Integration of Online and Offline Channels in Retail: The Impact of Sharing Reliable Inventory Availability Information
Dartmouth College - Tuck School of Business
Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS)
January 31, 2014
Using a proprietary dataset, we analyze the impact of the implementation of a “buy-online, pickup-in-store” (BOPS) project. The implementation of this project is associated with a reduction in online sales and an increase in store sales and traffic. These results can be explained by two simultaneous phenomena: (1) additional store sales from customers who use the BOPS functionality and buy additional products in the stores (cross-selling effect) and (2) the shift of some customers from the online to the brick-and-mortar channel and the conversion of noncustomers into store customers (channel-shift effect). We explain these channel shift patterns as an increase in “research online, purchase offline” (ROPO) behavior enabled by BOPS implementation, and we validate this explanation with evidence from the change of cart abandonment and conversion rates of the brick-and-mortar and online channels. We interpret these results in light of recent operations management literature that analyzes the impact of sharing inventory availability information. Our analysis illustrates the limitations of drawing conclusions about complex interventions using single-channel data.
Number of Pages in PDF File: 36
Keywords: retail operations, inventory availability, empirical operations management, business analytics, online retail
Date posted: September 20, 2012 ; Last revised: September 10, 2014