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Adding an online channel by cooperating with an online intermediary not only allows a brick-and-mortar (B&M) retailer to reach a larger potential market, but it also allows the B&M retailer to collect online consumer reviews (OCRs) from the online intermediary. OCRs can provide additional information for consumers to mitigate their uncertainty about product valuation. In this article, we develop a game-theoretic model to investigate how OCRs affect the B&M retailer's channel strategy and business model choice. Consumers may be self-evaluating or reviews-referenced, depending on whether they use OCRs to update their product valuation. We show that negative OCRs will deter the B&M retailer from adding an online channel by cooperating with the intermediary. Counterintuitively, the B&M retailer can still benefit from cooperating with the intermediary if the information disclosed by OCRs is only slightly negative. We also show that the B&M retailer's optimal strategy varies with the commission rate, the increase in market size achieved by cooperating with the intermediary, the proportion of reviews-referenced (self-evaluating) consumers, and the information disclosed by OCRs. Interestingly, when the commission rate is not too high and the increase in market size achieved by cooperating with the intermediary is moderate, more review-referenced customers and more positive information disclosed by OCRs will shift the B&M retailer's optimal business model from the agency model to the reselling model, then back to the agency model. This article reveals the importance of OCRs, and provides physical stores with valuable knowledge of their online expansion strategies and business model choices under various sets of market conditions.

Generating sales leads for auto dealers is the core business to auto vertical media platforms (VMPs). However, in recent years, many auto VMPs have started directly selling vehicles to consumers. Anecdotal evidence suggests that the primary purpose of auto VMPs’ business-to-consumer (B2C) endeavors is not solely B2C profitability, but rather the acquisition of sales data to calculate the leads-to-sales conversion ratio. This ratio is crucial in determining the pricing strategy for sales leads. To understand this, we consider an asymmetric information game in which the auto dealer possesses information about the leads-to-sales conversion ratio, whereas the VMP does not. We find that, when the VMP solely focuses on profiting from the sales lead business, if the market potential is large, the auto dealer prefers the cost-per-lead scheme, whereas the VMP always tends to the cost-per-sale scheme. However, when the VMP encroaches on the consumer market as a reseller, this divergence in contract-type preference can potentially be resolved. We recognize that VMPs need to conduct a comprehensive assessment of factors such as market potential, fixed cost related to market encroachment, and the correlation between market uncertainty and leads-to-sales conversion ratio when encroachment. Moreover, the encroachment of the VMP has the potential to create a win–win outcome. It is essential to highlight that engaging in B2C business enables the VMP to expand its market sample, thereby enhancing the value of leveraging information technology to optimize the leads-to-sales ratio and achieve superior performance.Funding:This work is partly supported by the Major program of the National Social Science Foundation of China [Grant 22&ZD082], the National Natural Science Foundation of China [Grants 72321001, 72371104, 72071080], and the Guangdong Basic and Applied Basic Research Foundation, China [Grants 2023A1515012529, 2023A1515012435, 2024A1515010940].