Integration of Online and Offline Channels in Retail: The Impact of Sharing Reliable Inventory Availability Information

Abstract:     
Increasingly, retailers are integrating their offline and online channels to reduce costs or to improve the value proposition they make to their customers. Using a proprietary dataset, we analyze the impact of the implementation of a buy-online-pickup-in-store project. Contrary to our expectations, the implementation of this project is associated with a reduction in online sales and an increase in store sales and traffic. We interpret the results in light of recent operations management literature that analyzes the impact of sharing inventory availability information online. The implementation of a buy-online-pickup-in-store project provides an exogenous shock to the verifiability of the inventory information that the firm shows to their customers. The fact that inventory information becomes more credible reduces the risk that customers face when deciding whether to visit the store. This is consistent with a shift of some online customers to the store channel. Our analysis illustrates the challenges of drawing conclusions about complex interventions using single channel data.

Number of Pages in PDF File: 24

Keywords: retail operations, inventory availability, empirical operations management, business analytics, online retail

working papers series