Assessing Markups, Service Quality, and Product Attributes in Music CDs' Internet Retailing
Article first published online: 12 FEB 2009
© 2008 Production and Operations Management Society
Production and Operations Management
Volume 17, Issue 3, pages 320–337, May-June 2008
How to Cite
Rabinovich, E., Maltz, A. and Sinha, R. K. (2008), Assessing Markups, Service Quality, and Product Attributes in Music CDs' Internet Retailing. Production and Operations Management, 17: 320–337. doi: 10.3401/poms.1080.0035
- Issue published online: 12 FEB 2009
- Article first published online: 12 FEB 2009
- Received: January 2006; Revised: February 2007; Accepted: May 2007 by Michael Pinedo.
- Internet commerce;
- supply chain management;
- technology management;
- empirical research
We investigate trade-offs among markups, service quality, and product attributes across customer, Internet retailer, and wholesaler echelons. Research has documented the reality of retail price dispersion, but little is known about how retail markups, in particular, are related to service quality and product attributes. For example, do Internet retailers deliver superior service in return for high markups? Do product characteristics affect the relationship between service and markups for retailers? To examine these issues, we first developed a model of Internet retail profitability that separates revenues and costs related to sales from other profit sources. This framework allowed us to position our work alongside the extant literature about Internet retailing. Moreover, it led us to synthesize service quality dimensions found in Internet retailing studies. We subsequently developed a critical-event study based on the profit model and the synthesis of service quality dimensions to delineate service aspects that retailers should emphasize to address buyers' utility. Finally, we collected data from Internet purchases across retailers to isolate markup-service quality trade-offs along our delineated service aspects. We find that high markups are associated with superior performance across service quality dimensions. Furthermore, this trade-off becomes more acutely defined when products with variable popularity are transacted.