The ability to retain and lock-in customers in the face of competition is a major concern for e-commerce businesses. If a firm is able to build a significant amount of switching cost and brand loyalty, then it can benefit from a long-term flow of profits and recover investments in customer acquisition. In this paper, we propose a method to measure the magnitude of switching costs for on-line service providers, which we apply to the on-line brokerage industry. We find a significant variation in calculated switching costs between brokers—on the factor of 2—suggesting that brokers have substantial influence over their switching costs.
Chen, Pei-Yu and Hitt, Lorin, "Switching Cost and Brand Loyalty in Electronic Markets: Evidence from On-Line Retail Brokers" (2000). ICIS 2000 Proceedings. 13.