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

36 Pages Posted: 20 Sep 2012 Last revised: 10 Sep 2014

Date Written: January 31, 2014

Abstract

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.

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

Suggested Citation

Gallino, Santiago and Moreno, Antonio, Integration of Online and Offline Channels in Retail: The Impact of Sharing Reliable Inventory Availability Information (January 31, 2014). Available at SSRN: https://ssrn.com/abstract=2149095 or http://dx.doi.org/10.2139/ssrn.2149095

Santiago Gallino (Contact Author)

Dartmouth College - Tuck School of Business ( email )

100 Tuck Dr
Hanover, NH 03755
United States

Antonio Moreno

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

2001 Sheridan Road
Evanston, IL 60208
United States

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