Guaranteed-selling service of online used-car reselling platform: Feasibility and applicability compared with conventional resell and agency resell

Abstract

Information asymmetry in the used-car market causes inconsistent product quality and price perceptions between buyers and sellers. Third-party reselling platforms with expertise can play a positive role in resolving this asymmetry. An emerging guaranteed selling (GS) service is a reselling service developed on online platforms, where the seller is offered a guaranteed selling duration and purchase price before the transaction begins. During this period, sellers can trade directly with buyers. After this period, the platform purchases the unsold used car at the agreed guaranteed purchase price. Although the GS service can reduce sellers’ trading uncertainty and guarantee revenue, it remains unclear whether this emerging service model is feasible. Hence, we verify the feasibility and optimal pricing policy of the GS model. It generates profits by extending the guaranteed selling duration within a threshold limited by the agency rate. Furthermore, we identify the optimal application scenario for the GS model. It is more profitable than the conventional and agency resell models, considering different consumer preferences. By extending the GS duration and reducing the agency rate within certain limits, the GS model can divert market shares of the conventional resell model and exclude the agency resell model from the platform’s model selection. The interaction between the GS duration and agency rate determines these limits. This study provides valuable insights and managerial guidelines for used-car reselling platforms.