Herd Effect In E-commerce

This thesis is aiming to study the consumers’ herd behavior in group buying websites.The structure follows the leads from outside to inside and progressively. Firstly, wesummary the procedure into two steps: Website Selection and Merchandize Selection.Then we learn them separately. All studies processed with relevant theories andformer journals support, which involve with E-commerce, Behavioral Economics,Information Economics and Marketing. In addition, the data indicator is created frommulti-dimensions. The data sources from target objects’ official websites, review sitesand traffic monitoring websites.By three relevant studies, we conclude that consumers’ behavior is not alwaysrational when selecting the group buying websites, which means they will ignoresome negative information but prefer the reputation advertised by others. With moreindividuals following this pattern, herd behavior happens. While during theMerchandize Selection phase, consumers’ decision will be influenced by formergroup buyers, and people intend to accelerate the process under time pressure whichcontributes to the herd effect. However, this trend doesn’t sustain in the wholetimeline. In addition, the website also can leverage some tricks or frauds tomanipulate consumers’ willingness about group buying.In the end, we offer some suggestions based on the studies above. In the first place,we need to envisage our irrationalities during the group buying. From the sellers’perspective, building the good image and using the multiplier effect in Internet will bechallengeable but effective. On the contrary, customers need to reference to moreinformation like comments, complaints etc. from the third-party websites which helpto lower the herd effect. Besides, perfecting the double-markets model is also a longterm duty to our government. As the defects mentioned in the studies, governmentshould better make schedule to introduce a standard to complete the group buyingsystem. The standard needs to classify the behaviors, in order to restrict operators’deceptions and protect consumers’ rights. Anyway it’ll benefit to a healthy market.