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Online Auctions and Multichannel Retailing

Author

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  • Jason Kuruzovich

    (Lally School of Management and Technology, Rensselaer Polytechnic Institute, Troy, New York 12180)

  • Hila Etzion

    (Stephen M. Ross School of Business, University of Michigan, Ann Arbor, Michigan 48109)

Abstract

The Internet enables sellers to offer products through multiple channels simultaneously. In particular, many sellers utilize online auctions in parallel to an offline channel in which they offer the item for a fixed price. Using search theory, we develop an analytical model for studying sellers’ pricing decisions and auction outcomes in the context of such multichannel retailing. Our analytical model provides a framework for studying how characteristics of the demand in an offline retail sales channel impact the seller’s optimal reserve price in the auction channel, the probability that an auction ends in a sale, the probability that an item is sold through the auction channel, and the auction expected sale price. We then utilize data from eBay Motors auctions and examine empirically how the quality of a sellers’ retail location impacts the seller’s auctions outcomes. The results of our empirical analysis match the predictions of the analytical model.

Suggested Citation

  • Jason Kuruzovich & Hila Etzion, 2018. "Online Auctions and Multichannel Retailing," Management Science, INFORMS, vol. 64(6), pages 2734-2753, June.
    • Handle: RePEc:inm:ormnsc:v:64:y:2018:i:6:p:2734-2753
    DOI: 10.287/mnsc.2017.2732
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    References listed on IDEAS

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