Demand Effects of the Internet-of-Things Sales Channel: Evidence from Automating the Purchase Process

Information Systems Research (Forthcoming)

76 Pages Posted: 20 Dec 2017 Last revised: 2 Jul 2020

See all articles by Panagiotis Adamopoulos

Panagiotis Adamopoulos

Emory University - Information Systems and Operations Management

Vilma Todri

Emory University - Goizueta Business School

Anindya Ghose

New York University (NYU) - Leonard N. Stern School of Business

Date Written: August 18, 2017

Abstract

The “Internet of Things” (IoT) is rapidly becoming one of the most popular emerging technologies in business and society. One of the major verticals that has recently begun to effectively utilize IoT technologies is the retail industry. Given the unprecedented opportunities IoT generates for brands and retailers, it is important to glean timely insights regarding the business value of IoT and understand whether the introduction of an IoT technology as an alternative purchase channel for consumers affects the sales of physical products. In this paper, using empirical data from a multi-national online retailer who adopted an IoT technology that largely automates the consumers’ purchases and utilizing a quasi-experimental framework, we study the effect of the introduction of IoT on product sales. Our analyses reveal a statistically and economically significant increase in sales as the result of adopting an IoT technology and demonstrate the business value of the IoT channel for retailers and brands. Besides, we conduct additional analyses of the IoT effect to also delve into the effect heterogeneity and empirically validate the underlying mechanism by examining the impact of IoT for products in different price ranges, levels of substitutability, and different product categories (e.g., search versus experience goods and hedonic versus utilitarian), drawing on mental accounting and automaticity theory. For instance, our analyses reveal that less expensive and more differentiated products as well as experience and utilitarian goods can accrue higher benefits leveraging more effectively novel IoT technologies. We validate the robustness of our findings using an extensive set of robustness checks and falsification tests. This is the first paper to study the impact of an IoT technology on product sales, drawing important theoretical and managerial implications and seeding new future research directions for devices and technologies largely automating the purchase process.

Keywords: Internet of Things, Electronic Commerce, Channels, Sales Growth, Retailing, Econometrics

JEL Classification: M15

Suggested Citation

Adamopoulos, Panagiotis and Todri, Vilma and Ghose, Anindya, Demand Effects of the Internet-of-Things Sales Channel: Evidence from Automating the Purchase Process (August 18, 2017). Information Systems Research (Forthcoming), Available at SSRN: https://ssrn.com/abstract=3089195

Panagiotis Adamopoulos

Emory University - Information Systems and Operations Management ( email )

1300 Clifton Road
Atlanta, GA 30322
United States

Vilma Todri (Contact Author)

Emory University - Goizueta Business School ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States

Anindya Ghose

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

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