Electronic Commerce has been growing amazingly in the past 5 years. With this growth, there are many discussions about Electronic commerce as a friction-free or perfect competitive commerce since it has lots of benefits such as a reduction of transaction costs, an effectiveness between buys and sellers and a relaxation of spatiotemporal constraints. Especially as for a homogeneous product, several studies insist that Internet dilutes a location effect and reduce menu costs, so a price competition has been raised as a result.
In this context, empirical analysis from several recent studies has shown. Most of them insist an effectiveness of Electronic commerce by the comparison between online and offline prices, and products for those studies are focused on ones which don`t have much price deviation between products such as CD, book, and videotapes. In addition, these price data are usually collected once a week for the limitation of ability in collection.
However, the online prices fluctuate real-time so that I used "Price Monitoring System" which is developed from Intelligent Information System and Electronic Commerce Laboratory at Korea Advanced Institute of Science and Technology (KAIST) for automatic collection tools. With this help, daily product data of various monitors has been collected for 37 days in American and Korean online retailers. I chose a monitor for empirical study because it is one of most popular product in Electronic commerce and varies in prices by technology and size. Also, this study has been practiced offline as well as online, so includes 3 offline store prices in the United States and Korea respectively.
Analysis techniques used for statistical test are Independent sample t-test, Correlation analysis and Paired sample t-test.
The major findings of this study are as follows:
First, most online price is cheaper than offline one as for monitor product in the United States and Korea. However, this result is not applied to CRT 17" below product, which is the cheapest product group. In addition, as for frequency and degree in price change, the cheaper group doesn`t have much difference between online and offline, but the other group has different result in American online retailer. In Korea, both online and offline retailer doesn`t have any different behavior in price change.
Second, among online retailers, Pure click which operates only online is more expensive than Brick-and-Click which is based in offline originally in America. However, the opposite result is derived in Korea. These results are still maintained when the shipping cost is added. In terms of frequency of price change, those two groups don`t have a significant difference in the US, comparing that Korean Pure click shows more changes than Brick-and-Click. Also, Pure click is higher in degree of price change in the US and Korea both.
Third, the monitors used in this study were classified as four groups by technology and size. In American online retailer, CRT 17" below group has shown more often price changes and changed in small degree. In Korea, any difference has been noticed between four groups.
Fourth, it is observed that some American online retailers often changed their price in weekends and these changes have a high correlation between them. Korean sites don`t change prices periodically.
Limitations of this study and suggestions for further researches were discussed.
