The influence of online review adoption on the profitability of capacitated supply chains

Huang, Shupeng; Potter, Andrew Thomas; Eyers, Daniel Roy; Li, Qinyun

doi:10.1016/j.omega.2021.102501

Cited by 18 publications

(5 citation statements)

References 97 publications

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“…We use this idea while modeling the impact of relative difference between different types of services on customer demand. Huang et al (2021) is one study that is closely related to ours. They model the impact of online reviews on customers' views about the actual service quality.…”

Section: Demand Structure: Wom and Loyalty Concernsmentioning

confidence: 64%

Word-of-Mouth on Action: Analysis of Operational Decisions When Customers are Resentful

Çavdar¹,

Erkip²

2022

Preprint

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Word-of-Mouth (WoM) communication, via online reviews, plays an important role in customers' purchasing decisions. As such, retailers must consider the impact of WoM to manage customer perceptions and future demand. In this paper, we consider an online shopping system with premium and regular customers. Building on the behavioral and operations management literature, we model customer preferences based on the perceived service quality indicated by WoM and integrate this into the retailer's operational problem to determine a shipment policy. First, we study the e-tailer's problem when she has no knowledge of WoM, and only reacts to the changes in demand. We analyze the long-term behavior of customer demand and show that potential market size and customer sensitivity are the key parameters determining this behavior. Then, we build a model to integrate knowledge of WoM into operational decision making and partially characterize the optimal solution. We show that (i) beating the competition in the market may not always benefit the company under strict operational constraints as it can result in undesired customer switching behavior, (ii) relaxations in operational constraints may hurt profitability due to the associated difficulties of managing perceptions, and (iii) seeking a stationary policy can lead to suboptimal solutions, therefore cyclic policies should also be considered when appropriate.

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Section: Demand Structure: Wom and Loyalty Concernsmentioning

confidence: 64%

Word-of-Mouth on Action: Analysis of Operational Decisions When Customers are Resentful

Çavdar¹,

Erkip²

2022

Preprint

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“…Liu et al (2021a, 2021b) regarded that consumers were inevitably affected by reviews and would interfere with reviews to decide whether to buy, thus affecting manufacturers’ online market demand, and then online reviews affected pricing strategies. Huang et al (2021) believed that online reviews would have an impact on the supply chain and then affect the pricing of supply chain members (Jiang and Yang, 2020; Yao et al , 2021). Most consumers trusted the information conveyed in online reviews, and manufacturers can improve the products according to online reviews (Zhang et al , 2021).…”

Section: Related Literaturementioning

confidence: 99%

A pricing strategy of dual-channel supply chain considering online reviews and in-sale service

Liu,

Lin,

Zhao

2024

JBIM

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Purpose The paper attempts to discuss the optimal pricing decisions under the decentralized and centralized decision and analyze the influence of online reviews and in-sale service on dual-channel supply chain. Finally, the authors design a two-part tariff coordination mechanism. Design/methodology/approach To deal with this pricing conflict problems of dual-channel supply chain consisting of dominant manufacturer and a retailer, considering the fact that online reviews and in-sale service are important factors on consumers’ purchase decisions, the authors establish some basic models and exploit them to discuss the optimal pricing decisions under the decentralized and centralized decision and analyze the influence of online reviews and in-sale service on dual-channel supply chain. Finally, the authors design a profit-sharing coordination mechanism. Findings The results show that the optimal online direct selling price is positively correlated with product perceived quality obtained from online reviews and negatively correlated with the in-sale service. The traditional retail price is positively correlated with the in-sale service and weakly correlated with online reviews. For the manufacturer and retailer, whether decentralized decision or coordination contract, their profits increase with the increase of the in-sale service in a certain range and quality perceived from spontaneous online reviews. Online reviews and in-sale service are important factors on consumers’ purchase decisions. Positive in-sale services and online reviews can provide consumers with a better shopping experience, thereby promoting their enthusiasm for shopping and improving their quality of life. The two-part tariff coordination mechanism improves the profits of the manufacturer and the traditional retailer, respectively, through the transfer fee. Originality/value The proposed approach can well analyze the channel conflicts and pricing problems between retailers and manufacturers with respect to product offline price and online price. The analysis and results can inform decision-making for manufacturers and retailers.

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“…Further, some scholars have studied the impact of online reviews on the overall operational efficiency of the supply chain system. For example, Wang, et al studied how consumers' deviations in product evaluation levels affect product quality and system profits at different stages [5] ; for capacity-constrained supply chains, Huang, et al found that the positive impact of online reviews on system operating efficiency depends on factors such as customer quality estimates and capacity constraints [8] .…”

Section: Online Reviewsmentioning

confidence: 99%

“…Few studies focus on online reviews from a supply chain perspective. Although Huang, et al [8] analyzed the operation of capacity-constrained supply chains with online reviews and showed that the positive influence of online reviews on system operational efficiency depends on factors such as customer quality estimates and capacity constraints, the study did not take consumers' returns into account and analyze the relationship between returns and online reviews. Based on these studies, we study the return behavior of consumers when purchasing products online based on the influence of product information accuracy on consumer return, and explore the decision-making and profits of E-SC with online reviews.…”

Section: Introductionmentioning

confidence: 99%

Pricing Decision of E-Commerce Supply Chains with Return and Online Review of Product Quality

WANG,

DING,

CHENG

et al. 2023

系统科学与信息学报(英文)

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The online review function helps consumers grasp more real product information and reduce the possibility of returning, but it may also damage firms' reputations or profits. However, few studies considered the relationship between online reviews and consumer returns. Based on this, we develop an e-commerce supply chain (E-SC) game model consisting of a single manufacturer and a single e-platform, aiming to explore the relationship between consumer returns and online reviews and to analyze the impact on both the decision-making of E-SC members and their profits. We find that there is a negative relationship between consumer returns and online reviews of product quality, and consumer returns make the pricing decisions in the two scenarios of yes/no online reviews move toward two different directions. Only when the online review is positive and higher than a certain threshold will it have a positive impact on sales and E-SC members' profits. Finally, we design a new "commission joint returns and quality improvement costs sharing" contract to optimize the decentralized model with online reviews, and we find that the higher the accuracy of product information, the less conducive the contract applied to E-SC.

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The influence of online review adoption on the profitability of capacitated supply chains

Cited by 18 publications

References 97 publications

Word-of-Mouth on Action: Analysis of Operational Decisions When Customers are Resentful

Word-of-Mouth on Action: Analysis of Operational Decisions When Customers are Resentful

A pricing strategy of dual-channel supply chain considering online reviews and in-sale service

Pricing Decision of E-Commerce Supply Chains with Return and Online Review of Product Quality

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