Large Online Product Catalog Space Indicates High Store Price: Understanding Customers' Overgeneralization and Illogical Inference

Previous research has shown that because offline store space is costly, customers tend to associate large interstitial space among products in a bricks-and-mortar store with high price. Drawing on consumer inference and signaling theories, the present research suggests this offline association could be overgeneralized to online contexts and lead customers to illogically infer high price based on large interstitial space among products in an online product catalog (i.e., online product catalog space, OPCS). We conducted five experiments to test whether and why OPCS affects customers' online store price perception and its downstream effect on store evaluation. Our findings indicate that (1) an online store with larger OPCS is perceived to be selling more expensive products (Study 1); (2) the effect of OPCS is due to offline-online overgeneralization rather than online learning, because either a reminder of offline-online differences (Study 2) or sufficient web design knowledge (Study 3) diminishes the effect of OPCS on store price perception, and only people who believe that large offline space is linked with high price show this effect (Study 4); and (3) customers who care more about quality evaluate a store with larger OPCS more positively, whereas customers who care more about price do the opposite (Study 5). These findings contribute to literatures on web design, price perception, consumer inference in e-commerce, and offline-online behavior transfer. We also discuss implications for practice and offer suggestions for future works.