Date of Original Version
This is an unedited manuscript that has been accepted for publication. A definitive version is available from INFORMS at http://dx.doi.org/10.1287/mnsc.2013.1731
Abstract or Description
How will consumption patterns change when consumers move from brick-and-mortar to Internet markets? If consumers purchase more niche products online than at brick-and- mortar stores, does this have something to do with the channel or is this solely due to selection effects: the types of consumers who decide to use the Internet channel or the types of products that consumers select to purchase online?
We address these questions using customer-level rental panel data obtained from a national video chain as it was closing many of its local stores. This allows us to observe how behavior changes when consumers are forced to move from brick-and-mortar to online consumption.
Our results suggest that when consumers move from brick-and-mortar to online channels they are significantly more likely to rent “niche” titles relative to “blockbusters.” This suggests that a significant amount of niche product consumption online is due to the nature of the channel, not just due to selection effects.
Management Science, 59, 11, 2604-2634.