The Impacts of Shopbots on Online Consumer Search

Online price comparison agents (shopbots) allow consumers to instantaneously receive price and other information from many online retailers. Contrary to conventional wisdom, our empirical study of the book and computer hardware categories reveals that consumers are visiting more online retailer web sites after using shopbots. This finding suggests that after searching for an item through a shopbot and receiving the price information, consumers will continue to look for other information by visiting the online retailers´ web sites. We use an analytical model to show that on the one hand shopbots reduce the marginal benefit of searching additional online stores; on the other hand they reduce the cost of search. Therefore whether shopbots reduce consumer search depends on the cost of reducing per unit of risk, which is decided by a number of factors, such as marginal search costs, price dispersion and quality differentiation among stores, price and quality correlation, and consumers´ relative preference for service quality.