Channel Choice and Customer Value

Shirsho Biswas, Hema Yoganarasimhan and Haonan Zhang

Papers from arXiv.org

Abstract: The rapid growth of digital shopping channels has prompted many traditional retailers to invest in e-commerce websites and mobile apps. While prior literature shows that multichannel customers tend to be more valuable, it overlooks how the reason for adopting a new channel may shape post-adoption behavior. Using transaction-level data from a major Brazilian pet supplies retailer, we examine how adoption of online shopping - by previously offline-only customers - affects post-adoption spend, profitability, and channel usage. We study four distinct adoption pathways: organic adoption, adoption due to the COVID-19 pandemic, Black Friday promotions, and a newly launched loyalty program. We find that although all adopter groups increase their spending relative to offline-only customers, post-adoption behavior differs based on the reason for adoption. COVID-19 adopters behave similarly to organic adopters in terms of spending, but show greater offline stickiness consistent with consumer inertia and habit theory, yielding higher profits due to higher offline margins. In contrast, promotion-driven adopters spend less post-adoption due to forward buying and exhibit lower profitability. Our findings caution against treating all multichannel customers as equal and highlight the importance of incorporating behavioral theories into forecasting and targeting strategies. Firms should account for adoption motives when evaluating channel and promotional investments.

Date: 2025-07
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