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The two research questions were fundamentally different. The distinct research question raised by Tang
and Xing (2000) on the different pricing behavior patterns of the two different types of online payment
sellers (both solely using the Internet channel) was historically due to the data collection problem. Based
then in Singapore, they could only collect data purely on Internet, and accidentally, this exploratory
attempt has yielded some surprisingly interesting results. In fact, this research methodology started
from a much earlier study by Tang and Ho (2003) who collected data by three online branches of
multichannel retailers versus two pure play e-tailers on 50 titles of books, from February 6 to March 6,
1999 once every two days (thus 3750 price observations).
A puzzling price difference pattern similar to was discovered (average price of US$16.07 of online
branches of multichannel retailers versus US$17.22 of pure play e-tailers, or 73% versus 78% in terms of
percentage prices), thus they continued to collect price data by five online branches of multichannel
retailers versus five pure play e-tailers from April 29 to June 3, 2000 (once every week following the
convention in Brynjolffson and Smith 2000), with a total of 2,900 price observations during this second
stage (updating only the bestseller titles while keeping the random titles unchanged). The price
difference patterns that were discovered in the first stage remained robust in the second stage, in fact,
amplified: average price of US$15.06 versus US$16.98, or 66.62% versus 75.1% in terms of percentage
prices and price dispersions around 20-30% less among the pure play e-tailers than the price dispersions
among the online branches of multichannel retailers, in every sense from dollar price ranges or standard
deviations to percentage price ranges or standard deviations.
A series of completed studies and ongoing studies have followed and continue to follow this
methodology proposed by since then, to explore various categories of products (e.g., books, CDs, DVDs,
pre-recorded videotapes, electronics, toys) and across different geographic regions(e.g. the United
States, South Korea, the mainland of China, Australia). We want to highlight that the studies to be
summarized in the following have been using exactly matched products, and over a relatively long time
span whenever possible. These goals have been achieved by labor-intensive work: All the data of price
observations have been collected by human research personnel (not through automatic software agents
or from Internet shop bots), therefore only the commonly available products on the Websites and the
actual selling prices have been recorded. (Only for extremely occasional out-of-stock items by one or
two of the online sellers at one time point,
The list price was used as a proxy.)Features of products have been carefully matched to ensure that the
product prices to be compared come from the exactly matched items, not from another version or
branded variants, etc. compared the pricing behavior of six top pure play e-tailers versus six online
payment gateway branches of multichannel retailers in the CD market of the United States, using a data
set collected (once every four days) from June 7 to July 9, 2000 for 34 titles (half bestsellers and half
random titles), with a total of 3,774 price observations. They found that the pure play e-tailers charged
on average around 2.4%-2.7% lower than the online branches of traditional retailers, but the price
dispersion among the pure play e-taliers are about 4% higher than among the online branches of
multichannel retailers.