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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.

Suggested Citation

  • Jie Jennifer Zhang & Bing Jing, 2007. "The Impacts of Shopbots on Online Consumer Search," Working Papers 07-34, NET Institute, revised Sep 2007.
  • Handle: RePEc:net:wpaper:0734
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    More about this item

    Keywords

    Sequential Search; Online Behavior; Shopbots; Internet Retailing; Clickstream Data; Service Quality;
    All these keywords.

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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