The Effects of Mobile Apps on Shopper Purchases and Product Returns
Posted: 2 Dec 2016
Date Written: December 1, 2016
Do mobile apps influence shopper purchases and product returns? We model the effects of app adoption in the context of a large omnichannel retailer with 32 million shoppers. We leverage the launch of a mobile app by the retailer and use a difference-in-differences approach to identify and estimate the differences between app adopters and non-adopters in shopping outcomes, such as the incidence and monetary value of purchases and product returns. We find that app adopters buy 21% more often but spend 12% less per purchase occasion and return 73% more often than non-adopters in the month after adoption. Overall, app adoption results in a 24% increase in net monetary value of purchases. Our findings are robust to alternative explanations and measures. Furthermore, our analysis of the drivers of app use reveals that exposure to offers and rewards through the app plays a key role in driving shopping outcomes. Surprisingly, the number of unique app features accessed by the shopper has an inverted U-shaped relationship with shopping outcomes, suggesting managerial caution against “all-in-one” app designs.
Keywords: difference-in-differences, exponential Type II Tobit, mobile marketing, mobile apps, quasi-experiment
JEL Classification: M31, L81, C01, C23
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