The Impacts of Shopbots on Online Consumer Search

Online price comparison agents (shopbots) allow consumers toinstantaneously receive price and other information from many onlineretailers. Online consumer clickstream data from ComScore Inc.demonstrate that consumers are increasingly using shopbots to conductsearch. This phenomenon raises such questions as "how do shopbotschange consumers' search behavior?" and "do they reduceconsumers' online search?" Conventional wisdom suggests thatconsumers are expected to search less because shopbots have displayedprices and other relative information from retailers on the searchresult page(s). Surprisingly, this study demonstrates the oppositeresult. That is, consumers are actually visiting more online retailerweb sites after using shopbots. This finding suggests that aftersearching for an item through a shopbot and receiving the priceinformation, consumers will continue to look for detailed informationabout the online retailers by visiting their web sites. The empiricalfinding is explained by an analytical model, which shows that on the onehand shopbots reduce the marginal benefit of searching additional onlinestores; on the other hand they reduce the cost of search. Thereforewhether shopbots reduce consumer search depends on the cost of reducingper unit of risk, which is decided by a number of factors, such asmarginal search costs, price dispersion and quality differentiationamong stores, price and quality correlation, and consumers' relativepreference for service quality. The model also gives sufficient andnecessary conditions under which shopbots increase consumer surplus.