Online and Offline Information for Omnichannel Retailing

Abstract

This paper studies how retailers can effectively deliver online and offline information to omnichannel consumers who strategically choose whether to gather information online or offline and whether to buy products online or offline. Information resolves two types of uncertainty: product value uncertainty (i.e., consumers realize valuations when they inspect the product in store, but may end up returning the product when they purchase online) and availability uncertainty (i.e., store visits are futile when consumers encounter stockouts). We consider three information mechanisms: physical showrooms allow consumers to learn valuations anytime they visit the store, even during stockouts; virtual showrooms give consumers online access to an imperfect signal of their valuations; availability information provides real-time information about whether the store has a product in stock. Our main results follow. First, physical showrooms may prompt retailers to reduce store inventory, which increases availability risk and discourages store patronage. Second, virtual showrooms may increase online returns and hurt profits, if they induce excessive customer migration from store to online channels. Third, availability information may be redundant when availability risk is low and may render physical showrooms ineffective when implemented jointly. Finally, when customers are homogeneous, these mechanisms may not exhibit significant complementarities and the optimal information structure may involve choosing only one of the three. Electronic copy available at: http://ssrn.com/abstract=2796566 Online and Offline Information for Omnichannel Retailing Fei GaoThe Wharton School, University of Pennsylvania, Philadelphia, PA, 19104 feigao@wharton.upenn.edu Xuanming SuThe Wharton School, University of Pennsylvania, Philadelphia, PA, 19104 xuanming@wharton.upenn.edu AbstractThis paper studies how retailers can effectively deliver online and offline information to omnichannel consumers who strategically choose whether to gather information online/offline and whether to buy products online/offline. Information resolves two types of uncertainty: product value uncertainty (i.e., consumers realize valuations when they inspect the product in store, but may end up returning the product when they purchase online) and availability uncertainty (i.e., store visits are futile when consumers encounter stockouts). We consider three information mechanisms: physical showrooms allow consumers to learn valuations anytime they visit the store, even during stockouts; virtual showrooms give consumers online access to an imperfect signal of their valuations; availability information provides real-time information about whether the store is in stock. Our main results follow. First, physical showrooms may prompt retailers to reduce store inventory, which increases availability risk and discourages store patronage.Second, virtual showrooms may increase online returns and hurt profits, if they induce excessive customer migration from store to online channe...

Consumer decision‐making in omnichannel retailing: Literature review and future research agenda

“…In terms of disciplinary orientation, these studies contribute to the omnichannel literature with respect to supply chain, retailing and marketing domain. Those that focus on supply chain tend to emphasize different functions and drivers including distribution and fulfilment (Melacini et al., 2018), delivery (Buldeo Rai et al, 2019a), facilities (Bell et al., 2017; Kembro et al., 2018), information technology (Gao & Su, 2017b), network design (Yadav et al., 2019), return management (Akturk et al., 2018; Bernon et al., 2016), logistics (Wollenburg et al., 2018b). In contrast, marketing‐focused studies placed a particular emphasis on channel management (Hosseini et al., 2018; Jocevski et al., 2019), product recommendation (Balakrishnan et al., 2018), pricing (Harsha et al., 2019), promotion (Blom et al, 2017) and sales management (Cummins et al., 2016).…”

Consumer Inter‐Product Showrooming and Information Service Provision in an Omni‐Channel Supply Chain

“…Herhausen, Binder, Schoegel, and Herrmann () found that online–offline channel integration can yield a competitive advantage for the retailer by influencing consumers’ perceived service quality and perceived risk of the online store. Gao and Su () further suggested that the omni‐channel consumers’ valuation uncertainty can be resolved by information delivery through both physical and virtual showrooms. In this article, by capturing consumers’ omni‐channel showrooming behavior that utilizes the offline information service, we go beyond the studies of Ofek et al.…”

“…In this article, by capturing consumers’ omni‐channel showrooming behavior that utilizes the offline information service, we go beyond the studies of Ofek et al. () and Gao and Su () by examining the retailer's information service provision in the physical stores. In addition, we study the M‐R information service compensation and its corresponding impacts on the players, which generates implications of information service provision for the omni‐channel supply chain.…”

Work after work: The impact of new service delivery models on work hours

“…The professional setting is important because it implies that the professional must herself deliver service via the new channel instead of offloading it to another server. This idea of a single server dealing with multiple channels as they become introduced is new and contrasts with much of the current literature, which has focused more on how new service channels affect “non‐professional” servers such as those in retail (Bell, Gallino, & Moreno, ; Gallino & Moreno, ; Gao & Su, ). The professional setting is also unique because such servers typically have control over much of their workflow (Harvey, ), forcing them to individually reoptimize their workflow when a new service delivery channel is introduced.…”