Seminar – AI transformation: Shop-then-ship vs ship-then-shop

Jiwoong Shin, Professor, Yale University 

This paper studies an emerging subscription model called ship-then-shop. Leveraging its predictive analytics and artificial intelligence (AI) capability, the firm curates and ships a product to the consumer, after which the consumer shops (ie, evaluate product fit and make a purchase decision). The consumer first pays the upfront ship-then-shop subscription fee prior to observing product fit and then pays the product price if she decides to purchase after realising product fit. We analyse how the firm balances the subscription fee and product price to maximise its profit in the presence of consumers’ potential showrooming behaviours. In particular, we focus on how the firm’s prediction capability affects its pricing strategies. Our model generates rich insights regarding a firm’s prediction capability, search friction, and their interactions on the profitability of the ship-then-shop model.

Speaker bio

Jiwoong Shin is a Professor of Marketing at the School of Management, Yale University. He holds a PhD in Management Science at MIT and MS and BS from Seoul National University, Korea. Shin is a leading scholar in marketing strategy, and his research focuses on analytical modeling of strategic interactions between firms and consumers. His several award-winning pieces of research advance our understanding of firms’ strategic decisions in the context of social interactions and digital marketing; in particular, consumer journey in the digital sphere, word of mouth, advertising, pricing strategies, and CRM. His research in communication strategy investigates (i) the role of vague messages and (ii) the relative roles of consumer search and firm advertising in signaling product quality. Also, his work in customer management strategy addresses a long-standing puzzle in practice: Should a firm offer a lower price to its own customers or competitors’ customers? When is it profitable to reward one’s own customers? (iii) His recent work in communication seeks a fundamental question about why an individual engages in word of mouth, and how a firm can manage this important process by explicitly incorporating an individual’s social motivation.

There will be a light picnic lunch for seminar attendees in the Common Room from 12:30, with the seminar in Lecture Theatre 2 from 13:00.

For more information, please contact Luke Slater.