Informational Determinants of Customer Acquisition and eTailer Revenue

Firms have leveraged the Internet in innumerable ways to derive business value from this technology. However, one class of firm that is distinctively dependent on this platform is the online retailer or eTailer. One aspect of this distinctiveness is that eTailers depend on their Web portals to attract customers, engage them in purchase activities, and execute transactions connected with a purchase ultimately leading to revenue generation. In this study, we wish to examine the informational determinants of this customer interaction and their relationship to eTailer revenue. We propose a two-phase path model of customer acquisition leading to revenue generation. Informational determinants are included in the path structure. The model is empirically tested using a dataset of 500 eTailers. The results indicate that the model is able to explain a large proportion of the variability in financial performance of these eTailers. We find that the type of information made available on the eTailer’s website, along with transactional capabilities and customizability, significantly correlate with customer acquisition. Analytical capability correlated significantly with the transition to phase two – which we refer to as conversion. These findings have implications for information technology governance within firms as they manage their IT investments to deliver maximum value.