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Consumer Decision-making at an Internet Shopbot: Brand Still Matters

In: E-commerce

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  • Michael D. Smith
  • Erik Brynjolfsson

Abstract

Internet shopbots compare prices and services 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. Copyright 2001 by Blackwell Publishing Ltd

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This chapter was published in:

  • Severin Borenstein & Garth Saloner, 2001. "E-commerce," NBER Books, National Bureau of Economic Research, Inc, number bore01-1, May.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 12319.

    Handle: RePEc:nbr:nberch:12319

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