Shopping cost and brand exploration in online grocery

This paper studies differences in consumers' grocery shopping behaviorwhen they shop online and in a brick-and-mortar store. To do so, Iassemble a new scanner dataset that tracks customers' grocery purchasesin-store and on the Internet. This allows comparison in behavior of thesame households, shopping in the same chain, for identical items and foridentical prices, eliminating many possible confounding factors. Idocument that brand exploration - the purchase of a brand not tried inthe past- is systematically more prevalent in-store than online. Ipropose three possible explana- tions for this finding: (i) shocks tothe instantaneous utility of time correlated with the decision to shoponline (ii) possibility to reduce shopping cost; and (iii) difficulty inassessing quality of unknown items while shopping online. I develop amodel of consumer behavior that allows me to quantify each effect. Ifind that all of them contribute to hamper trial of new brands online.The counterfactual shows that altering the design of the website toremove potential obstacles to new trials increases brand exploration by23%. More generally, in contrast to the conventional wisdom of theInternet reducing entry barriers, my work points to features of theonline environment that in certain contexts actually could make entry ofnew brands more diffcult.