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Product Choice Strategy for Online Retailers

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  • Ruiliang Yan

    (Virginia State University, USA)

  • Amit Bhatnagar

    (University of Wisconsin-Milwaukee, USA)

Abstract

An important strategic issue for managers planning to set up online stores is the choice of product categories to retail. While the “right” product category would depend on a number of factors, here we focus on the following two factors: compatibility of the product with the online channel, and the competition between the traditional brick and mortar channel and the online channel. This is to acknowledge two well-known facts: Certain products are more suitable for selling through the Web than through other channels; and an online retailer competes with not only other online retailers, but also traditional brick and mortar retailers. To determine the right product category, we develop a game theoretical model that allows for competition between the retailers. We study both Stackelberg and Bertrand competition models, as these two models capture the essence of different types of competition on the Web. Based on our results, we propose that, under all types of competition, the optimal product is one that is only moderately compatible with the Internet.

Suggested Citation

  • Ruiliang Yan & Amit Bhatnagar, 2008. "Product Choice Strategy for Online Retailers," International Journal of E-Business Research (IJEBR), IGI Global, vol. 4(1), pages 22-39, January.
    • Handle: RePEc:igg:jebr00:v:4:y:2008:i:1:p:22-39
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    File URL: http://services.igi-global.com/resolvedoi/resolve.aspx?doi=10.4018/jebr.2008010102
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    Cited by:

    1. Pei, Zhi & Wooldridge, Barbara Ross & Swimberghe, Krist R., 2021. "Manufacturer rebate and channel coordination in O2O retailing," Journal of Retailing and Consumer Services, Elsevier, vol. 58(C).
    2. Cao, Zixia & Yan, Ruiliang, 2021. "Product nutrition, innovation, advertising, and firm’s financial gains," Journal of Business Research, Elsevier, vol. 133(C), pages 13-22.

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