All posts by wfyang

Community engagement and online word of mouth

Over the past few years, the online technologies and environment has developed dramatically to enable individuals to create, share and engage with web content rather than being a passive recipient of content. There are two significant online platforms- online brand communities (OBCs) and online word-of-mouth (WOM) channels for increasing customer engagement and boosting profits. Companies deploy an online brand community, where is not only a means to convey the brand message or provide customer support, but an interactive communication to build strong relationships among members. Customers benefit from their ability to recognize in each other while they’re willing to contribute their time and expertise to grow the identity-based networking. Although OBCs and online WOM channels are separated, customers tend to engage in multiple channels simultaneously.

Key findings: 
With regards to cross-channel engagement, the research empirically identifies three key findings:

  1. Consumer engagement in an OBC increases both their generating of online reviews (the volume of WOM) and online review ratings (the valence of WOM) after purchase.
  2. The effects of community engagement on online WOM become stronger among longer-tenured customers.
  3. The shorter-tenured consumers are more likely to have lower levels of engagement and commitment to the brand community.

Fig. 1. The conceptual framework of this study..jpgFig. 1. The conceptual framework of this study.

We can see above framework  how community engagement influences customers’ online WOM behavior in terms of generating online review and review ratings. The research considers several control variables, including product attributes, disconfirmation, review context, and customer attributes. Therefore, the article proposed two main reasons why community engagement will positively impact customers’ review generation. Firstly, community engagement enhances customers’ identification and loyalty, which facilitates their willingness to contribute to the brand or products by generating online product reviews. Secondly, community engagement is able to be geared positive performance in a voluntary environment, and engaged customers are more likely to give online reviews to help other customers make purchase decisions. Hence, here are the proposed hypotheses:

H1: Community engagement has a positive impact on generating online product reviews after purchase.

H2: Community engagement has a positive impact on online product review ratings after purchase.

H3a: The impact of community engagement on generating online product reviews after purchase is stronger for longer-tenured consumers than for shorter-tenured consumers.

H3b: The impact of community engagement on online product review ratings after purchase is stronger for longer-tenured consumers than for shorter-tenured consumers.

In order to test the hypotheses, the research examines a focal firm, which designs, produces, and sells female apparel in an Asian market, collecting all purchase transaction data, incorporating user ID, product ID, review ratings, review context, and the date of leaving review from its e-commerce website. In October 2010, the focal firm, first created its OBC with the objective of encouraging customer engagement. A total of 111,266 purchase records from 10,896 customers were sampled from May 2011 to December 2012. Specifically, 2,286 customers, at least 20% of customers, generated 12,723 post-purchase online product reviews during the time period.

Another strength is the second phase of data collection that the author created custom programs to gathered information from members’ profile pages, analyzing the discussion threads in its online brand community. The research utilized econometric models and set the control approach to achieve consistent estimation. Additionally, the author conduct robustness checks to verify the results of our analyses. The author finalized integrated community engagement data with the purchase data and online product reviews. Meanwhile, the author defined time windows of six weeks for each of the purchase records, which are consistent with the presented results. This implies that customer tenure moderates the relationships between community engagement and the intentions of generating online product reviews after purchase, and this relationship is strengthened when consumers have longer tenure.

First, while the dataset is retrieved from a single focal firm, we lack of exogenous data to compare levels of interaction with other online communities and verify the outcomes to see how and where we may need to change tact to achieve maximum engagement. Second, the research focuses on consumer brand and products, which might cause bias when applying to different product segmentations such as services or technical products, which require a certain amount of professional knowledge. Third, there are two major types in terms of who owns the platforms: consumer-initiated communities and company-initiated communities. The study targets firm-sponsored and we can investigate if different types of online brand communities could impact customer attitudes and behaviors variously.

In summary, a firm’s OBC is an essential indicators of consumer WOM behaviors, resulting in positive online product review and ratings after purchase. Furthermore, the effect of community engagement on online product review and ratings after purchase is moderated by customer tenure. That’s why it’s important to map out how our business engages with customers across channels and increase channel engagement amongst the recurring customers; in contrast, we may need to lift sales conversions with first-time visitors.

Ji Wu, Shaokun Fan, J. Leon Zhaoc (2018). Community engagement and online word of mouth: An empirical investigation Vol. 55, Issue 2, 258-270

Beyond Omnichannel: Alibaba’s “New Retail” strategy


Alibaba Founder and Chairman Jack Ma coined the term “New Retail” in a letter to Alibaba’s shareholders in October, 2016. Ma said, “In the future, pure e-commerce will be reduced to a traditional business and replaced by the concept of New Retail-the integration of online, offline, logistics and data across a single value chain.”

