The Promising Effect of a Green Food Label in the New Online Market

Abstract

Although public interest in sustainable and safer products have steadily risen worldwide, research has shown a difference between consumer’s willingness to purchase, and actual purchasing behavior, for which two main explanations exist, including a lack of accessibility and a poor knowledge of related attributes. Fortunately, the emergence of online food markets may improve this situation through convenient accessibility to sustainable food and detailed description about sustainability labels. This research uses a hedonic price analysis to compare the price premiums for the sustainability attribute in Chinese online and offline markets, using edible oil as a case. The specific objective is to test the different values of a sustainable attribute, a green food label, in two types of markets. Results show that the green food attribute could gain a price premium in the online market but not in the offline market, indicating the importance of the online channel for sustainable food sale in China. A big price mechanism difference between online and offline markets is also found, with regard to attributes of production method, variety, place of origin, packaging, and discount. These results provide a guide for firms’ pricing strategies in online and offline markets.