Demand Learning through Social Media Exposure in the Fashion Industry: See Now Buy Now vs. See Now Buy Later

Posted: 6 Feb 2020

See all articles by Bin Shen

Bin Shen

Donghua University

Quan Yuan

Zhejiang University

Date Written: January 10, 2020

Abstract

Fashion brands and designers can now webcast fashion shows and analyze market feedback from social media exposure (SME). See Now Buy Now (SNBN), a new product introduction system that allows consumers to purchase products after fashion shows, has been deemed a revolutionary movement in the fashion industry. Whether SNBN can replace See Now Buy Later (SNBL), the traditional system in which consumers purchase products several months after fashion shows, is unclear. We evaluate the value of demand learning through SME for SNBL and SNBN. We develop a stylish two-period model to characterize SNBL and SNBN with SME. We find that when the feedback accuracy and holding cost are sufficiently low, SNBN performs better than SNBL with SME. Furthermore, for SNBL, when the consumer valuation is relatively low, learning the market responses from SME is effective and profit improvement with SME decreases. For SNBN, SME is not always effective. Our results imply that brands, such as Gucci, should sell trendy and fashionable items via SNBL without SME and classic products (products with high consumer preference) via SME. Brands, such as Burberry, should sell low holding cost products (e.g., shirts) through SNBN and high holding cost products (e.g., leather bags) through SNBL.

Keywords: new product introduction, social media exposure, demand learning, fashion operations

JEL Classification: M21

Suggested Citation

Shen, Bin and Yuan, Quan, Demand Learning through Social Media Exposure in the Fashion Industry: See Now Buy Now vs. See Now Buy Later (January 10, 2020). Available at SSRN: https://ssrn.com/abstract=3519090

Bin Shen (Contact Author)

Donghua University ( email )

Shanghai 200051
China

Quan Yuan

Zhejiang University ( email )

38 Zheda Road
Hangzhou, Zhejiang 310058
China

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