suggested a process approach to understanding service quality (Field et al 2004) and associating quality with supply chain entities or interactions. To our knowledge, no other research has compiled objective measures in a "natural experiment" setting similar to our work except Rabinovich (2007). However, unlike Rabinovich (2007), this paper considers retail profits in relation to pricing decisions by wholesalers and in relation to retailers' S&H prices and examines the impact on sales markups in Internet markets of product attributes and service quality dimensions.…”

“…In studying markups, we drew data from ongoing work initially introduced in Rabinovich (2007). This allowed us to set up controls to isolate the retailer conduct underlying the proposed effects.…”

Leveraging e-business process for business value: A layered structure perspective

“…For example, a digital platform allows the focal firm to work together with the suppliers to accommodate emerging requests from the customers and to collaboratively find the optimal solutions. It also helps the focal firm work A c c e p t e d M a n u s c r i p t 11 with distributors to rapidly detect market changes and respond to customer problems [8,56]. Thus, we posit:…”