How Offline Experience Changes Online Behavior of Member-Customer Segments

47 Pages Posted: 8 Aug 2019

See all articles by Yilong Liang

Yilong Liang

University of Minnesota - Twin Cities, Carlson School of Management, Students

Yue Qian

Tsinghua University, School of Economics & Management, Students

Tony Haitao Cui

University of Minnesota - Twin Cities

George John

University of Minnesota - Twin Cities - Carlson School of Management

Shilei Yang

Southwestern University of Finance and Economics (SWUFE)

Date Written: July 25, 2019

Abstract

Many digitally native brands have expanded into offline channels. A small literature has consistently documented mostly complementarity effects arising from these additions and linked these effects to channel service drivers. We extend this literature to considering these channel service-driven effects at the segment level, including the possibility that different customer segments might have opposite reactions. We investigate this issue with detailed member-customer data from a digitally native grocery retailer that added 4 physical stores. Working out of a quasi-experimental causal inference framework, our analysis finds an overall positive (complementarity) effect of the physical stores on non-store sales. However, we also uncover opposite causal effects for heavy volume customers (who decreased non-store purchases) versus light volume customers (who increased non-store purchases). We explore three important services that are likely to result in the opposite effects. We conclude that digitally native retailers adding physical stores are likely to benefit from overall complementarity, and their focus should be on the expected reactions to the channel services afforded by the physical stores at the segment level.

Keywords: channels/distribution, multichannel retailing, channel migration, customer segmentation, quasi-experimental methods

JEL Classification: M31

Suggested Citation

Liang, Yilong and Qian, Yue and Cui, Tony Haitao and John, George and Yang, Shilei, How Offline Experience Changes Online Behavior of Member-Customer Segments (July 25, 2019). Available at SSRN: https://ssrn.com/abstract=3426304 or http://dx.doi.org/10.2139/ssrn.3426304

Yilong Liang (Contact Author)

University of Minnesota - Twin Cities, Carlson School of Management, Students ( email )

Minneapolis, MN
United States

Yue Qian

Tsinghua University, School of Economics & Management, Students ( email )

Beijing
China
100084 (Fax)

Tony Haitao Cui

University of Minnesota - Twin Cities ( email )

321 19th Ave S
Suite 3-150
Minneapolis, MN 55455
United States

George John

University of Minnesota - Twin Cities - Carlson School of Management ( email )

321 19th Avenue South
1220 Management and Economics
Minneapolis, MN 55455
United States
612-624-6841 (Phone)
612-626-8328 (Fax)

Shilei Yang

Southwestern University of Finance and Economics (SWUFE)

55 Guanghuacun St,
Chengdu, Sichuan 610074
China

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