Channel coordination and quantity discounts
Management Science
Customer Referral Management: Optimal Reward Programs
Marketing Science
Competitive One-to-One Promotions
Management Science
Group Buying on the Web: A Comparison of Price-Discovery Mechanisms
Management Science
Using Online Conversations to Study Word-of-Mouth Communication
Marketing Science
Customized Products: A Competitive Analysis
Marketing Science
Probabilistic Goods: A Creative Way of Selling Products and Services
Marketing Science
The Sound of Silence: Observational Learning in the U.S. Kidney Market
Marketing Science
Under what conditions will social commerce business models survive?
Electronic Commerce Research and Applications
Do starting and ending effects in fixed-price group-buying differ?
Electronic Commerce Research and Applications
A new evolution model for B2C e-commerce market
Information Technology and Management
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This paper examines a unique selling strategy, Group Buying, under which consumers enjoy a discounted group price if they are willing and able to achieve a required group size and coordinate their transaction time. We argue that Group Buying allows a seller to gain from facilitating consumer social interaction, i.e., using a group discount to motivate informed customers to work as “sales agents” to acquire less-informed customers through interpersonal information/knowledge sharing. We formally model such an information-sharing effect and examine if and when Group Buying is more profitable than (1) traditional individual-selling strategies, and (2) another popular social interaction scheme, Referral Rewards programs. We show that Group Buying dominates traditional individual-selling strategies when the information/knowledge gap between expert and novice consumers is neither too high nor too low (e.g., for products in the midstage of their life cycle) and when interpersonal information sharing is very efficient (e.g., in cultures that emphasize trust and group conformity, or when implemented through existing online social networks). We also show that, unlike Referral Rewards programs, Group Buying requires information sharing before any transaction takes place, thereby increasing the scale of social interaction but also incurring a higher cost. As a result, Group Buying is optimal when interpersonal communication is very efficient or when the product valuation of the less-informed consumer segment is high. This paper was accepted by Preyas Desai, marketing.