Abstract

http://ssrn.com/abstract=2370535
 


 



Inventory Showrooms and Customer Migration in Omni-Channel Retail: The Effect of Product Information


David R. Bell


University of Pennsylvania - Marketing Department

Santiago Gallino


Dartmouth College - Tuck School of Business

Antonio Moreno


Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS)

December 16, 2013


Abstract:     
Omni-channel environments where customers can shop online and offline at the same retailer are increasingly ubiquitous. Furthermore, the presence of both channels has important implications for customer demand and operational issues such as product returns. We propose that, given the opportunity, customers self-select into channels based on their need for visceral product information, i.e., the need to touch, feel, and sample physical products before purchasing. From this core idea, we develop a simple model of channel matching; it predicts that customers with a higher need for information prefer physical access to all products and that the introduction of an offline inventory display channel where none previously existed results in a more efficient match between customers and channels. Using data on display showroom introductions by WarbyParker, a leading US eyewear retailer, we find that: (1) the introduction of an offline channel increases demand overall and through the online channel as well, and (2) customers who migrate offline are those with the highest cost-to-serve both online and through other mechanisms such as product sampling. The second finding is evidenced by a decline in product returns through the online channel, and through a higher rate of conversion from sampling, and a reduction in repeated sampling by individual customers. The economic impact of more efficient matching made possible by the introduction of offline inventory display showrooms, is substantial.

Number of Pages in PDF File: 33

Keywords: Omni-Channel Retailing, Showrooms, Experience Attributes, Propensity Scoring, Quasi-Experimental Methods

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Date posted: December 22, 2013  

Suggested Citation

Bell, David R. and Gallino, Santiago and Moreno, Antonio, Inventory Showrooms and Customer Migration in Omni-Channel Retail: The Effect of Product Information (December 16, 2013). Available at SSRN: http://ssrn.com/abstract=2370535 or http://dx.doi.org/10.2139/ssrn.2370535

Contact Information

David R. Bell
University of Pennsylvania - Marketing Department ( email )
700 Jon M. Huntsman Hall
3730 Walnut Street
Philadelphia, PA 19104-6340
United States

Santiago Gallino
Dartmouth College - Tuck School of Business ( email )
100 Tuck Dr
Hanover, NH 03755
United States
Antonio Moreno (Contact Author)
Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS) ( email )
2001 Sheridan Road
Evanston, IL 60208
United States
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