Why Expect Lower Prices Online? Empirical Examination in Online and Store-Based Retailers

Abstract

This study extends prior research by examining consumer expectations regarding the lower price of products found in online shopping stores and considers the role of overhead cost in consumer decision-making. By using a laboratory experiment method, we verified the difference in the perceived overhead cost between the two types of retailers and the relationship between perceived overhead cost and internal reference pricing. This study involved 123 subjects. The findings show that consumers perceive online retailers' overhead costs as lower than store-based retailers' overhead costs and that lower perceived overhead prices cause consumers to have lower internal reference prices. This study supplements e-commerce research, can assist retailers in understanding consumers' perceptions of overhead cost and product prices, and serves as a reference for online retailers attempting to create pricing strategies.

Analysis of the Factors Impacting the Online Shopping Decision-Making Process

“…To search for a lower price represents a normal behavior for a rational consumer (Moore and Mathews, 2008;Kostyra et al, 2016). The price reference is in many cases that one given by a physical store (Lo, 2014). However, the lowest price for a product cannot guarantee the success of the online purchase process completion.…”

The influence of in‐store personnel on online store value: An analogical transfer perspective

“…By focusing on this particular topic, we aim to challenge the negative connotation associated with in‐store personnel. That is, they are often seen as a limitation of the offline “bricks” model in terms of costs (Lo, Hsieh, & Chiu, ). We will renew this perspective by demonstrating their value for the online experience.…”

Does opportunity make the thief? Abilities and moral disengagement in illegal downloading

“…Public policy and marketing should therefore consider solutions tailored to the new Internet-market norms. For instance, they might take into account the different perceptions of the cost structure of digital products, the different perceptions of price fairness, and the increasing demand for free content (Fassnacht et al, 2016;Huang, Chang & Chen 2005;Lo et al, 2014;Nunes et al;2004;Santillanes and Felder, 2015).…”