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The Impacts of Shopbots on Online Consumer Search

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    Abstract

    Online price comparison agents (shopbots) allow consumers to instantaneously receive price and other information from many online retailers. Online consumer clickstream data from ComScore Inc.demonstrate that consumers are increasingly using shopbots to conduct search. This phenomenon raises such questions as "how do shopbots change consumers’ search behavior?" and "do they reduce consumers’ online search?" Conventional wisdom suggests that consumers are expected to search less because shopbots have displayed prices and other relative information from retailers on the search result page(s). Surprisingly, this study demonstrates the opposite result. That is, consumers are actually visiting more online retailer web sites after using shopbots. This finding suggests that after searching for an item through a shopbot and receiving the price information, consumers will continue to look for detailed information about the online retailers by visiting their web sites. The empirical finding is explained by an analytical model, which shows that on the one hand shopbots reduce the marginal benefit of searching additional online stores; on the other hand they reduce the cost of search. Therefore whether shopbots reduce consumer search depends on the cost of reducing per unit of risk, which is decided by a number of factors, such as marginal search costs, price dispersion and quality differentiation among stores, price and quality correlation, and consumers’ relative preference for service quality.

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    File URL: http://www.netinst.org/Zhang-Jing_07-34.pdf
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    Bibliographic Info

    Paper provided by NET Institute in its series Working Papers with number 07-34.

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    Length: 28 pages
    Date of creation: Sep 2007
    Date of revision: Sep 2007
    Handle: RePEc:net:wpaper:0734

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    Related research

    Keywords: Sequential Search; Online Behavior; Shopbots; Internet Retailing; Clickstream Data; Service Quality;

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    1. Moorthy, Sridhar & Ratchford, Brian T & Talukdar, Debabrata, 1997. " Consumer Information Search Revisited: Theory and Empirical Analysis," Journal of Consumer Research, University of Chicago Press, vol. 23(4), pages 263-77, March.
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    3. repec:rje:randje:v:37:y:2006:2:p:257-275 is not listed on IDEAS
    4. Michael D. Smith & Erik Brynjolfsson, 2001. "Consumer Decision-making at an Internet Shopbot: Brand Still Matters," NBER Chapters, in: E-commerce, pages 541-558 National Bureau of Economic Research, Inc.
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    8. Urbany, Joel E & Dickson, Peter R & Wilkie, William L, 1989. " Buyer Uncertainty and Information Search," Journal of Consumer Research, University of Chicago Press, vol. 16(2), pages 208-15, September.
    9. Han Hong & Matthew Shum, 2006. "Using price distributions to estimate search costs," RAND Journal of Economics, RAND Corporation, vol. 37(2), pages 257-275, 06.
    10. George J. Stigler, 1961. "The Economics of Information," Journal of Political Economy, University of Chicago Press, vol. 69, pages 213.
    11. Stahl, Dale O, II, 1989. "Oligopolistic Pricing with Sequential Consumer Search," American Economic Review, American Economic Association, vol. 79(4), pages 700-712, September.
    12. Rami Zwick & Amnon Rapoport & Alison King Chung Lo & A. V. Muthukrishnan, 2003. "Consumer Sequential Search: Not Enough or Too Much?," Marketing Science, INFORMS, vol. 22(4), pages 503-519, October.
    13. Diehl, Kristin & Kornish, Laura J & Lynch, John G, Jr, 2003. " Smart Agents: When Lower Search Costs for Quality Information Increase Price Sensitivity," Journal of Consumer Research, University of Chicago Press, vol. 30(1), pages 56-71, June.
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