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

Michael Smith and Erik Brynjolfsson

Journal of Industrial Economics, 2001, vol. 49, issue 4, 541-558

Abstract: Internet shopbots compare prices and service 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.

Date: 2001
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