Information is king in today's world. The Web offers a great
solution for this need through information density which is the total amount of
quality and information available to all market participants, consumers and
merchants alike. E-commerce technologies reduce information collection,
storage, processing and communication costs while greatly increasing the
currency, accuracy and timeliness of information. Unlike print media
publications and catalogues, the Web provides instant access to
information. As such information
changes, web sites can be edited in real-time and updated often without the
expense of reproduction. As a result,
information is more accurate and relevant to timeliness. Information density offers reduced costs and
increased levels of service which generates revenue.
Information density in e-commerce markets make prices and
costs more transparent. Price transparency refers to the ease with which
consumers can find out the variety of prices in a market. Cost transparency
refers to the ability of consumers to discover the actual costs merchants pay
for products. Many see price and cost transparencies as a benefit to consumers,
but many businesses do not want this form of information made public, limiting
strategic initiatives and possible related advantages.
However, there are advantages for merchants as well. Online
merchants can discover much more about consumers than in the past. This allows
merchants to segment the market into groups that are willing to pay different
prices and permits the merchant to engage in price discrimination which is
selling the same goods or nearly the same goods to different targeted groups
with different prices. For instance, an online merchant can discover a
consumer's avid interest in expensive, exotic vacations and then pitch high-end
vacation plans to that consumer at a premium price, knowing this person is
willing to pay extra for such a vacation. At the same time, the online merchant
can pitch the same vacation plan at a lower price to a more price-sensitive
consumer. Information density also helps merchants differentiate their products
in term of cost, brand and quality.