Inducing consumers’ anticipated regret or not? The optimal selling strategy with group buying

Group buying has become a prevalent selling method with the development of e-commerce and mobile internet. Since the success of group buying requires sufficient consumer participation, consumers are often uncertain about whether they can eventually obtain the low-priced products, resulting in potential post-purchase regret. Therefore, consumers may exhibit anticipated regret behaviour that influences their purchase decisions. In this paper, we examine how anticipated regret impacts a seller’s profit and selling strategy. We consider two types of regret: action regret (joining group buying but suffering failure) and forgone regret (purchasing directly but missing the cheaper price of group buying). Our analyses indicate that the seller should employ a mixed strategy, combining group buying and traditional individual buying, to induce consumers’ anticipated regret when they are more concerned about action regret. Alternatively, the seller should adopt a pure strategy, utilising only one selling method, when forgone regret prevails. We also find that anticipated regret may increase the seller’s profit. For direct sales, the action/forgone regret always benefits/hurts the seller. Then we extend our model to distribution sales, and find that the impact is reversed when the network effect margin of group buying is high due to double marginalisation. Finally, anticipated regret may also benefit consumers, suggesting that it may lead to a win-win situation for both the seller and consumers.