The importance of product representation online: empirical results and implications for electronic markets

We investigate the effects of online product representation at a large Dutch flower auction that implemented screen auctioning. In screen auctioning, flowers are not physically shown to the buyers anymore; instead, an image is presented on a screen to buyers in the auction hall. This online product representation entailed a decrease in information about flower quality compared to the physical product representation. Analysis of the transaction data before and after screen auctioning revealed lower prices after the introduction of screen auctioning. We conclude that deficient product representation may be a partial explanation for reduced prices in electronic markets.