Channel Choice and Customer Value

47 Pages Posted: 6 Mar 2024 Last revised: 12 Jul 2024

See all articles by Shirsho Biswas

Shirsho Biswas

University of Washington - Michael G. Foster School of Business

Hema Yoganarasimhan

University of Washington

Haonan Zhang

University of Washington - Department of Information Systems and Operations Management

Date Written: March 4, 2024

Abstract

This paper investigates the impact of omnichannel adoption on consumer spending behavior, focusing on two groups of consumers-offline-only consumers who became omnichannel organically (organic switchers) and offline-only consumers who became omnichannel due to the COVID-19 shock (covid switchers). Leveraging comprehensive data from a leading pet retailer in Brazil over 2019-2023 and a Differences-InDifferences analysis, we show that the two groups of consumers increase their spending by the same amount after becoming omnichannel. That is, conditional on switching to omnichannel, the reasons for switching have no significant impact on consumer revenue. From a managerial perspective, our findings are valuable since they suggest that retailers can use the Average Treatment Effect on Treated (ATT) of users who voluntarily become omnichannel (organic switchers) as a measure of the potential gains from converting other users to omnichannel. However, differences emerge in channel preferences, with externally induced switchers displaying a slower uptake of the online channel. We find that these differences are mostly driven by older covid switchers. Since the offline channel is more profitable in our setting, our results suggest that nudging consumers to become omnichannel can increase the profitability of these consumers even beyond that of customers who voluntarily become omnichannel.

Keywords: Retailing, COVID-19, Omnichannel, Channel choice, Customer value, Natural Experiment

JEL Classification: M31, L81

Suggested Citation

Biswas, Shirsho and Yoganarasimhan, Hema and Zhang, Haonan, Channel Choice and Customer Value (March 4, 2024). Available at SSRN: https://ssrn.com/abstract=4747756 or http://dx.doi.org/10.2139/ssrn.4747756

Shirsho Biswas (Contact Author)

University of Washington - Michael G. Foster School of Business ( email )

Box 353200
Seattle, WA 98195-3200
United States

Hema Yoganarasimhan

University of Washington ( email )

481 Paccar Hall
Seattle, WA 98195
United States

HOME PAGE: http://faculty.washington.edu/hemay/

Haonan Zhang

University of Washington - Department of Information Systems and Operations Management ( email )

Box 353200
Seattle, WA 98195-3200
United States
8479618325 (Phone)

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