Consumer Selection of E-Commerce Websites in a B2C Environment: A Discrete Decision Choice Model

Despite the suggestions of friction-free information availability, considerable price dispersions for the same product are not uncommon across online retailers in the business-to-consumer (B2C) segment. Online customers do not necessarily always buy from the site with the lowest price, suggesting that other forces are at work. This paper presents and empirically examines a model that proposes that Web site value in terms of (perceived) Web site quality as well as awareness of the site and consumer differences (on price sensitivity) are key variables in explaining online consumer behavior in their choice of Web site despite the existence of price dispersions. Two hundred ninety-three students participated in a series of controlled laboratory experiments making use of two different types of products in terms of complexity and expensiveness (Canon digital camera Powershot S400 and digital versatile disc full-screen edition of Star Wars: Episodes I and II) that required them to interact with three different real-world Web sites offering each of these two branded products and make their decision on which of the three Web sites they will chose to buy the product from. The prices varied across the Web sites, as did the quality of the sites on various dimensions and site awareness of the participants. Conditional logit models of discrete choice for each of the two product types indicate differential influences of Web site quality dimensions and price sensitivity. A number of interesting implications emerge, and pointers to further extensions of the research theme are discussed.