Service beats price in Web shopping: study

The Internet isn't necessarily the great price equaliser it was thought to be, according to a recent study.

While search tools on the Web make it easier for shoppers to compare prices, online costs fluctuate even more than they do in the bricks-and-mortar world, said Erik Brynjolfsson, associate professor at MIT's Sloan School of Management and codirector of the Centre for eBusiness@MIT in Cambridge, Massachusetts.

Customers on the Web are still willing to pay more for high-quality service and innovation, he said at the eBusiness Conference and Expo in the US last week.

"It's not the case that the Internet always destroys existing business practices," he said.

Brynjolfsson shared the results of a study he led at MIT that analysed purchases made through online price intermediaries, also known as shop bots.

These sites search the Web for specific products, then give consumers lists of sellers and their prices.

Only 47 per cent of consumers surveyed said they bought from the lowest-price seller. In fact, Brynjolfsson said, price was the least important factor.

Customers most often choose sites they have previously visited, said Brynjolfsson. The next most important factor was advertising and name recognition, followed by shipping time and price.

The key, he said, is for companies to take their successful traditional business practices, determine which can be reshaped for the Internet and devise an evolving business plan that responds to changes in the market as they occur, such as the growing demand for wireless e-commerce.

Richard Owen, CEO of California-based AvantGo, said the Web hasn't changed the rules of business - it has just created "a window" on companies' services.

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