Offline Experiences and Value Creation in Omnichannel Retail
13 Pages Posted: 28 Oct 2018
Date Written: October 4, 2018
For online retailers, an offline sales format may not simply be an additional channel through which to expand market coverage, but a significant amplifier of positive customer behaviors in the online channel as well. We test this thesis using data from a digital-first men’s apparel retailer and a pioneer of the “Zero Inventory Store” format—an experience-centric retail location which carries no inventory for immediate fulfillment. We calibrate our estimates using a risk-set matching approach where customers who are “treated”, i.e., have an offline experience, are matched with identical customers who shop online only. We find that after an offline brand experience, customers spend more, shop at a higher velocity, and are less likely to return items. For returns, this positive effect is more pronounced for higher-priced and tactile items, thus mitigating one of the biggest pain points of online retail. Furthermore, an offline shopping experience aids product discovery and brand attachment, causing sales to become more diffuse over a larger number of categories. Finally, our estimates imply that offline intervention is most effective when it occurs early in a customer’s journey with the brand. Our insights are robust to self-section and potentially confounding effects of unobservable factors on the matched pairs of customers. Implications for retailing practice are discussed.
Keywords: Retail Operations, Marketing-Operations Interface, Omni-Channel Retailing, Experience Attributes, Quasi- Experimental Methods
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