Research Details

Abstract

In this paper, we investigate how consumer online search and spending among eCommerce retailers changes with an exogenous shift in demand. We motivate our empirical analyses with a stylized theoretical model of search and spending. We then test three theoretical predictions using a large dataset from Comscore that provides detailed data on online search and online consumption. We show that in aggregate search and spending are positively correlated and the function is concave. But, in peak demand periods, the slope of the aggregate search versus spending relationship becomes steeper, which shows that consumers engage in more search for the same level of spending. This same pattern of results holds for both the number of unique eCommerce sites visited and eCommerce clicks. Analyses at the individual customer level reveals that the increase in search in peak demand is due to consumers who engage in less search during non-peak demand periods. Almost 90 percent of initially low search individuals increase their search intensity in peak demand periods, but this effect monotonically withers away for higher-intensity, baseline searchers. We show there is increased concentration of spending and search in large eCommerce retailers in peak demand periods. We find that search engines may partially explain search differentials among consumers; low baseline searchers turn to these platforms relatively more during peak demand, which contributes to market concentration.

Type

Working Paper

Author(s)

Eric T. Anderson, Martim Leitao

Date Published

2023

Citations

Anderson, Eric T., and Martim Leitao. 2023. Search, Spending and Market Concentration.