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Effects of consumer online purchase costs on online and traditional retailers

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  • Ruiliang Yan
  • John Wang

Abstract

Our research provides a useful framework to help business marketers identify the effect of consumer online purchase costs on firm performances in online and traditional channel competition. A game theory model is developed to determine the optimal strategies for online and traditional retailers. We demonstrate that consumer online purchase costs always have a valuable impact on firm profits, and further show that consumer online purchase costs always have a much more valuable impact on firm profits whenever the traditional retail transaction costs and the product web-fit change. We also find that consumer online purchase costs have a greater impact on the retailer's profits in a Stackelberg competitive system than in a Bertrand competitive system. Based on our results, managerial implications are discussed and probable paths of future research are identified.

Suggested Citation

  • Ruiliang Yan & John Wang, 2009. "Effects of consumer online purchase costs on online and traditional retailers," International Journal of Business and Systems Research, Inderscience Enterprises Ltd, vol. 3(3), pages 351-371.
    • Handle: RePEc:ids:ijbsre:v:3:y:2009:i:3:p:351-371
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    Cited by:

    1. Zhang, Zhichao & Xu, Haiyan & Zhao, Yingxue & Liu, Zhi & Chen, Kebing, 2023. "Extended warranty service provision: A strategic analysis for the E-commerce platform supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 177(C).

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