Competition online and the preference ordering of offers

The Internet is radically changing the way consumers buy products. The main contention about the Internet and consumer behaviour is that it facilitates the search for information and that consumers also have a wider range of retailers to choose from. In this paper, we question this proposition and investigate how consumers choose between online retailers. Incomplete information about some stores, especially those new stores that have yet to build a reputation, may limit the choice of online offers that consumers consider. If this is the case, an important implication for competition online is that some stores, whose offers are not considered because of incomplete information, may not be able to compete against those branded stores which are known to the consumer. The consumer has relatively more information on known than on unknown online stores. Importantly, we show that it is the type of information that is missing that affects the choice of online offers. More specifically, it is the information that relates to the store rather than information that relates to the product or the price that may influence consumers' preferences for online offers. By proposing a new conceptualisation of choice of online offers, we explore how consumer preferences for some types of online deals can influence the level of competition online