Why Do Stores Drive Online Sales? Evidence of Underlying Mechanisms from a Multichannel Retailer
Information Systems Research,30(1), March 2019, 319-338
52 Pages Posted: 25 Sep 2014 Last revised: 30 Oct 2019
Date Written: June 1, 2018
Different mechanisms through which easier access to physical stores could affect customers’ online purchase behavior are not well understood in the literature. We use customer-level data of a large apparel retailer to estimate the treatment effect of store openings on the online purchase behavior of its existing customers. We find that retailer’s store openings resulted in increase in the online purchases from its existing customers. We propose two mechanisms that could explain these results: (1) store engagement effect - higher customers’ engagement with the retailer due to higher store interactions and (2) store return effect - reduced risk of online purchase due to the low cost option of store returns. We provide direct empirical evidence of these mechanisms on our field data. We further show that these effects are caused by reduction in customers’ distances from the retailer’s store due to the store openings.
Keywords: Ecommerce, Multichannel customer behavior. Omnichannel retail, matching estimators, average treatment effect
JEL Classification: C93
Suggested Citation: Suggested Citation