Transferring, Eliminating, or Both? The Strategic Impact of Resale Platforms and Consumer Learning on Coping with Consumer Uncertainty

The sales of experience goods, whose characteristics can only be ascertained by purchasing and using, are woven with the strategic waiting behavior of consumers, which is often driven by their perceived risk and limited knowledge regarding the applicability of the goods. This cautious approach may potentially lead to diminished profits for sellers. However, the rapid growth of the online platform economy has spawned a remarkable reversal of this phenomenon. Resale platforms have emerged as a strategic outlet for consumers to transfer their risk burdens to others, whereas the elimination of geographical distance has enabled them to glean insights into goods’ applicability through online peer reviews, thereby effectively mitigating their perceived risks. Despite these transformative developments, there remains a noticeable dearth of research centering on the nuanced impacts of resale platforms and consumer learning on both consumer behavior and seller strategies. To effectively address this gap, we develop a two-stage analytical model that clarifies both the intricate conflict and interaction between resale platforms and consumer learning. Specifically, our analysis delves into the direct and indirect impacts of resale platforms on seller profits, also highlighting the effects of consumer learning. We identify the prioritization of different approaches (i.e., resale platform versus consumer learning), which essentially hinges on consumer patience and production costs. Additionally, our investigation uncovers the mutually beneficial circumstances for both profits and the environment. We further explore the dual nature of integrating resale platforms with consumer learning. Finally, our research presents sellers’ strategic responses across three key aspects: resale platforms, consumers, and products.

History: Hsing Kenneth Cheng, Senior Editor; Zhengrui Jiang, Associate Editor.

Funding: This study was supported by the National Natural Science Foundation of China (NSFC) [Grants 72132007, 72261147707, and 72402159].

Supplemental Material: The online appendix is available at https://doi.org/10.1287/isre.2023.0659.