Caveat, Web Shopper
Third-party websites that provide product information and reviews may be harming the consumers they’re trying to help.
A well-informed consumer is said to be a wise consumer. Today, thanks to the proliferation of websites, online forums, apps, and other digital platforms that offer information about retail products and services, shoppers have ever greater opportunities to arm themselves with data.
But buyer beware, says Associate Professor Ravi Aron of the Johns Hopkins Carey Business School.
Third-party “infomediary” websites that aim to inform the public about products are sometimes, inadvertently, doing a disservice to the people they’re trying to help, Aron and two colleagues write in a new study for the Journal of Management Information Systems.
“The infomediary means well. But its actions can cause the manufacturer to scale back and post less product information on its own site. This enables the manufacturer to save on marketing costs, though at the same time it leaves consumers with less overall information.”
The problem arises when a manufacturer notices the activity of an infomediary and then elects to “free ride” on the third party’s product reviews.
“Clearly the infomediary means well. But its actions can cause the manufacturer to scale back and post less product information on its own site. This enables the manufacturer to save on marketing costs, though at the same time it leaves consumers with less overall information than they would have received in the absence of the infomediary,” says Aron.
The paper cites a 2008 study’s finding that makers of high- quality running shoes reduced their advertising expenses by 30 percent in reaction to infomediary activity; sellers of lower-quality running shoes cut their ad expenses by 70 percent.
In some cases, an infomediary’s comments will be further disseminated on blogs, news feeds, and social media accounts. The upshot is even less incentive for the manufacturer to put out information, especially if it means not having to produce expensive graphics, videos, and other promotional tools for the company website.
Aron and his co-authors – Lecturer Panos Markopoulos of the University of Cyprus and Professor Lyle Ungar of the University of Pennsylvania – used a game theoretic model in their study. They focused on the ways in which infomediaries address product “ fit.” These are the attempts to help consumers assess whether a computer keyboard, a camera lens, a computer game, or a streaming TV series, among other products, has the attributes that would turn a shopper into a buyer. Does the keyboard click softly or loudly during typing? Is the camera lens effective both indoors and out? What’s the learning curve for the video game? Does the TV series have a complex plot?
Previous papers on consumer behavior have looked at the impact of third-party information. The authors state theirs is the first to examine the setting in which buyers get information from both manufacturers and infomediaries, and in which the product makers can free ride on third-party reviews.
Trying to provide the kind of information that should come from manufacturers is the wrong role for the third-party sites, Aron argues. Rather than attempt to supply the depth of fit-related data that manufacturers can best provide, infomediaries should act only to verify or correct the companies’ claims about their products.
“In this way, the infomediaries can provide a valuable service
to consumers,” says Aron. “In the process, any incentives that manufacturers have to free ride on infomediaries will vanish and they will provide more relevant information, to the benefit of consumers. A video game company, say, might offer a downloadable demo on its website instead of relying merely on comments from a third-party site.”
The paper by Aron, Markopoulos, and Ungar, “Product Information Websites: Are They Good for Consumers?,” was published in December 2016 on the Journal of Management Information Systems website.