The Demand for One-to-One Customization on the Internet: Evidence from the Retail PC Hardware Industry

David Muir, Business Economics and Public Policy, The Wharton School

Abstract: We study the demand for one-to-one customization in the computer hardware industry. Using household browsing, transaction, and demographic data from the comScore database, we uncover evidence that geographically isolated households that are technologically savvy are more likely to buy and customize computer hardware online. These households intensely search for information, including information from technology websites, implying they nd better matches to their preferences through one-to-one customization. Hence, we show evidence the Internet acts as a substitute to brick-and-mortar stores for households in relative isolation that have a nontrivial level of technological sophistication. Firms with capabilities to offer one-to-one customization should therefore focus on households based on their agglomeration: conditional on being technologically savvy, isolated households are more likely to customize the default while agglomerated households are more likely to choose the default itself.

Read the full working paper here (PDF).