Human Services or Non-Human Services? How Online Retailers Make Service Decisions

Abstract

With the development of Internet technology, online shopping has become increasingly popular. Owing to the improvement of living standards, the quality of e-service has become one of the important criteria for online shopping, with online shopping consultation being one of the key services. At the same time, the emergence of new technologies such as Artificial Intelligent (AI) has allowed online retailers to increase the availability of non-human online shopping consultation services. Therefore, this paper investigates the service decision problem between human and non-human online shopping consultation services for online retailers in the online duopoly market. By constructing a Hotelling improvement model and applying it in a new way, considering consumer preferences for human services, this paper explores the impact of the optimal service level of human online shopping consultation services and consumers’ sensitivity to the service level of human services on online retailers’ pricing, service decisions, etc. Our research results show that consumers’ sensitivity to the service level of human online shopping consultation services has an impact on the demand and profit of online retailers. In addition, human online shopping consultation services are not always beneficial to the profitability. Furthermore, when two online retailers compete, the utility of the non-human online retailer’s service to consumers can influence the service decisions of the other online retailer.

Keywords

• duopoly market
• online retailers
• human service
• service decision making
• service sensitivity