The Virtual Location of E-Tailers: Evidence from a B2C E-Commerce Market

Julia Häring

No 05-52, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: An Internet retailer?s (e-tailer?s) outstanding virtual location enhances the probability of being noticed by potential customers. The notion of a virtual location for e-tailers refers to the analogy to the physical location. In the empirical analysis, an e-tailer?s Internet search engine rank as well as its advertising activities in search engines serve as proxies for the virtual location. The results suggest that it is optimal for e-tailers to complement a high search engine rank with investments in online advertising. Moreover, banner ads seem to serve as price advertising mechanism, whereas sponsored links rather seem to be used in order to signal outstanding customer service.

Keywords: virtual location; online advertising; search engines (search for similar items in EconPapers)
JEL-codes: C25 L29 L81 M37 (search for similar items in EconPapers)
Date: 2005
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