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Response to Comments: /Econ_Articles/newecon.htm

from Mike Gilbert (jng@sli.com)
I don't think that services like BargainFinder will turn out to be as destructive to the dynamic storefront story (including collaborative filtering) as you fear. I'll use my experience with Amazon.com to illustrate the point.

I agree with you that a dynamic storefront is a valuable service; it attracts me back to Amazon.com. I also agree that if Amazon.com started charging for their recommendations I would think twice (or maybe three times) before paying.

However, Amazon.com cleverly updates their database about me *only if I buy from their Web site*. So when Amazon.com recommends a truly fascinating book to me, I want to purchase it at Amazon.com so the next recommendation will be even better. I'm vaguely aware that there are shop-bots available, but I find myself thinking that I should go ahead and buy from Amazon because (1) the price difference will be small compared to the hassle of getting competitive quotes for my book (especially since Amazon's super-easy one-click ordering involves no hassle at all), and (2) I'll screw up the dynamic storefront if I buy elsewhere.

I regard shop-bots more as a guarantee that Amazon.com won't rip me off too badly, or as a way to validate the true market value of my potential purchase if Amazon.com's price seems outrageous.

I'm sure the super-frugal buyers out there will be using shop-bots for every purchase. But to me it's like switching long distance companies -- the fact that some frugal consumers switch long distance service at the drop of a hat means that the market is competitive, so I am (rightly or wrongly) confident that I can just sign up for a decent plan with a reputable company, and get a good deal without having to switch all the time. I'm sure I'm not getting the absolute best possible deal, but it's close enough - life is too short for me and probably lots of other consumers to put the time and effort required into long distance offers or shop-bot listings to save those last few cents.

Thank you for an interesting and informative article.

(posted 8751 days ago)

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