Managing electronic commerce retail transaction costs for customer value

  • Authors:

  • Alina M. Chircu;Vijay Mahajan

  • Affiliations:

  • Information, Risk and Operations Management Department, McCombs Graduate School of Business, University of Texas at Austin;Department of Marketing, McCombs Graduate School of Business, University of Texas at Austin

  • Venue:
  • Decision Support Systems
  • Year:
  • 2006

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Abstract

We investigate how electronic commerce (EC) retailers, or e-tailers, manage transaction costs and generate customer value. We integrate information systems and marketing theories in a framework for transaction cost management based on four contingency factors: channel, customer, product and shopping occasion characteristics. We build the framework using archival case studies and validate it with customer interviews. We show that trying to minimize the entire cost of retail transactions is either unsustainable or devalues the customer shopping experience. Instead, looking at transactions as a series of atomic steps enables e-tailers to better understand and manage what really matters for consumers.