Online Auctions and Multichannel Retailing

Abstract

The Internet enables sellers to offer products through multiple channels simultaneously. In particular, many sellers utilize online auctions in parallel to other online and offline channels. Using an analytical model and data from eBay Motors, we study seller behavior and auction outcomes in the context of multichannel retailing. Our model shows that seller characteristics which affect the distribution and volume of offers in the non-auction channels impact the probability an auction ends in a sale, the probability an item is sold through the auction channel, and the sale price in case of a sale. The impact on the two probabilities can be negative or positive and depends on whether the seller manages the channels jointly or separately. Our empirical analysis examines how the quality of the seller’s retail location and her electronic commerce capabilities (i.e., two seller characteristics influencing demand in non-auction channels) impact the auction channel outcomes. The results confirm the joint channel management strategy considered in the analytical model.

Keywords: Online auctions, multichannel retailing, electronic commerce, channel management

JEL Classification: D44, D21, M30