Managing Impulsive Purchases in Multi-Channel Online Retailing: Product Categories and Organizational Choices

43 Pages Posted: 9 Jan 2019

See all articles by Nitish Jain

Nitish Jain

London Business School

Sergei Savin

University of Pennsylvania - Operations, Information and Decisions Department

Narendra Singh

Nazarbayev University - Graduate School of Business; Nazarbayev University

Date Written: December 27, 2018

Abstract

Multiple online channels allow a retailer to cover a wider range of situational purchase settings but also expose it to a more complex spectrum of consumer purchase behavior. Compared with the conventional desktop computer-based Web channel, the mobile-based application channel enables retailers to understand consumers better and, also, makes them more vulnerable to impulse purchases. The unique features of consumer experience and purchase behavior in each online channel raise the question of whether these channels should be managed jointly or separately. This study seeks to identify retail settings that favor a particular organizational choice.

The extant literature on multi-channel retail has paid scant attention to differences between these primary online channels. Our study helps to fill this gap, and it aims to equip retailers with a simple tool for comparing the organization's choices with regard to managing sales across the two channels.

We build a parsimonious model that captures key aspects of consumers' impulsive purchase behavior across various product types and two different online channels. In this model, the consumer's utility from purchasing a product via a particular channel consists of two correlated components: a channel-independent "base'' component and a channel-specific "impulsive'' component. We use this model to examine retailer performance when pricing is delegated to managers under separate-channel and joint-channel management schemes.

We find that products which induce impulsive purchase behavior strongly correlated with the base product valuation, such as high-value hedonic products, favor the joint-channel setup. In contrast, products with strong negative correlation between the base and impulsive valuation components, such as high-end durables, do better under separate-channel management. Online retailers should carefully curate their delegation strategies to manage the interplay between channels' natural differences and the product characteristics that shape how consumers' impulsive purchase behavior is related to their base valuations.

Keywords: OM-marketing interface, product returns, promotions, demand management, online retailing

Suggested Citation

Jain, Nitish and Savin, Sergei and Singh, Narendra, Managing Impulsive Purchases in Multi-Channel Online Retailing: Product Categories and Organizational Choices (December 27, 2018). Available at SSRN: https://ssrn.com/abstract=3306898 or http://dx.doi.org/10.2139/ssrn.3306898

Nitish Jain

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

Sergei Savin (Contact Author)

University of Pennsylvania - Operations, Information and Decisions Department ( email )

3730 Walnut Street
546 Jon M. Huntsman Hall
Philadelphia, PA 19104-5340
United States

Narendra Singh

Nazarbayev University - Graduate School of Business ( email )

53 Kabanbay Batyr Ave
Nur-Sultan, 010000
Kazakhstan

HOME PAGE: http://gsb.nu.edu.kz/en/facultyresearch/faculty-profiles?faculty=59

Nazarbayev University ( email )

Nur-Sultan, 500 019
Kazakhstan

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