Retail customer interaction has been rapidly changing over the years, from the traditional way of visiting storefronts to shopping in the comfort of our homes via e-commerce, and now to New Retail. Although the integration of Online and Offline (O2O) commerce is not entirely new concept, “New Retail” demands for greater customer-centric engagement seamlessly  through leveraging data technology.


Fresh-food focused HEMA (盒马鲜生, which means “Boxed/packaged freshness and liveliness”) – a real example of online-offline hybrid, where carries a curated selection of 3,000 products from 100 countries, ranging from fresh food, grocery to catering and fine-dining. HEMA offered customers to choose order online via HEMA mobile app and receive free delivery within half an hour in a 3km radius, or scan barcodes at the store, pay via HEMA app and set up delivery, blending the online and offline shopping experience. From ordering to delivery, customer shopping behavior is captured all along the way via its mobile app. Accordingly, Alibaba is able to personalize the entire experience such as organizing promotion, offering tailored suggestions based on specific consumers’ wants and needs, and dedicated food booths where customers can easily get the food cooked on the spot.


What value HEMA brings to customers?

HEMA is not only a one-stop shop, but also its entertaining layout and display is definitely a game-changer, especially at fresh seafood section. HEMA has a pop-up “Seafood Exhibition” in Shanghai, in an aquarium-style glass house, where consumers are able to check out expensive and live seafood products such as Boston lobster and Alaskan king crab, and can choose to have it cooked right away for carry-out, delivered to assigned places, or eat it on the spot at the store’s dining area.

Secondly, with the technology of Cainao delivery and logistics business under its belt, HEMA itself is able to do pre-packaging and electronic tagging, so that staff can sort out goods from different food sections through scanning codes. HEMA is using algorithms to solve problems concerning sorting time, binning, combining bills and logistics route. The stipulation so-called “arrival within 30 minutes” is the superlative service achieved through the operations management and data technology.

Thirdly, Alibaba takes its dedication to building customer trust. China is considered as a comparably low-trust society, especially with regards to food issue, which raised great concern since 2008. It was precisely because of the poor transparency in China and society’s lack of trust in the government. HEMA’s transparency provides multi-level reassurance, such as easy access to all the information via a QR code, which reveals the origin of every product as a guarantee of quality, price comparison, personalized product recommendations, etc. In addition, HEMA’s advertising is also more adventurous than other supermarket brands. For example, HEMA redefined the “Home Kitchen” as a liberation campaign for the housewives. This has boosted HEMA’s high reputation among women with hectic lifestyles.


How to make HEMA more efficient?

With the usage of HEMA App and Alipay as the only accepted payment method at HEMA stores, Alibaba successfully engages consumers into its ecosystem. While customers gained convenience, Alibaba benefits from an increase in users. The new comers joined the steady stream of its customer data and can provide customer insights from different perspectives. Alibaba further boost its data and smart logistics technology to enhance greater consumer experiences; meanwhile, the database of customers insights will apparently enable Alibaba to market its products to consumers better.

With two years store operation, statistics cited by Alibaba look relatively promising at first glance. On average, customers make 4.5 purchases per month and 50 times a year, and among users who have HEMA app, the conversion rate for making a purchase is as high as 35%. Online orders account for more than 50% of total orders and in some premium locations, online orders are as high as 70% of total orders. For now, HEMA opened more than 20 locations in major commercial districts in Shanghai and Beijing, focusing increasingly on the lucrative fresh-food retail sector.

However, HEMA’s expansion continues to incur high operating costs due to the prime locations of its supermarkets. The exorbitant cost of expansion may discourage its growth in the future. In the long run, it could be more profitable for Alibaba to expand its delivery network or partner with existing partners, merging quality brands to open up more supermarkets around the urban areas. Above all, Alibaba can keep encouraging the adoption of “New Retail” concept amongst partners with existing online stores, for that will minimize the need to invest in more supermarkets.

In conclusion,  HEMA presents a “New Retail” model to redefine commerce by enabling seamless engagement between the online and offline world. Nevertheless, it’s not all about converting online users to offline customers or vice versa. It’s about building a retail ecosystem that combines online and offline channels in a cohesive way that features the consumer at its core. While Amazon Go is calling its strategy as a “Just Walk Out” shopping experience, I’d like to propose that HEMA is creating a “Just Be There” strategy to increase customer stickiness, offering a more efficient, flexible and fun shopping experience.