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Seller reputation: From word-of-mouth to centralized feedback

Author

Listed:
  • Cai, Hongbin
  • Jin, Ginger Zhe
  • Liu, Chong
  • Zhou, Li-an

Abstract

Reputation is one of the most important incentives for trade and cooperation. Using the complete selling history of 125,135 sellers on Eachnet.com (an eBay equivalent in China), we show that sellers with a longer successful selling record enjoyed more repeat business, reached more buyer regions, sold in more product categories, and had a higher completion rate even before Eachnet introduced a centralized feedback system. Since the centralized feedback system, the difference between reputable and non-reputable sellers has decreased in terms of repeat business but enlarged in terms of market expansion. These findings suggest that while reputation can facilitate trade through buyer experience and word-of-mouth, it is not as effective as centralized feedback. Our study also shows that, although completion rate and transaction price are the two outcomes most often examined in the literature, seller reputation is important for buyer clientele, market reach, business scope and market survival.

Suggested Citation

  • Cai, Hongbin & Jin, Ginger Zhe & Liu, Chong & Zhou, Li-an, 2014. "Seller reputation: From word-of-mouth to centralized feedback," International Journal of Industrial Organization, Elsevier, vol. 34(C), pages 51-65.
    • Handle: RePEc:eee:indorg:v:34:y:2014:i:c:p:51-65
    DOI: 10.1016/j.ijindorg.2014.03.002
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    3. Kevin Money & Anastasiya Saraeva & Irene Garnelo-Gomez & Stephen Pain & Carola Hillenbrand, 2017. "Corporate Reputation Past and Future: A Review and Integration of Existing Literature and a Framework for Future Research," Corporate Reputation Review, Palgrave Macmillan, vol. 20(3), pages 193-211, November.
    4. Johnen, Johannes & Ng, Robin, 2023. "Harvesting Ratings," CEPR Discussion Papers 18021, C.E.P.R. Discussion Papers.
    5. Liang Chen & Garrett Johnson & Yao Luo, 2015. "Great and Small Walls of China: Distance & Chinese E-Commerce," Working Papers 15-14, NET Institute.
    6. Casalin, Fabrizio & Dia, Enzo, 2019. "Information and reputation mechanisms in auctions of remanufactured goods," International Journal of Industrial Organization, Elsevier, vol. 63(C), pages 185-212.
    7. Che, X. & Katayama, H. & Lee, P., 2020. "Willingness to Pay for Brand Reputation: Lessons from the Volkswagen Diesel Emissions Scandal," Working Papers 20/02, Department of Economics, City University London.
    8. Michael Luca & Oren Reshef, 2020. "The Effect of Price on Firm Reputation," NBER Working Papers 27405, National Bureau of Economic Research, Inc.
    9. Kim, Da Yeon & Kim, Sang Yong, 2022. "The impact of customer-generated evaluation information on sales in online platform-based markets," Journal of Retailing and Consumer Services, Elsevier, vol. 68(C).
    10. Paul Belleflamme & Martin Peitz, 2018. "Inside the Engine Room of Digital Platforms: Reviews, Ratings, and Recommendations," Working Papers halshs-01714549, HAL.
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    12. Franz Hackl & Rudolf Winter-Ebmer, 2020. "Customer reactions to a webshop’s service quality," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(4), pages 699-731, November.
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    17. Eugenia Y. Huang & Shu-Chiung Lin & I-Ting Hsieh, 2023. "Online marketplace sellers’ influence on rating scores and comment orientation," Electronic Commerce Research, Springer, vol. 23(2), pages 1241-1270, June.

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    More about this item

    Keywords

    Reputation; e-Commerce; Centralized feedback; Word-of-mouth;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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