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Consumer Decision‐making at an Internet Shopbot: Brand Still Matters
Author(s) -
Smith Michael D.,
Brynjolfsson Erik
Publication year - 2001
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/1467-6451.00162
Subject(s) - business , credibility , advertising , product (mathematics) , the internet , marketing , homogeneous , service (business) , computer science , physics , geometry , mathematics , world wide web , political science , law , thermodynamics
Internet shopbots compare prices and service levels at competing retailers, creating a laboratory for analysing consumer choice. We analyse 20,268 shopbot consumers who select various books from 33 retailers over 69 days. Although each retailer offers a homogeneous product, we find that brand is an important determinant of consumer choice. The three most heavily branded retailers hold a $1.72 price advantage over more generic retailers in head‐to‐head price comparisons. In particular, we find that consumers use brand as a proxy for retailer credibility in non‐contractible aspects of the product and service bundle, such as shipping reliability.