at an Internet Shopbot:
Brand Still Matters
Published in Journal of Industrial Economics,
December 2001, Vol. 49, Issue 4, pp. 541-558.
Carnegie Mellon University
MIT Sloan School of Management
Internet shopbots compare prices and service levels at competing retailers, creating a laboratory for analyzing consumer choice. We analyze 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.