Abstract

participants at the Marketing Sciences Institute’s “Marketing to and Serving Customers Through the Internet ” Conference (December 2001) for valuable comments on this paper. Christopher Muenchhoff generously provided data regarding customer behavior at Dealtime.com and providing invaluable insight into the shopbot market. The Carnegie Bosch Institute and the Berkman Foundation provided generous financial support. The Impact of Shopbots on Electronic Markets Internet shopbots are automated tools that allow customers to easily search for prices and product characteristics from online retailers. Some market observers have predicted that shopbots will benefit consumers at the expense of retailers. In this view, shopbots will radically reduce consumer search costs, reduce retailer opportunities to differentiate their products, and as a result will drive retailer margins toward zero. However, a review of the literature suggests that, while shopbots may place pressure on retailer margins in some circumstances, retailers retain numerous opportunities to differentiate their products, leverage brand names, set strategic prices, and reduce the effectiveness of consumer

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