Comparing Product Policy’s Effectiveness for E-Commerce Companies: An Abstract

E-commerce companies experience increasing challenges related to the global nature of markets and general economic turbulence. Under such conditions, it is relevant to understand the factors of non-price product competition on the Internet. In particular, e-commerce product policies may considerably influence e-commerce companies’ performance levels. Although existing research has highlighted the landscape and effectiveness of online marketing structures, studies have overlooked a more detailed understanding of the effectiveness of product policies employed by e-commerce companies. This study looks at the effectiveness of product policies generally employed by e-commerce companies. We develop and test a model that captures dimensions affecting the choice of paid versus free e-commerce products, assessing the effectiveness of e-commerce companies’ product policies. The model entails the following constructs: opinions of critics, opinions of users, level of competition, advertising, brand, and paid/free product. For the empirical analysis, a data set was withdrawn from an online platform containing information about the downloads from global firms offering software products. The sample entails software products from firms associated with brands with large name recognition and market cap, such as Microsoft, Adobe, Apple, Macromedia, Blizzard Entertainment and Capcom, as well as little-known firms, with small market cap, such as ES-Computing, Bohemian, and Felt Tip. There are 540 observations related to 18 different types of software (e.g., audio, browsers, desktop enhancement, developer tools, digital photo, education, entertainment). Findings supported the general idea that consumers prefer free products and consider various existing alternatives for the solution of their specific needs. Among the factors influencing software download, the largest positive associations with downloads of both free and paid software were reflected in the variables advertising and branding. Users and critics’ reviews and assessments also produced a significant association with the rate of software download for both free and paid software. The study allows establishing implications for managers and drawing avenues for future research.