When Third-Party is a Crowd

By BizEd Staff

April 25, 2017

How "infomediary" websites can do customers a disservice.

Consumers can never arm themselves with too much information-but the plethora of websites, apps, and online forums designed to educate buyers might actually be doing them a disservice, according to three researchers. When third-party "infomediary" websites provide reviews of and information about products and services, manufacturers might elect to reduce their own efforts to educate the public.

The research was conducted by lecturer Panos Markopoulos of the Department of Business and Public Administration at the University of Cyprus; associate professor RaviAron of the Johns Hopkins Carey Business School in Baltimore, Maryland; and professor of computer and information science Lyle Ungar of the University of Pennsylvania in Philadelphia.

Although infomediaries mean well their actions can encourage manufacturers to save on marketing costs by posting less information on their own websites. This leaves consumers with less information overall.

The researchers cite a 2008 study that found that makers of high-quality running shoes reduced advertising expenses by 30 percent in reaction to the activity of infomediaries. Sellers of lower-quality running shoes cut ad expenses by 70 percent.

The three researchers looked at how infomediaries help consumers evaluate product attributes for instance a quiet keyboard or a camera lens that functions in both indoor and outdoor lighting. But the researchers argue that infomediaries should only verify companies' claims about their products, not provide details that should come directly from manufacturers, to force manufacturers to provide more relevant information on their own, which would benefit consumers overall.

"Product Information Websites: Are They Good for Consumers?" was published online in December 2016 by the Journal of Management Information Systems. It can be found at www.tandfonline.com/doi/abs/10.1080/07421222.2016.1243885.

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