Group buying on the web团购外文文献.docx

Group buying on the web团购外文文献.docx

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Groupbuyingontheweb团购外文文献

Group-BuyingOnTheWeb:

AComparisonOfPriceDiscoveryMechanisms

KrishnanS.Anand1andRaviAron2OPIMdepartment,TheWhartonSchoolUniversityofPennsylvania.

Abstract:

Web-basedGroup-Buyingmechanisms,arefinementofquantitydiscounting,arebeingusedforbothBusiness-to-Business（B2B）andBusiness-to-Consumer（B2C）transactions.Inthispaper,wesurveycurrentlyoperationalonlineGroup-Buyingmarkets,andthenstudythisphenomenonusinganalyticalmodels.WesurveyedoverfiftyactiveGroup-Buyingsites,andprovideacomprehensivereviewofGroup-BuyingpracticesintheB2B,B2Candnon-profitsectors,acrossthreecontinents.

Onthemodelingside,webuildonthecoordinationliteratureinInformationEconomicsandthequantity-discountsliteratureinOperationstodevelopananalyticalmodelofamonopolistwhousesweb-basedGroup-Buyingmechanismsunderdifferentkindsofdemanduncertainty.Wederivethemonopolist'soptimalGroup-Buyingschedule,andcomparehisprofitswiththosethatobtainunderthemoreconventionalposted-pricemechanism.Wealsostudytheeffectofheterogeneityinthedemandregimes,incombinationwithuncertainty,ontherelativeperformanceofthetwomechanisms.Wefurtherstudytheimpactofthetimingofthepricingdecision（vis-à-vistheproductiondecision）bymodelingitasatwo-stagegamebetweenthemonopolistandbuyers.Finally,weinvestigatehowGroup-Buyingschemescomparewithpostedpricemarketswhenbuyerscanrevisetheirpriorvaluationofproductsbasedoninformationreceivedfromthirdparties（infomediaries）.

Inallcases,wecharacterizetheconditionsunderwhichonemechanismoutperformstheother,andthoseunderwhichthepostedpriceandGroup-Buymechanismsleadtoidenticalsellerrevenues.Ourresultshaveimplicationsforfirms'choiceofpricediscoverymechanismsinelectronicmarketsandschedulingofproductionandpricingdecisionsinthepresence（andabsence）ofscaleeconomiesofproduction.1Email:

********************.edu;Tel:

（215）8981175.2Email:

**********************.edu;Tel:

（215）5735677.

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1.Introduction

Group-Buyingschemeshavebeeninvogueforverymanyyears,particularlyinthecontextofsellingontelevisionviathepopularHomeShoppingNetwork.Web-basedvariantsofGroup-Buyinghavereceivedalotofattentionrecentlyaspartofthewaveofinnovativeonlinemarket-basedmechanismssuchasauctions,reverseauctionsandPriceline’s‘name-your-own-price’scheme.Nevertheless,unlikeinthecaseofauctions（whichhasarichhistoryofanalyticalresearchovermorethanfortyyears）,Group-Buyingsorelylacksatheoreticalframework.

ThispaperdevelopsanalyticalmodelsofGroup-Buying,buildingonextantacademicresearchinthedisciplinesofOperationsManagement,EconomicsandInformationsystems.Aswedemonstrate,twostreamsofresearch—thequantity-discountsliteratureinOperationsManagementandtheliteratureonpricediscoveryunderdemanduncertaintyinInformationEconomics—serveasbuildingblockstodevelopatheoryofGroup-Buying.WecomparetheperformanceofGroup-Buyingwiththatofthemarketmechanismmostwidelyusedinelectronicmarkets—simplepostedprices—andidentifytheconditionsunderwhicheachdominates.

Theremainderofthispaperisorganizedasfollows.InthenextSection,welayoutourresearchobjectives.InSection3,weprovideacomprehensivereviewofthecurrentstateofpraxis,bysurveyingavarietyofGroup-Buyingpractices,world-wide,intheB2B,B2Candnon-profitsectors.InSection4,wereviewtherelevantpriorresearchandcommentonimportantresultsthatarerelevanttoourresearch.InSections5,6and7wedevelopthreedifferentanalyticalmodelsofdemanduncertaintyandcomparetheperformanceofthetwomarketmechanisms（Group-Buyingandpostedpricing）ineachcase.InSection8,wediscussthemanagerialimplicationsofourresearchandhighlightpossibleextensions.

Section2:

ResearchObjectives

Ourobjectiveistostudythephenomenon,widelyseenincurrentpractice,ofweb-basedGroup-Buying.Thisisaspecificinstanceoftheproliferationofcomplexprice-discoverymechanismsenabledbytheInternetandtheWorld-Wide-Web.ElectronicGroup-Buyingmarketmechanismsseektoaggregateavarietyofdisparatebuyersviatheweb—remotelyandasynchronously—essentiallybyprovidingthemprice-basedincentivestoparticipateinthemarketandbuythegood.Inwhatisaclassicvolume-discountingscheme,themarketoperatoroffersbuyerslowerpricesforhighervolumesprocuredcollectively.TheGroup-Buyingmarketsthatwesurveyedwereallcharacterizedbypricesdeclininginsalesvolumes.Further,web-basedGroup-Buyingwasalmostentirelyasynchronous—usershavetoworkagainstsomedeadlinesimposedbytheseller,buthaveconsiderableleewaytomaketheirbidsviatheinternetwithintheweek（s）duringwhichtheobjectisonsale.WeprovideadetailedexpositionofseveralkindsofelectronicGroup-BuyingmarketsinSection3.

