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World Online sales could reduce prices, but also limit choices
A new American study has found that while increasing online sales could lead to a dip in prices, customers would have a limited range of products to choose from. The research led by Yunchuan "Frank" Liu, a business professor at the University of Illinois will be published in Marketing Science. Liu said: "We should cautiously celebrate the price benefits of buying through the Internet because there's a tradeoff that some consumers might not like. "There's some good news - low price. But there's also some bad news - less choice." The game-theory study found that selling through retailers involves longer product lines, which could shrivel as sales over the Internet surge. While manufacturers prefer longer product lines at stores because they can easily overcome the expenses of involving middlemen (who have a profit motive of their own), incentives are less when a product is sold directly and thus the trimmed choice for customers. Lie added: "Over the next few decades, we could see a revolutionary change in the retail marketplace, with less variety in certain product areas, from cosmetics to computer equipment to cars...So consumers may be less likely to find products that most fit their needs." Speaking about the surging trend of Internet sales Liu said: "The status quo is encouraging direct sales, largely because of the tax consequences. "But that policy has shortcomings because it could lead to less variety, so policy makers should at least consider the potential negative effects." However, Liu believes a complete product migration from shops to the Internet is not coming soon. He said: "As things stand, though, the percentage of direct sales ill keep increasing, "How much depends on the product category. It may be lower in clothes, but higher for cars or computer software. It's already igh for products like books, CDs and tickets. If the trend continues, people may end up longing for the good old days, when hey had more choices." (ANI)
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