The Effect of Search Channel Elimination on Purchase Incidence, Order Size and Channel Choice

International Journal of Research in Marketing, Vol. 31, Issue 1 (2014), Forthcoming

58 Pages Posted: 29 Sep 2013

See all articles by Umut Konus

Umut Konus

University of Amsterdam Business School

Scott Neslin

Dartmouth College - Tuck School of Business

Peter C. Verhoef

University of Groningen - Department of Marketing & Marketing Research

Date Written: September 20, 2013

Abstract

This study investigates the impact of eliminating a search channel on purchase incidence, order size, channel choice and, ultimately, sales and profits. We analyze customer panel data from a large retailer over a five-year period. The retailer conducted a randomized field test in which the firm eliminated its catalog for half of the panel. We find that channel elimination decreases purchase incidence, especially for customers who, before the test, were heavy users of the telephone purchase channel that aligns with the catalog search channel. As expected, channel choice for purchases is shifted toward the Internet and away from the telephone channel. Interestingly, order size per purchase increases. We investigate the impact of channel elimination on profits across different customer segments. We calculate a net positive impact because the savings from eliminating the catalog compensate for lower sales revenues.

Keywords: multichannel, customer relationship management, Internet, catalog shopping, retailing, panel data analysis

JEL Classification: M10, M31

Suggested Citation

Konus, Umut and Neslin, Scott and Verhoef, Peter C., The Effect of Search Channel Elimination on Purchase Incidence, Order Size and Channel Choice (September 20, 2013). International Journal of Research in Marketing, Vol. 31, Issue 1 (2014), Forthcoming. Available at SSRN: https://ssrn.com/abstract=2331954

Umut Konus (Contact Author)

University of Amsterdam Business School ( email )

Roetersstraat 18
Amsterdam, 1018WB
Netherlands

Scott Neslin

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

Peter C. Verhoef

University of Groningen - Department of Marketing & Marketing Research ( email )

Netherlands

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