Thursday, October 28, 2010

Information trade-offs due to choice of shopping medium -- or, misadventures with plush fire trucks

Sometimes with online shopping, you do not buy what you think you are buying. Example: this fuzzy firetruck. Based on its photo on (Exhibit A), my wife and I thought it was relatively large, and excitedly bought it for our little man... only to discover that it was barely bigger than his fist (Exhibit B).

Exhibit A
Exhibit B
There is an interesting lesson here in the economics of retailing. I think it is well understood that online sales are not a perfect substitute for "brick-and-mortar" sales. But I think we are still trying to get a complete handle on what the trade-offs are. There are certain types of information that online sales make it easier for consumers to acquire, such as prices offered by various vendors and consumer reviews. But it can be harder for consumers to grasp information about product attributes such as textures and even size,  even if the product specs are provided online. Reading that something is made of satin is different from touching it; it can be hard to get a feel for the size of a doll photographed in isolation, even if the precise measurements are provided alongside a photo. It is interesting to me to try to think about:

1. How to quantify these information trade-offs, and how they affect consumer behavior and decisions vis-a-vis the medium through which transactions take place.

2. How the trade-offs may evolve as technologies evolve. Will we ever have computers that allow us to feel the texture of satin via our monitor screen?

1 comment:

  1. Actually, there was a segment in this past weekend's Marketplace Money about recent research showing that people are willing to pay more for things that they can touch/see in advance than for things purchased online. Might want to look into that study!