Bart Bronnenberg will present the paper "Gains from Convenience and the Value of E-commerce".
Abstract:
Why do consumers value shopping online? We measure the value of e-commerce, allowing for a role of convenience in the form of avoiding travel-cost. We complement individual-level panel data from the retail apparel industry in the Netherlands with precise location data to show that consumers are highly sensitive to travel distances in their store choice. We next estimate the distribution of implied transportation costs across consumers. These transportation costs imply that the addition of e-commerce creates value to the consumers: during 2016-2018, the total value from e-commerce to consumers is equivalent to having a 25% price reduction. About two-thirds of this value comes from convenience in two ways: directly from savings of transportation costs to the same set of chains, or indirectly from lower prices due to the intensified competition. About one-third of the gains comes from the addition of new online retailers and plausibly from more variety.