Determinants of prices in an online marketplace

Abstract

Purpose

Despite the availability of side‐by‐side price comparisons, online retailers often charge very different prices for the same product. The purpose of this paper is to identify the drivers of price differences in an online retail marketplace by examining pricing information from a sample of sellers in the market.

Design/methodology/approach

An empirical, quantitative research study of Amazon Marketplace, using 498 observations of online sellers of a variety of electronics products was conducted. A regression analysis is employed to determine the drivers of these sellers' prices.

Findings

The results provide a set of factors associated with deviation from the mean price Amazon Marketplace retailers charge for a given product. The authors find that online retailers that charge higher prices post additional channels of customer service, post their return policy, have lower reputation scores, display a retail brand logo, offer more products, and are not electronic specialists.

Originality/value

The paper contributes to the theoretical understanding of the effects of information quality and governance structures on prices. This is the first study to focus on these issues in an online marketplace setting.

Citation

DiRusso, D.J., Mudambi, S.M. and Schuff, D. (2011), "Determinants of prices in an online marketplace", Journal of Product & Brand Management, Vol. 20 No. 5, pp. 420-428. https://doi.org/10.1108/10610421111157946