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Weknowthatsimplepostedpricesarewidelyusedinconsumersales—intraditionalapproachessuchasretailandcatalogselling,forinstance,butalsoinweb-basedselling.WhilethewebfacilitatescomplexsellingmechanismssuchasGroup-Buying,alargerquestionishoweffectivearesuchcomplexschemes,relativetosimplepostedprices,andmoreimportantly,underwhatconditionsdotheyaddthemostvalue?

Ourstudyisfocusedonansweringtwoquestions,bothofimmediateconcerntocurrentpractice:

（i）GiventhatafirmusestheGroup-Buying（volumediscounting）marketmechanismtosellitsproduct（s）,whatisitsoptimalGroup-Buying（price-quantity）schedule,andwhatareitsrevenuesunderthisschedule?

（ii）HowdoesthisoptimalGroup-Buyingschedulecomparewiththeotherwidelyusedmarketmechanism,specifically,simplepostedprices?

Specifically,whatmarketconditionsandproductcharacteristicswouldjustifytheuseofGroup-Buyingoverpostedprices?

Thepracticalapplicationofinsightsintothesetwoquestionsisobvious.Tothebestofourknowledge,ourpaperisthefirstinacademiato（i）identifyanddelineatetheGroup-Buyingmarketmechanism,（ii）developanalyticalmodelsofthismechanism,（iii）studytheoptimalsuchscheduleunderavarietyofparameterizedmarketscenarios,and（iv）analyzeitsperformancerelativetothesimplermechanismofpostedprices（listprices）.

3.Group-Buying:

TheCurrentStateofPraxis

WequotethemissionstatementsoftwomarketoperatorsthatwesurveyedtoillustratethatvolumediscountinganddemandaggregationareatthecoreofGroup-Buying.

“Co-buyingisco-operativeshoppingforthe21stcentury.It'sareallysimplewayofgettingbettervaluebybringingpeopletogetherviatheInternet.Bybringingtogetherasmanymembersaspossible,LetsBuyIcannegotiatelowerpriceswithmerchantpartners（alsoreferredtoassuppliers）ormanufacturers.Themorepeople,thelowertheprices.”-L

“Themoreweare,thebiggerthenegotiationpowertowardstrustedsuppliers.Theimmediateresult?

Pricesthatfallwithouthavingtonegotiateonyourown.Themoreweare（"many"）,thehappierweare（"happy"）becauseeveryonepayslessandeveryonebenefitsfromabetterservice.”-TheHappyMany

Inourstudyofcurrentlyoperational3onlinemarkets,wefoundthatGroup-Buying（referredtoas‘co-buying’intheabovequote）isawidelydeployedprice-discoverymechanisminavarietyofmarketsandcontexts.Thesemarketsarenotlimitedtoaparticulargeographicregion（suchastheUnitedStates）oraparticularproductcategory.WewillseethattheGroup-BuyingmechanismisextensivelyusedintheUnitedStates,3Asofmid-September2002.

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Europe（includinginGermany,FranceandtheUK）andAsia（includinginIndia,Thailand,SingaporeandEgypt）.Thisreviewdiscussesrepresentative,interestingexamplesofthisdeployment.GiventhelargenumberofactiveGroup-Buyingsites（wellover50）,anexhaustivereviewisbeyondthescopeofthispaper;however,afairlycomprehensivelistof26representativeGroup-BuyingwebsitesfromtheB2B,B2Candnon-profitsectorsisprovidedintheAppendixattheendofthisdocument.Group-Buyingschedulesareemployedforbrandedconsumerproductsaswellasintangibleservicessuchasbandwidthandnetworksecurity,inbothbusiness-to-business（B2B）andbusiness-to-consumer（B2C）markets,andinpublicaswellasprivatemarkets.ThesemarketsarecharacterizedbythebeliefthatbothsuppliersandbuyersstandtobenefitthroughGroup-buying.Evidenceofthisbeliefisadducedbytheweb-sitesofbothbuyer[IRPG,APPA,TBG,GBP]4andsupplier[LBI,THM]consortiainavarietyofmarkets,thatprominentlytoutthebenefitsofGroup-Buyingtotheirmembers.Whilewedocumentedmarketsinthreecontinentsthatdeploythegroup-buyingmechanism,wehaverestrictedthediscussionbelowtosomeinterestinginstancesthatarerepresentativeofseveralcurrentlyoperationalmarkets,orthatemploytheoreticallyinterestingvariantsofGroup-Buying,ofrelevancetoourmodeling-basedanalysis.

TheGroup-Buyingsitee.conomy,operatedbyPricewaterhouseCoopers,isasuccessfulmarketbasedintheUS[ECON].ThisB2Bmarketallowsbuyerstopurchaseindirectgoodsandservicessuchasofficesupplies,‘temps’（temporarystaffingservices）,furniture,commercialprint,computerhardware,software,telecommunications&connectivity,andcompanytravel,atsubstantiallyreducedpricesthatresultfromhigherpurchasevolumes.Membersareassuredofaninitialmaximumprice（a‘priceceiling’）.Astheyplaceorders,incrementingthetotalvolumedemanded,theresultingprice-d