Offline Showrooms and Customer Migration in Omni-Channel Retail

David R. Bell, Santiago Gallino, Antonio Moreno-Garcia

Research output: Working paper

Abstract

Omni-channel environments where customers shop online and offline at the same retailer are increasingly ubiquitous and have important new implications for demand generation and operational efficiency. We propose that given choice and opportunity, customers self-select into channels according to their need for visceral product information, i.e., the need to touch, feel, and sample physical products before purchasing. Injecting a new showroom into a market induces customer migration and has significant impacts on channel sales and operational efficiency for all customers within the showroom's trading area.

Using quasi-experimental data on showroom openings by WarbyParker.com, the leading online US eyewear retailer, we find that introducing a showroom: (1) increases demand overall and through the online channel as well, (2) improves operational efficiency by increasing conversion on sampling and decreasing returns, and (3) that these effects are amplified for those customers who have the most acute need for the product. Moreover, these effects strengthen with time as the showroom contributes not only to brand awareness but also to what we term channel awareness as well. We verify that these effects are robust to alternative model specifications and sample selection procedures; implications for omni-channel retailing are discussed.
Original languageEnglish (US)
PublisherSocial Science Research Network (SSRN)
Number of pages36
StatePublished - May 8 2015

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