Online and Offline Information for Omnichannel Retailing

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

Exploring the Determinant Factors of Impulsive Buying Behavior during the COVID-19 Pandemic among Indonesian Consumers

The COVID-19 pandemic has ravaged the global economy, igniting much fear and panic that disrupted buying patterns and behavior. This study aims to investigate the phenomenon of impulsive buying behavior during the COVID-19 crises by exploring the influences of panic buying, perceived scarcity, and the mediation role of fear appeals. This study uses path analysis which is processed by using the Preacher-Hayes technique. A total of 243 respondents participated in the study. The result of this study revealed that perceived scarcity and panic buying were successfully proved to be significant predictors of impulsive buying behavior. However, the direct effect of fear appeals and the mediation role of fear appeals and panic buying on the relationship between perceived scarcity and impulsive buying behavior were failed to prove in this study

Integration of Online and Offline Channels in Retail: The Impact of Sharing Reliable Inventory Availability Information

Using a proprietary data set, we analyze the impact of the implementation of a “buy-online, pick-up-in-store” (BOPS) project. The implementation of this project is associated with a reduction in online sales and an increase in store sales and traffic. These results can be explained by two simultaneous phenomena: (1) additional store sales from customers who use the BOPS functionality and buy additional products in the stores (cross-selling effect) and (2) the shift of some customers from the online to the brick-and-mortar channel and the conversion of noncustomers into store customers (channel-shift effect). We explain these channel-shift patterns as an increase in “research online, purchase offline” behavior enabled by BOPS implementation, and we validate this explanation with evidence from the change of cart abandonment and conversion rates of the brick-and-mortar and online channels. We interpret these results in light of recent operations management literature that analyzes the impact of sharing inventory availability information. Our analysis illustrates the limitations of drawing conclusions about complex interventions using single-channel data

Omnichannel Retail Operations with Buy-Online-and-Pick-up-in-Store

Many retailers have recently started to offer customers the option to buy online and pick up in store (BOPS). We study the impact of the BOPS initiative on store operations. We build a stylized model where a retailer operates both online and offline channels. Customers strategically make channel choices. The BOPS option affects customer choice in two ways: by providing real-time information about inventory availability and by reducing the hassle cost of shopping. We obtain three findings. First, not all products are well suited for in-store pickup; specifically, it may not be profitable to implement BOPS on products that sell well in stores. Second, BOPS enables retailers to reach new customers, but for existing customers, the shift from online fulfillment to store fulfillment may decrease profit margins when the latter is less cost effective. Finally, in a decentralized retail system where store and online channels are managed separately, BOPS revenue can be shared across channels to alleviate incentive conflicts; it is rarely efficient to allocate all the revenue to a single channel

Customer Service Challenges in Omni-Channel Retailing—An Exploratory Study of Vague Language in Retailer Customer Service Policies

Retailers are interacting with customers via an ever-increasing number of touchpoints. The addition of social media and mobile devices to the traditional physical and virtual retail platforms has created an evolving consumer practice of using several such touchpoints in the course of a single purchase (the omni-channel”). The difficulty of providing high levels of customer service has increased with the necessity of managing multiple channels under the retailer’s control and coordinating formally or informally with touchpoints not directly within the retailer’s own operations. Multiple sources of potentially conflicting information (e.g., order fulfillment) can lead to miscommunication, and thus poor service experience for customers. The purpose of this paper is to describe two preliminary studies that explore how well retailers are prepared for this increasing complexity via a content analysis of retailer website language regarding customer service policies. Implications of our findings and recommendations for further research are then discussed

Empirical Studies In Retail Operations

This dissertation contains three essays. The first essay, entitled \textit{ Does Inventory Increase Sales? The Billboard and Scarcity Effects in U.S. Automobile Dealerships } looks into the relationship between inventory and demand beyond the obvious stockout effect. Inventory might signal a popular, and therefore a desirable, product, thereby increasing sale. Or, inventory might encourage a consumer to continue her search, thereby decreasing sales. In this paper we seek to identify these effects in U.S. automobile sales. Our primary research challenge is the endogenous relationship between inventories and demand. Hence, our estimation strategy relies on weather shocks at upstream production facilities to create exogenous variation in downstream dealership inventory. We find that the impact of adding a vehicle of a particular model to a dealer\u27s lot depends on which cars the dealer already has. If the added vehicle expands the available set of sub-models (e.g., adding a four-door among a set that is exclusively two-door), then sales increase. But if the added vehicle is of the same sub-model as an existing vehicle, then sales actually decrease. Based on this insight, given a fixed set of cars, they should be allocated among a group of dealers so as to maximize each dealer\u27s variety. The second essay, entitled \textit{ Severe Weather and Automobile Assembly Productivity }, is related to the first one in that presents a detail analysis of the exogenous shock presented there: The weather impact on vehicles assembly lines. It is apparent that severe weather should hamper the productivity of work that occurs outside. But what is the effect of extreme rain, snow, heat and wind on work that occurs indoors, such as the production of automobiles? Using weekly production data from 64 automobile plants in the United States over a ten-year period, we find that adverse weather conditions lead to a significant reduction in production. Across our sample of plants, severe weather reduces production on average by 1.5\%. While it is possible that plants are able to recover these losses at some later date, we do not find evidence that recovery occurs in the week after the event. Our findings are useful both for assessing the potential productivity shock associated with inclement weather as well as guiding managers on where to locate a new production facility. The third essay, entitled \textit{ Integration of Online and Offline Channels in Retail: The Impact of Sharing Reliable Inventory Availability Information }. In this essay we focus the attention on the impact of inventory information disclosure. Increasingly, retailers are integrating their offline and online channels to reduce costs or to improve the value proposition they make to their customers. Using a proprietary dataset, we analyze the impact of the implementation of a buy-online-pickup-in-store project. Contrary to our expectations, the implementation of this project is associated with a reduction in online sales and an increase in store sales and traffic. We interpret the results in light of recent operations management literature that analyzes the impact of sharing inventory availability information online. The implementation of a buy-online-pickup-in-store project provides an exogenous shock to the verifiability of the inventory information that the firm shows to their customers. Our analysis illustrates the challenges of drawing conclusions about complex interventions using single channel data