Hidden semi-Markov model-based reputation management system for online to offline (O2O) e-commerce markets

a r t i c l e i n f o The rapid development of information technology enables an increasing number of consumers to search and book products/services online first and then to consume them in brick-and-mortar stores. This new e-commerce model is called online to offline (O2O) e-commerce and has received significant managerial and academic attention. Compared with many extant e-commerce models (i.e., B2B, B2C and C2C), reputation management in this emerging model needs some improvement. It has to collect more raw reputation-related data, consider more reputation-related factors and show more comprehensive reputation evaluation results. As a stepping-stone in the research in O2O e-commerce, a new reputation management system (HSMM-RMS) has been developed based on a probabilistic model called the hidden semi-Markov model. By combining observable online and offline raw reputation information, the proposed system can accurately, promptly and dynamically provide O2O e-commerce participants with offline merchants' historical and predictive reputation information. Our Monte-Carlo simulation experiments indicate that the proposed system performs significantly better than the extant hidden Markov model-based reputation management system. A case study based on a real O2O e-commerce platform demonstrates the real application of HSMM-RMS. It also shows that the proposed system can provide a realistic solution for reputation management in the O2O e-commerce market. The rapid development of information technology enables increasing numbers of consumers to seek and book products/services online first and then consume them in brick-and-mortar stores. This emerging trend is called " online-to-offline (O2O) e-commerce " and can be exemplified by services such as Groupon, Yelp and Dianping in the restaurant business, TripAdvisor and Hipmunk in the travel business, and Zipcar and Uber in the transportation business. According to a recent report from the IIMedia Consultation Group, the market size of O2O e-commerce in China alone amounted to 98.68 billion RMB at the end of 2012 and will increase to 418.85 billion RMB by the end of 2015 [1]. Attracted by this huge profit potential, an increasing number of companies will enter into this new market. However, the latest feedback from this market shows that the flourishing prospect of O2O e-commerce largely depends on whether offline merchants can provide consumers with consistent products/services as claimed online. That is to say, offline merchants' reputation plays a vital role in the further development of O2O e-commerce. In fact, in the e-business market, merchants' reputation can help consumers reduce information asymmetry and increase their …