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Customer Supercharging in Experience-Centric Channels

Author

Listed:
  • David R. Bell

    (Idea Farm Ventures, New York, New York 10010)

  • Santiago Gallino

    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104)

  • Antonio Moreno

    (Harvard Business School, Harvard University, Boston, Massachusetts 02163)

Abstract

We conjecture that for online retailers, experience-centric offline store formats do not simply expand market coverage, but rather, serve to significantly amplify future positive customer behaviors, both online and offline. We term this phenomenon “supercharging” and test our thesis using data from a digital-first men’s apparel retailer and a pioneer of the so-called zero inventory store (ZIS) format—a small-footprint, experience-centric retail location that carries no inventory for immediate fulfillment, but fulfils orders via e-commerce. Using a risk-set matching approach, we calibrate our estimates on customers who are “treated,” that is, have a ZIS experience, and matched with identical customers who shop online only. We find that after the ZIS experience, customers spend more, shop at a higher velocity, and are less likely to return items. The positive impact on returns is doubly virtuous as it is more pronounced for more tactile, higher-priced items, thus mitigating a key pain point of online retail. Furthermore, the ZIS shopping experience aids product discovery and brand attachment, causing sales to become more diffuse over a larger number of categories. Finally, we demonstrate that our results are robust to self-selection and potentially confounding effects of unobservable factors on the matched pairs of customers. Implications for retailing practice, including for legacy, offline-first retailers, are discussed.

Suggested Citation

  • David R. Bell & Santiago Gallino & Antonio Moreno, 2020. "Customer Supercharging in Experience-Centric Channels," Management Science, INFORMS, vol. 66(9), pages 4096-4107, September.
  • Handle: RePEc:inm:ormnsc:v:66:y:2020:i:9:p:4096-4107
    DOI: 10.287/mnsc.2019.3453
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    References listed on IDEAS

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    Cited by:

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    2. Zhou, Yong-Wu & Zhang, Xiong & Zhong, Yuanguang & Cao, Bin & Cheng, T.C. Edwin, 2021. "Dynamic pricing and cross-channel fulfillment for omnichannel retailing industry: An approximation policy and implications," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 156(C).
    3. Jeremy J. Kovach & Morgan Swink & Mauricio Rodriguez, 2023. "Delaying supplier payments to increase buyer profits," Journal of Supply Chain Management, Institute for Supply Management, vol. 59(1), pages 26-47, January.
    4. Anwar Sadat Shimul, 2022. "Brand attachment: a review and future research," Journal of Brand Management, Palgrave Macmillan, vol. 29(4), pages 400-419, July.
    5. Ratchford, Brian & Soysal, Gonca & Zentner, Alejandro & Gauri, Dinesh K., 2022. "Online and offline retailing: What we know and directions for future research," Journal of Retailing, Elsevier, vol. 98(1), pages 152-177.
    6. David Simchi-Levi, 2020. "From the Editor," Management Science, INFORMS, vol. 66(1), pages 1-4, January.
    7. Gabor, Adriana F. & van Ommeren, Jan-Kees & Sleptchenko, Andrei, 2022. "An inventory model with discounts for omnichannel retailers of slow moving items," European Journal of Operational Research, Elsevier, vol. 300(1), pages 58-72.
    8. Peng Vincent Zhang & Seoyoung Kim & Anindita Chakravarty, 2023. "Influence of pull marketing actions on marketing action effectiveness of multichannel firms: A meta-analysis," Journal of the Academy of Marketing Science, Springer, vol. 51(2), pages 310-333, March.
    9. Mandal, Prasenjit & Basu, Preetam & Saha, Kushal, 2021. "Forays into omnichannel: An online retailer’s strategies for managing product returns," European Journal of Operational Research, Elsevier, vol. 292(2), pages 633-651.

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