This is the summary of an article by Ethan Liever and Chad Syverson for the Oxford Handbook of the Digital Economy. You can get the pdf of the behavioral targeting article here: Online vs Offline Competition.
Jeff Bezos, founder, president and CEO of Amazon.com, understood the advantages of his online business selling books. Consumers can easily look for the books and products they want to buy, they can order from any location and most of the purchases do not have sales tax. He also understood its limitations. Consumers have to wait before they receive their orders. They can’t inspect the products they will be receiving beforehand. Amazon had to find unique ways of letting consumers know about their products before buying.