The Economic Impact of an E-Commerce Website

Despite the touted potential of E-commerce to improve profits in businesses, the literature on the economic impact of E-commerce is very limited. This paper assesses the economic impact of an E-Commerce website (MarketMaker) on agricultural businesses. MarketMaker provides agricultural producers with information to better target consumers and identify potential businesses partners for collaboration. To estimate the economic value of the services provided by MarketMaker we use contingent valuation methods. Therefore, the economic value of this trade platform is estimated using producers’ willingness to pay for services received from MarketMaker. In addition, we evaluate the effect of producers’ characteristics and perceptions on producers’ economic valuation of the site. Data for the estimation of the WTP values were collected through an online survey of 1,446 agricultural producers registered on the site. Six different statistical distributions were considered in the modeling of producers’ WTP for MarketMaker: normal, Weibull, log-normal, exponential, log-logistic and gamma distributions. Estimation of the different models was carried out using maximum likelihood estimation procedures. Based on the Akaike information criterion corrected for finite sample sizes (AICC), the distribution that “best described” the data is the exponential. Results indicate that producers, on average, are willing to pay $37.25 annually for the services they receive from MarketMaker. This value is also a measure of the increase in annual profits attributed to the use of MarketMaker. Additionally, producer region, registration type, number of marketing contacts received, gender and total annual sales were found to have a significant effect on WTP.