Do Online Firms Individualize Search Results? An Empirical Analysis of Individualization on Amazon

Abstract

Online markets offer sellers access to buyers’ information and, thus, the potential to alter prices and products accordingly. In light of this, we undertook an empirical analysis to test for individualization on Amazon.com. We collect data from individuals recruited to shop for household items. Our results indicate evidence of individualization of search results and net prices (via coupons). We found, contrary to what was expected, that demographic, geolocation, and account information play an insignificant role in individualization of search results. Thus, we conclude that individualization is based on more dynamic information, e.g., online browsing behavior. This highlights the fact that sellers’ need for (and use of) buyer information goes beyond the simple information accessible from the buyers’ accounts to a more rigorous monitoring of buyers’ online behavior.

Keywords

• individualization
• price discrimination
• Amazon