Dynamic decisions between sellers and consumers in online second-hand trading platforms: Evidence from C2C transactions

Dynamic decisions have become pivotal strategies for sellers and consumers in C2C second-hand product market. This study instroduces a two-stage pricing model and a consumer choice model, aiming to scrutinize the dynamic pricing behaviors of individual sellers and their subsequent impact on consumer choice. Leveraging data from the Xianyu platform, akin to eBay, we identify two fundamental dynamics that underscore successful pricing strategies. Seller pricing behaviors for second-hand products are subject to a number of influences, encompassing the duration since release, consumer engagement with product features, emotive descriptions, and feedback from market information. Our investigation unveils that sellers tend to recalibrate prices in the second phase if their second-hand products remain unsold during the initial phase, leveraging additional insights amassed during the first period. This adjustment is particularly pronounced if the price adjustment in the second phase is influenced by the time since the product's release. Moreover, the extra information gleaned during the initial phase affects the range of price adjustments. Notably, our research uncovers that consumers exhibit heightened attentiveness to product features and optimistic emotional descriptions in the search stage. Conversely, during the purchasing stage, product prices and the time since release emerge as more pivotal determinants. However, prevailing price adjustment practices predominantly center around markdowns or markups, with the time since release dampening purchasing inclinations. Our findings disclose that among these practices, only price markdowns hold the power to effectively stimulate purchase decisions, particularly when influenced by the duration since release. Based on these insights, we suggest that sellers should refrain from concentrating solely on pricing adjustments for their second-hand products. Instead, they would benefit from incorporating the additional market insights gained from the time since the product's release and the feedback from consumers to enhance the quality of dynamic pricing decisions.