Market information strategies for online retailers

With the rapid development of the Internet, many retailers or individuals nowadays use this technology to engage in direct online sales. When a retailer sells its product through the Internet-based market, the value of market information has an important impact on its expected profit. The value of market information depends not only on its forecast accuracy but also on the product characteristics the retailer sells. We develop a theoretic approach to examine how the effect of market information on firm profit is moderated by product characteristics. Our results suggest that more accurate market information always is more valuable for firm profit when product quality is higher and web-product fit is larger. Based on our analytical results, we propose the optimal marketing strategies for the online retailers to adopt.