Abstract
The emerging product sharing trend poses challenges for manufacturers. Although the cost of purchasing products is decreased by adopting product sharing, consumers must accept that their demand cannot be responded to instantly and must use unfamiliar shared products. There are unavoidable inconveniences that are inherent in product sharing that directly affect consumers’ choices and further affect manufacturers’ decisions about providing sharing services. However, few papers have focused on the impact of such factors. In this paper, we aim to study how the unavoidable inconvenience costs and operational costs affect the manufacturer’s decision on whether to provide sharing services. First, low inconvenience cost and operational cost encourage the manufacturer to provide sharing services. High product quality weakens the influence of these two factors, while strengthening the influence of the pooling effect on the manufacturer’s provision decision. Second, the sharing market cannibalizes the sales demand when inconvenience cost is low and product quality is high. Third, the provision of sharing services is a win-win situation for consumers and the manufacturers of low-quality products.
Highlights
Product sharing has expanded widely around the world. e transaction mode, which focuses on providing the right to use, rather than transferring ownership, has become an important business trend
Different from other research in this area, our study reveals that the renter’s inconvenience cost and the operational cost of sharing businesses are two key forces that steer the manufacturer’s choice on whether or not to include product sharing services to complement its sales business
A manufacturer that includes product sharing with its traditional sales business is motivated by the low inconvenience cost of renters and low operational cost of its sharing business. e intuition behind this result is the trade-off between the increase in sharing demand and the increase in operational cost due to convenient sharing experience. erefore, manufacturers that contemplate joining the sharing market could take steps to balance between the sharing convenience improvement and the operational cost increase
Summary
Product sharing has expanded widely around the world. e transaction mode, which focuses on providing the right to use, rather than transferring ownership, has become an important business trend. Product sharing has expanded widely around the world. E transaction mode, which focuses on providing the right to use, rather than transferring ownership, has become an important business trend. Many firms have undertaken action to embrace the new challenges and gain advantages in the changing business world. Ann Taylor, the American fashion retailer, recently launched the sharing service Infinite Style (https://www.anntaylor.com/how-itworks/cat3880004). Other fashion groups, such as LVMH, are considering joining the sharing market by merging with Rent the Runway, founded in 2009, with the simple philosophy of renting designer clothing and accessories to women rather than selling them Even though the phenomenon that the firms include product sharing services is conspicuous, the understanding of this is limited. Our aim was to study the impact of product sharing on traditional sales and to guide manufacturers in making the choice of whether or not to introduce sharing services to complement their sales
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