Which Online Channel Is Right? Online Auction Channel Choice for Personal Computers in the Presence of Demand Decay

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Electronic Commerce Research and Applications


Electronic commerce has become a viable marketing channel for many companies as they take advantage of the ease of electronic markets to move merchandise quickly and inexpensively. Researchers have investigated the use of an e-commerce channel in conjunction with traditional channels, but less research has been dedicated to choosing which e-commerce channel to use. In this study, we examine the choices made by Dell, a computer manufacturer, about whether to utilize their own proprietary auction site to sell computers or to use eBay, a popular and well-established third-party auction site, to move excess merchandise. We find that Dell receives a price premium over other vendors of Dell computers, and that DellAuction.com receives a price premium over eBay.com auctions. This price premium is drastically reduced as technology ages and is made obsolete by newer technology-based products. We further find that there is little to no price premium for extremely new technology, which is consistent with a contention that the online auction demand is so high for new technology that Dell cannot realize much of a price premium making a more popular third-party channel a more viable option.


Electronic Commerce Research and Applications, Volume 10, No. 2 (March 2011), DOI: 10.1016/j.elerap.2009.06.001