Abstract
Internet shopbots are automated tools that allow customers to easily search for prices and product characteristics from online retailers. Some market observers have predicted that shopbots will benefit consumers at the expense of retailers. In this view, shopbots will radically reduce consumer search costs and reduce retailer opportunities to differentiate their products; as a result, they will drive retailer margins toward zero. However, a review of the literature suggests that while shopbots may place pressure on retailer margins in some circumstances, retailers retain numerous opportunities to differentiate their products, leverage brand names, set strategic prices, and reduce the effectiveness of consumer search at shopbots. The article closes by identifying significant questions for future research.
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Michael D. Smith is an assistant professor of information systems and marketing at the H. John Heinz III School of Public Policy and Management and the Graduate School of Industrial Administration at Carnegie Mellon University. He received a B.S. in electrical engineering and an M.S. in telecommunications science from the University of Maryland and a Ph.D. in management science and information technology from Sloan School of Management at MIT. His research relates to the nature of structure and competition in electronic markets and addresses the efficiency of electronic markets, the uses of network effects and lock-in techniques for competitive advantage, and the measurement of consumer responses to retailer differentiation strategies. Prior to receiving his Ph.D., Dr. Smith worked extensively in the telecommunications and information systems industries, first GTE in their laboratories, telecommunications, and satellite business units and subsequently with Booz Allen and Hamilton as a member of their telecommunications client service team. While with GTE, he was awarded a patent for research for applying fuzzy logic and artificial intelligence techniques to the design and operation of telecommunications networks.
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Smith, M.D. The impact of shopbots on electronic markets. J. of the Acad. Mark. Sci. 30, 446–454 (2002). https://doi.org/10.1177/009207002236916
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DOI: https://doi.org/10.1177/009207002236916