The Role of Online Buying Experience as a Competitive Advantage: Evidence from Third-Party Ratings for E-Commerce Firms

Posted: 26 May 2003

See all articles by Shivaram Rajgopal

Shivaram Rajgopal

Columbia Business School

Mohan Venkatachalam

Duke University - Fuqua School of Business

Suresh Kotha

Foster School of Business

Abstract

Claims have often been made that the quality of online buying experience - web site ease of use, selection of goods offered, quality of customer service, the effectiveness of virtual community building, and site personalization - are crucial to the success of e-commerce firms. We posit that website usability and product selection can be competed away via imitation. On the other hand, we hypothesize that factors such as customer confidence and relationship services including community building and site personalization represent a sustainable competitive advantage. To test these hypotheses, we examine the relation between third-party ratings of online buying experience provided by Gomez Advisors and firms' Tobin's q for a sample of 46 e-commerce firms during the period 4Q: 1999 to 3Q: 2000. We find that the association between online buying experience scores and Tobin's q is positive but decreasing in the extent of competition. Our results related to the detailed aspects of online buying experience are largely consistent with our posited hypotheses.

Suggested Citation

Rajgopal, Shivaram and Venkatachalam, Mohan and Kotha, Suresh, The Role of Online Buying Experience as a Competitive Advantage: Evidence from Third-Party Ratings for E-Commerce Firms. Available at SSRN: https://ssrn.com/abstract=390482

Shivaram Rajgopal (Contact Author)

Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

Mohan Venkatachalam

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
919-660-7859 (Phone)
919-660-7971 (Fax)

Suresh Kotha

Foster School of Business ( email )

University of Washington
Seattle, WA
United States
206-543-4466 (Phone)
206-683-9392 (Fax)

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