The shipping strategies of internet retailers: Evidence from internet book retailing

Dinlersoz, Emin; Li, Han

doi:10.1007/s11129-006-9010-4

Cited by 46 publications

(30 citation statements)

References 22 publications

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“…It is the total of the item's price and shipping cost. Earlier research has suggested that Internet retailers manipulate products' price and shipping charges to gain a competitive advantage (Dinlersoz and Li 2006). Measuring total cost (i.e., a product's price and shipping charges), as done by Brynjolfsson and Smith (2000) and Pan et al (2002Pan et al ( , 2003a, can eliminate potential price dispersion resulting from such manipulation.…”

Section: Descriptive Analysismentioning

confidence: 99%

Using Transaction Prices to Re-Examine Price Dispersion in Electronic Markets

Ghose

Yao

2011

Information Systems Research

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P rice dispersion is an important indicator of market efficiency. Internet-based electronic markets have the potential to reduce transaction and search costs, thereby creating more efficient, "frictionless" markets, as predicted by theories in information economics. However, earlier work has reported significant levels of price dispersion on the Internet, which is in contrast to theoretical predictions. A key feature of the existing stream of work has been its use of posted prices to estimate price dispersion. In theory, this can lead to an overestimation of price dispersion because a sale may not have occurred at the posted price. In this research, we use a unique data set of actual transaction prices collected from both the electronic and offline markets of buyers in a businessto-business market to evaluate the extent of price dispersion. We find that price dispersion in the electronic market is as low as 0.22%, which is substantially less than that reported in the existing literature. This near-zero price dispersion suggests that in some electronic markets the "law of one price" can prevail when we consider transaction prices, instead of posted prices. We further develop a theoretical framework that identifies several new drivers of price dispersion using transaction data. In particular, we focus on four product-level and market-level attributes-product cost, order cycle time, own price elasticity, and transaction quantity, and we estimate their impact on price dispersion. We also examine the electronic market's moderating role in the relationship between these drivers and price dispersion. Finally, we estimate the efficiency gains that accrue from transactions in the relatively friction-free market and find that the electronic market can enhance consumer surplus by as much as $97.92 million per year.

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Section: Descriptive Analysismentioning

confidence: 99%

Using Transaction Prices to Re-Examine Price Dispersion in Electronic Markets

Ghose

Yao

2011

Information Systems Research

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“…Second, Raya may view bidding and shipping as different attributes of the auction item, or even as two separate pieces of information (Dinlersoz and Li, 2006). When integrating multiple information pieces into an overall judgment consumers oftentimes use a heuristic approach, termed as anchoring and adjustment (Tversky and Kahneman, 1974;Yadav, 1994).…”

Section: Shipping Chargesmentioning

confidence: 99%

Do bidders compensate for shipping fees in online auctions?

Hou

Blodgett

2012

Journal of Services Marketing

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If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The purpose of this paper is to determine whether online bidders adjust their offers downward to compensate for shipping fees; whether shipping fees affect the number of bids in an auction, and thus indirectly influence winning bid prices; and whether experienced bidders more fully compensate for shipping fees, as compared to less experienced bidders. Design/methodology/approach -Data were collected from eBay, covering 530 auctions of 19-inch LCD monitors and 242 auctions of 1921 Morgan Dollar coins. Several regression models were employed to test the hypotheses. Findings -Shipping fees had a large, negative effect on winning bids in monitor auctions, but had no effect in coin auctions. Auctions with larger shipping fees resulted in fewer bids, which in turn lessened winning bid prices. Experienced bidders adjusted more fully than inexperienced bidders in monitor auctions, in which the fees are more substantial.Research limitations/implications -Data should be collected on additional product categories, and in order to control for background variables a controlled experiment should be conducted. Practical implications -Shipping fees appear to result in greater revenues for online sellers. Even though monitor bidders adjust their offers downward to compensate for fees, each additional $1 of shipping fee resulted in an additional $0.05 of profit for sellers. Coin sellers appear to have profited dollar for dollar from fees. Originality/value -Previous research has only indirectly examined the impact of shipping fees on winning bid prices. Given the dramatic growth of online auctions in the past decade, an examination of shipping charges is of both practical and theoretical importance.

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“…Most relevant to mail/ web retailing, Dinlersoz and Li (2006) report that internet booksellers almost all use uniform pricing. Less relevant due to focus on industrial markets are two papers: Phlips (1983) presents examples of uniform pricing in Europe in the cement and plasterboard industries, and Greenhut (1981) shows that in industrial markets uniform pricing is widely used.…”

Section: Literature Reviewmentioning

confidence: 99%