On optimal reservation prices in auctions
Management Science
Insights and analyses of online auctions
Communications of the ACM
Consumer trust in an Internet store
Information Technology and Management
Reengineering the Dutch Flower Auctions: a Framework for Analyzing Exchange Organizations
Information Systems Research
Frictionless Commerce? A Comparison of Internet and Conventional Retailers
Management Science
Dynamic Conversion Behavior at E-Commerce Sites
Management Science
Personalization versus Privacy: An Empirical Examination of the Online Consumer's Dilemma
Information Technology and Management
Journal of Management Information Systems - Special section: Strategic and competitive information systems
Promotion Effect on Endogenous Consumption
Marketing Science
Analyzing the Simultaneous Use of Auctions and Posted Prices for Online Selling
Manufacturing & Service Operations Management
Dynamic Mechanism Design for Online Commerce
Operations Research
Strategic Investment in Switching Cost: An Integrated Customer Acquisition and Retention Perspective
International Journal of Electronic Commerce
International Journal of Electronic Commerce
Customer Efficiency, Channel Usage, and Firm Performance in Retail Banking
Manufacturing & Service Operations Management
Marketspace or Marketplace? Online Information Search and Channel Outcomes in Auto Retailing
Information Systems Research
Are online auction markets efficient? An empirical study of market liquidity and abnormal returns
Decision Support Systems
Determinants and Outcomes of Internet Banking Adoption
Management Science
Information Systems Research
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Despite many success stories, B2B e-commerce penetration remains low. Many firms introduce electronic channels in addition to their traditional sales channels but find that buyer usage of the e-channel over time does not keep up with initial expectations. Firms must understand the underlying factors that drive channel usage and how these factors change over time and across buyers. Using panel data pertaining to the purchase histories of 683 buyers over a 43-month period, we estimate a dynamic discrete choice model in a B2B setting that (i) recognizes how price, channel inertia, and inventory change over time; (ii) allows buyers to dynamically trade off these factors when making e-channel adoption decisions; and (iii) takes into account buyer heterogeneity. We find that channel usage is both heterogeneous and dynamic across buyers. Our findings reveal the dynamic tradeoff between channel inertia and the adverse price effect, which interact in opposing directions as the e-channel grows more popular over time: price increases resulting from more bids deter buyers, whereas channel inertia built from sampling experience helps retain repeat buyers for the new channel. Second, we find that the buyers' size and diversity influence purchase decisions, and the e-channel appears more attractive to small and/or diversified buyers. Based on our analysis, we postulate that the seller's allocation decisions of products across channels, if not aligned with buyer behavior, can alienate some buyers. Based on the parameter estimates from the buyer response model, we propose an improved channel allocation that enables firms to selectively attract more buyers to the e-channel and improve revenues. Channel acceptance increases as a result of smart allocation when firms understand and account for individual buyers' channel usage behavior.