Impact of price and regional factors on the word-of-mouth in the food delivery sector

ABSTRACT

This paper investigates price and regional effects on the word-of-mouth (WOM) valence and sales in the food delivery sector. Using 56,939 food delivery merchants’ data from a food delivery giant in China, our results show that the impact of price on WOM valence is significantly positive, while the regional effect is negative. And the price effect varies according to consumers’ preferences. Price threshold is determined as 53 Yuan and 100 Yuan to examine the impact on valence and sales, respectively. This suggests that in the food delivery sector, price and regional factors have different effects on merchants’ WOM valence and sales.

KEYWORDS:

• Food delivery
• price
• regional factor
• word of mouth (WOM)
• valence

JEL CLASSIFICATION:

• D12
• L87

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ The four top U.S. food-delivery apps are Doordash, Grubhub, Postmates, and Uber Eats. Source: https://www.marketwatch.com/story/the-pandemic-has-more-than-doubled-americans-use-of-food-delivery-apps-but-that-doesnt-mean-the-companies-are-making-money-11606340169

² Meituan merchants pay less on nearby orders, more on long, https://technode.com/2021/05/25/meituan-merchants-pay-less-on-nearby-orders-more-on-long/

³ Meituan is the food delivery giant in China with more than five million annual active local merchants across 2800 cities. It holds 67.3% market share in the Chinese food delivery market. https://www.statista.com/chart/24743/chinese-food-delivery-market-shar

Additional information

Funding

This research is financially supported by Sichuan Center for Rural Development Research (Funding No: CR2012).