Can in-store recommendations for online-substitutive products integrate online and offline channels?

Xiaojian Hu, Ju Qiu, Ju Zhao and Yang Li

Journal of Retailing and Consumer Services, 2023, vol. 70, issue C

Abstract: An increasing number of multichannel retailers have adopted an offline-to-online recommendation strategy (OORS) that provides information regarding products sold online to in-store shoppers via recommendation systems employing in-store technologies (e.g., in-store virtual shelves and smart fitting mirrors). We investigate the impact of an OORS on cross-channel integration for retailers mainly selling substitutable products via online and offline channels. Considering omnichannel shoppers (who strategically choose a channel for purchasing) and offline shoppers (who prefer to shop in store), pricing game models with and without an OORS are developed for a decentralized retailer operating offline and online channels as separate businesses. The results show that although an OORS enables the offline channel to cannibalize more omnichannel shoppers from the online channel, interestingly, it alleviates channel conflict, which is reflected in increased prices and shopping traffic in both online and offline channels, because an OORS drives more in-store customers who cannot find matched products to the online store than omnichannel shoppers who shift from online to offline. Thus, an OORS increases online and offline profits and creates a synergic effect for a retailer with a decentralized organization. Compared to multichannel centralization, an OORS can even generate a higher synergic effect, especially when the proportion of offline shoppers in the mixed market is high. Finally, an OORS always improves social welfare, but its impacts on consumer surplus vary. An OORS can be beneficial for customers in a centralized organization but detrimental in a decentralized organization.

Keywords: Cross-channel integration; Offline-to-online recommendation; Synergy; Cannibalization (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0969698922002351
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:joreco:v:70:y:2023:i:c:s0969698922002351

DOI: 10.1016/j.jretconser.2022.103142

Access Statistics for this article

Journal of Retailing and Consumer Services is currently edited by Harry Timmermans

More articles in Journal of Retailing and Consumer Services from Elsevier
Bibliographic data for series maintained by Catherine Liu ().