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The impact of online sales on consumers and firms. Evidence from consumer electronics

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  • Duch-Brown, Néstor
  • Grzybowski, Lukasz
  • Romahn, André
  • Verboven, Frank

Abstract

In this paper we estimate a differentiated products demand model to ask three questions regarding the introduction of e-commerce. First, we ask whether the online distribution channel has increased total sales, or only diverted sales from traditional channels. We find that there is a market expansion effect but also a considerable sales diversion. Second, we ask to which extent consumers and firms benefited from the introduction of the online sales channel. We find that consumers benefited proportionately more, and this is entirely due to the appearance of an additional distribution channel and not due to increased competition. Third, we ask how the online channel has affected European market integration. We find that price differences between the EU countries for identical products are large both in the traditional channel and online. Therefore, the introduction of e-commerce did not influence price levels and international price dispersion in the traditional channel.

Suggested Citation

  • Duch-Brown, Néstor & Grzybowski, Lukasz & Romahn, André & Verboven, Frank, 2017. "The impact of online sales on consumers and firms. Evidence from consumer electronics," International Journal of Industrial Organization, Elsevier, vol. 52(C), pages 30-62.
  • Handle: RePEc:eee:indorg:v:52:y:2017:i:c:p:30-62
    DOI: 10.1016/j.ijindorg.2017.01.009
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    References listed on IDEAS

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    Cited by:

    1. Helfrich, Magdalena & Herweg, Fabian, 2017. "Salience in Retailing: Vertical Restraints on Internet Sales," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168276, Verein für Socialpolitik / German Economic Association.
    2. Donna, Javier D. & Pereira, Pedro & Trindade, Andre & Yoshida, Renan C., 2020. "Direct-to-Consumer Sales by Manufacturers and Bargaining," MPRA Paper 105773, University Library of Munich, Germany.
    3. Andrew Rhodes & Makoto Watanabe & Jidong Zhou, 2021. "Multiproduct Intermediaries," Journal of Political Economy, University of Chicago Press, vol. 129(2), pages 421-464.
    4. Marc Bourreau & Fabio M. Manenti, 2020. "Selling Cross-Border in Online Markets: The Impact of the Ban on Geoblocking Strategies," CESifo Working Paper Series 8690, CESifo.
    5. Alex Coad & Nestor Duch-Brown, 2017. "Barriers to European cross-border E-commerce," JRC Working Papers on Digital Economy 2017-03, Joint Research Centre (Seville site).
    6. Dertwinkel-Kalt, Markus & Köster, Mats, 2020. "Attention to online sales: The role of brand image concerns," DICE Discussion Papers 335, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    7. Jelena Šaković Jovanović & Radoje Vujadinović & Elizabeta Mitreva & Cristiano Fragassa & Aleksandar Vujović, 2020. "The Relationship between E-Commerce and Firm Performance: The Mediating Role of Internet Sales Channels," Sustainability, MDPI, vol. 12(17), pages 1-17, August.
    8. Jovana Zoroja & Igor Klopotan & Ana-Marija Stjepic, 2020. "Quality of e-commerce practices in European enterprises: cluster analysis approach," Interdisciplinary Description of Complex Systems - scientific journal, Croatian Interdisciplinary Society Provider Homepage: http://indecs.eu, vol. 18(2-B), pages 312-326.
    9. R. Scott Hiller & Scott J. Savage, 2021. "Tariff Pass‐Through and Welfare in the Tablet Computer Market," Journal of Industrial Economics, Wiley Blackwell, vol. 69(2), pages 369-409, June.
    10. Christina Kleisiari & Marie-Noelle Duquenne & George Vlontzos, 2021. "E-Commerce in the Retail Chain Store Market: An Alternative or a Main Trend?," Sustainability, MDPI, vol. 13(8), pages 1-21, April.
    11. Markus Dertwinkel‐Kalt & Mats Köster, 2022. "Attention to online sales: The role of brand image concerns," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(1), pages 64-89, February.
    12. Cazaubiel, Arthur & Cure, Morgane & Johansen, Bjørn Olav & Vergé, Thibaud, 2018. "Substitution Between Online Distribution Channels: Evidence from the Oslo Hotel Market," Working Papers in Economics 8/18, University of Bergen, Department of Economics.
    13. Hiller, R. Scott & Savage, Scott J. & Waldman, Donald M., 2018. "Using aggregate market data to estimate patent value: An application to United States smartphones 2010 to 2015," International Journal of Industrial Organization, Elsevier, vol. 60(C), pages 1-31.
    14. Markus Dertwinkel-Kalt & Mats Köster, 2017. "Salience and Online Sales: The Role of Brand Image Concerns," CESifo Working Paper Series 6787, CESifo.
    15. Helfrich, Magdalena & Herweg, Fabian, 2020. "Context-dependent preferences and retailing: Vertical restraints on internet sales," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 87(C).
    16. Cazaubiel, Arthur & Cure, Morgane & Johansen, Bjørn Olav & Vergé, Thibaud, 2020. "Substitution between online distribution channels: Evidence from the Oslo hotel market," International Journal of Industrial Organization, Elsevier, vol. 69(C).

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    More about this item

    Keywords

    Online sales; Offline sales; Nested logit; BLP;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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