The Value of Fit Information in Online Retail: Evidence from a Randomized Field Experiment
30 Pages Posted: 23 Oct 2015 Last revised: 30 Oct 2015
Date Written: October 21, 2015
With the growing relevance of online channels, retailers are exploring new ways in which they can overcome the impediments associated with selling products with non-digital attributes, such as apparel, without customers having physical access to products. Virtual fitting-room technologies can provide information about how a product fits a particular customer in a novel way and mitigate the stress that the existing information gap generates in the retailer’s supply chain. By implementing a series of randomized field experiments, we study the value of virtual fit information in online retail. Customers are randomly assigned to a treatment condition where virtual fit information is available or to a control condition where virtual fit information is not available. Our results show that offering virtual fit information increases conversion, basket sizes, average price of purchased products, and revisits to the site, while reducing fulfillment costs arising from returns and home try-on behavior, e.g., customers ordering multiple sizes of the same product. Furthermore, we find the effects are more intense for products that are more expensive and those with more sizes available. We discuss the consequences and implications for the online retailers' supply chains.
Keywords: Supply chain information, Supply chain innovation, Fit uncertainty, Online retail, Randomized field experiment, Virtual fitting room
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