Demand Effects of the Internet-of-Things Sales Channel.

The "Internet of Things" (IoT) is rapidly becoming one of the most popular emerging technologies in business and society. One of the major verticals that has recently begun to effectively utilize IoT technologies is the retail industry. Given the unpreceded opportunities IoT generates for brands and retailers, it is important to glean timely insights regarding the demand effects of IoT and understand whether the adoption of an IoT technology as an alternative purchase channel for consumers affects the sales of physical products. In this paper, using empirical data from an online retailer who adopted an IoT technology that largely automates the consumers' purchases and utilizing a quasi-experimental framework, we study the effect of the adoption of the IoT channel on product sales. Our analyses reveal a statistically and economically significant increase in sales as the result of adopting an IoT technology and demonstrate the business value of IoT for retailers and brands. Besides, we delve into the effect heterogeneity by examining the impact of IoT for products in different price ranges and different product categories (i.e., search versus experience goods). Our analyses reveal that less expensive products as well as experience goods, rather than search goods, can accrue higher benefits leveraging more effectively novel IoT technologies. We validate the robustness of our findings using an extensive set of robustness checks and falsification tests. This is the first paper to study the impact of an IoT technology on product sales, drawing important managerial implications and future research directions. [ABSTRACT FROM AUTHOR]