Strategizing for E-Commerce: Science and Art in Communication and Pricing

The rapid change that digital marketing is undergoing greatly affects how businesses adapt their marketing strategies. Firms can leverage digital commerce to their advantage by innovative pricing, assortment and advertising, for example. In my dissertation, I explore three marketing innovations that have attracted attention of both industry and academia. In the first essay, I explore the role of an innovative affiliate site — online cash back websites on retail pricing. I analyze a model of consumer search to understand how online cash back affects the price competition between two symmetric retailers. I find that such affliate sites can reduce search, thus making retailers more sticky and thereby increase their profits in equilibrium. In the second essay, I examine the potential impact of a platform’s assortment strategy. Specifically, when should a platform extend its assortment to include a product carried by third party merchant? And what is its strategic advantage of doing that? I ana-lyze the competition between the platform and the third party merchant and show that it is a case of co-opetition. This is because of the effect of the strategy on consumers. Specifically, the assortment strategy affects consumer evaluation of quality and in turn, the market size. I show that under some conditions, the merchant benefits from the platform competing and selling a product. In the third essay, I focus on isolating the effect of viewability of banner advertisements on their effectiveness. Doing so will allow advertisers to learn whether the challenge is to find media that enhance a consumer’s likelihood of viewing or to focus on making an advertisement more meaningful conditioned on viewing. I analyze panel data specifically collected with this question in mind. I also propose an alternative measure of viewability to the one currently used in industry. I then investigate whether this alternative measure can be more useful in practice.