The Determinants of Price Dispersion in Cosmetic E-Commerce in China

Abstract

There are large numbers of potential customers of cosmetic e-commerce in China. From Jan to Aug in 2009, about 61% of Internet users have browsed shopping websites and about 18% of users have purchased a product online. In addition, more than 30 million which is about 8.3% of the total Netizen are cosmetic users. But there is a large price gap among the e-tailors. It might because of brand, product and e-tailor’s characteristics. This thesis uses the HLM to test how the online cosmetic price is determined by brand, product and e-tailor’s characteristics. It includes price data for 44 different product items from the 13 active Guangdong e-tailor web sites with different brands, product and e-tailor characteristics. The data consist of 269 observations collected during November, 2009. In order to capture the three-step process consumer use when selecting which e-tailor to buy from, it uses the HLM model.