Drawing on the notion of channel capability, we develop a theoretical ramework for understanding the interactions between mobile and traditional online channels for products with different characteristics. Specifically, we identify two channel capabilities-access and search capabilities-that differentiate mobile and online channels, and two product characteristics that are directly related to the channel capabilities-time criticality and information intensity. Based on this framework, we generate a set of predictions on the differential effects of mobile channel introduction across different product categories. We test the predictions by applying a counterfactual analysis based on vector autoregression to a large panel data set from a leading e-market in Korea that covers a 28-month period and contains all of the transactions made through the online and mobile channels before and after the mobile channel introduction. Consistent with our theoretical predictions, our results suggest that the performance impact of the mobile channel depends on the two product characteristics and the resulting product-channel fit. We discuss implications for theory and multichannel strategy.
Advances in information technology and e-commerce enable firms to make personalized offers to individual consumers based on information about the consumers. However, the collection and use of private information have caused serious concerns about privacy invasion by consumers, creating a personalization–privacy tradeoff. The key approach to address privacy concerns is via the protection of privacy through the implementation of fair information practices, a set of standards governing the collection and use of personal information. In this paper, we take a game-theoretic approach to explore the motivation of firms for privacy protection and its impact on competition and social welfare in the context of product and price personalization. We find that privacy protection can work as a competition-mitigating mechanism by generating asymmetry in the consumer segments to which firms offer personalization, enhancing the profit extraction abilities of the firms. In equilibrium, both symmetric and asymmetric choices of privacy protection by the firms can result, depending on the size of the personalization scope and the investment cost of protection. Further, as consumers become more concerned about their privacy, it is more likely that all firms adopt privacy protection. In the perspective of welfare, we show that autonomous choices of privacy protection by personalizing firms can improve social welfare at the expense of consumer welfare. We further find that regulation enforcing the implementation of fair information practices can be efficient from the social welfare perspective mainly by limiting the incentives of the firms to exploit the competition-mitigation effect.