Theory and evidence on pricing by asymmetric oligopolies

We present an analysis of markets with many asymmetrically positioned retailers that compete for the business of both informed and uninformed customers for a homogenous good, such as software, music, book or a brand-name appliance. We show that two forms of asymmetry, one related to loyal segment sizes of retailers and one related to the positioning of firms, completely explain the observed price dispersion in such markets and the multitude of asymmetrical strategies adopted by retailers. The stochastic dominance of empirical mixed strategy measures is used to test the theory with data on 968 books from 10 online retailers

Different Prices for Identical Products? Market Efficiency and the Virtual Location in B2C E-Commerce

This paper analyses market efficiency and the role of the virtual location in digital markets using a data set containing more than 23,000 price observations from the online market for contact lenses as well as detailed information about online retailer and product characteristics. The data allow to implement and test the concept of virtual location. The empirical results reveal evidence for lower prices and less price dispersion among e-retailers in comparison to hybrid retailers, which supports the hypothesis of enhanced market efficiency in electronic markets. Furthermore, the results show that an online shop?s virtual location influences its prices and that differences in prices are partially driven by differentiation in retailer service. A decomposition of the price differential reveals that there may indeed be a competition effect. --electronic markets,efficiency,virtual location,pricing

Identifying the unique characteristics of independent fashion retailers in Scotland by utilising Porter’s generic competitive strategy model and the marketing mix

Independent retailers in the fashion sector make a substantial contribution to the UK economy at the time of significant change on the high street due to financial pressures and the growth of online trade. They provide an element of creativity and innovation to a homogenous retail landscape. The independent fashion retailer creates a destination and individual identity by presenting a unique offering and differentiated experience. Whilst independent retailers are important to the future of our high street, research is limited, particularly in the area of fashion independents. Therefore this research examines and identifies the unique characteristics of independent fashion retailers within Scotland. The research adopts a case study approach, qualitative methods of data collection in order to fulfil the aim and objectives of the study. Porter’s Generic Competitive Strategies and the marketing mix were utilised as a means of drawing out the individual aspects and unique characteristics of the independent fashion retailer.Los minoristas independientes en el sector de la moda hacen una contribución sustancial a la economía del Reino Unido en el momento de un cambio significativo debido a las presiones financieras y el crecimiento del comercio en línea. Proporcionan un elemento de creatividad e innovación a un paisaje minorista homogéneo. El distribuidor independiente de moda crea un destino y una identidad individual al presentar una oferta única y una experiencia diferenciada. Mientras que los minoristas independientes son importantes para el futuro, la investigación es limitada, sobre todo en el área de empresas independientes de la moda. Por lo tanto, esta investigación examina e identifica las características únicas de los minoristas independientes de moda en Escocia. La investigación adopta un enfoque de estudio de caso, métodos cualitativos de recolección de datos con el fin de cumplir con los objetivos del estudio. Las Estrategias Competitivas Generales de Porter y la mezcla de mercadeo se utilizaron como un medio de extraer los aspectos individuales y las características únicas del minorista de moda independiente

Reputation and Certification in Online Shops

We investigate the impact of self-organized reputation versus certification by an independent institution on demand for online shops. Using data from a large Austrian price comparison site, we show that quality seals issued by a credible and independent institution increase demand more than feedback-based reputation. This result is important for markets where the market-maker must deal with issues of asymmetric information concerning the quality of goods and services in the market.Online markets, search engines, signaling, certification, reputation

Shopbots, Powershopping, Powersales: New Forms of Intermediation in E-Commerce - An Overview -

With the advent and proliferation of the Internet many aspects of business and market activities are changing. New forms of intermediation also called cybermediaries are becoming increasingly important as a coordinator of interaction between buyers and sellers in the electronic market environment. Especially the overwhelming abundance of information offered by the Internet promotes the development of new intermediarie like malls, shopbots, virtual resellers etc. This paper provides a detailed overview of different new forms of cybermediation and illustrates their influence on consumer choice, firm pricing and product differentiation strategies.comparison shopping, cybermediaries, e-commerce, shopbots

Seller strategies on eBay: Does size matter?

We examine seller strategies in 1177 Internet auctions on eBay, to understand the diversity of strategies used, and their impacts. Dimensions of strategic choice include the use of a ‘Buy it Now’ option, the level of the starting price, and the use of a secret reserve price. A major focus of our analysis is on differences across sellers with different volumes of sales. The largest volume sellers (termed “retailers”) in our sample employ uniform selling strategies, but lower volume sellers exhibit a wide variety of strategic choices. While some components of sellers’ strategies appear important in raising seller revenue, including starting the auction with a ‘Buy it Now’ offer, the overall impact of seller strategy choices on the outcome appears to be quite small. We interpret this as evidence for the competitiveness of the online auction market for frequently traded items with conventional retail alternatives. An exception is provided by the use of a secret reserve price, which raises the winning bid conditional on a sale, but reduces the probability of a sale. Depending on sellers’ risk aversion and impatience, this may also be an efficient outcome

Acquisitions: Walmart vs Amazon

The retail industry is in the process of undergoing major change. Historically big box brick and mortar strategies have dominated, but this is changing in the age of impatience and instant gratification. As consumers want items more conveniently, online retail has taken hold with no semblance of anticipated decline. At the forefront of this transformation are two industry giants: Walmart and Amazon. Walmart finds itself on the side of brick and mortar with 11,718 physical retail locations worldwide. Amazon is dominating the online retail space with control of a staggering 44% of all US e-commerce sales in 2017. These equally powerful yet opposing forces seem to have come to a realization. Walmart has determined that a purely brick and mortar strategy will not suffice and there must be a major focus on expanding e-commerce. Amazon has come to the realization that a pure e-commerce play will not be as effective as a mixed approach and is working into the brick and mortar space. As each giant finds itself on opposite sides of the spectrum they seek to reach the ideal equilibrium between physical and online retail, and acquisitions have been the remedy of choice

Seller strategies on eBay: Does size matter?

We examine seller strategies in 1177 Internet auctions on eBay, to understand the diversity of strategies used, and their impacts. Dimensions of strategic choice include the use of a ‘Buy it Now’ option, the level of the starting price, and the use of a secret reserve price. A major focus of our analysis is on differences across sellers with different volumes of sales. The largest volume sellers (termed “retailers”) in our sample employ uniform selling strategies, but lower volume sellers exhibit a wide variety of strategic choices. While some components of sellers’ strategies appear important in raising seller revenue, including starting the auction with a ‘Buy it Now’ offer, the overall impact of seller strategy choices on the outcome appears to be quite small. We interpret this as evidence for the competitiveness of the online auction market for frequently traded items with conventional retail alternatives. An exception is provided by the use of a secret reserve price, which raises the winning bid conditional on a sale, but reduces the probability of a sale. Depending on sellers’ risk aversion and impatience, this may also be an efficient outcome.Internet auctions; posted prices; market institutions

Pandoras Box: Does Electronic Commerce Increase the Optimal Amount of Fraud?

Close business relationships are important in the food industry. However, the introduction of electronic commerce has emerged as a fundamental challenge to these relationships. In particular, retailers who start procuring private label food products in electronic auctions risk the termination of the relationships with their suppliers thus losing the value derived from these relationships. Instead, they move their focal interest towards single, unrelated transactions. The authors argue that this development increases the optimal amount of fraud in electronic commerce. In this context, they analyze the occurrence of opportunism.Relationships, information asymmetry, auctions, opportunism, economics of information, Marketing,