Risk profile and consumer shopping behavior in electronic and traditional channels

  • Authors:

  • Alok Gupta;Bo-chiuan Su;Zhiping Walter

  • Affiliations:

  • Department of Information and Decision Sciences, Carlson School of Management, University of Minnesota, 321-19th Avenue South, Minneapolis, MN;School of Management, National Central University, Chung-Li, Taiwan;College of Business and Administration, University of Colorado at Denver, Denver, CO

  • Venue:
  • Decision Support Systems
  • Year:
  • 2004

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Abstract

This paper develops an economic model that captures consumer shopping channel choices based on shopping channel characteristics and consumer risk profiles--risk-neutral or risk-averse. Analyses of results show that after making purchases through one channel, electronic or traditional, risk-averse consumers tend to be more loyal customers than risk-neutral consumers. Further, the two types of consumers may exhibit split channel behavior--risk-neutral consumers prefer one channel and risk-averse consumers prefer the other. However, risk-neutral consumers are not always more likely to prefer electronic channel than risk-averse consumers. Implications for retailer pricing strategies are discussed.