Inter-retailer channel competition: Empirical analyses of store entry effects on online purchases

This study empirically examines the effect of offline store entry on a competing online retailer in the footwear industry and investigates how this effect depends on the relative product assortment and price between the offline store and the online retailer. Using transaction data from a large onlin...

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Main Authors: Tang, Qian, Lin, Mei, KIM, Youngsoo
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Language:English
Published: Institutional Knowledge at Singapore Management University 2021
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Online Access:https://ink.library.smu.edu.sg/sis_research/2824
https://ink.library.smu.edu.sg/context/sis_research/article/3824/viewcontent/inter_retailer.pdf
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spelling sg-smu-ink.sis_research-38242023-02-10T07:09:06Z Inter-retailer channel competition: Empirical analyses of store entry effects on online purchases Tang, Qian Lin, Mei KIM, Youngsoo This study empirically examines the effect of offline store entry on a competing online retailer in the footwear industry and investigates how this effect depends on the relative product assortment and price between the offline store and the online retailer. Using transaction data from a large online footwear retailer and offline store entry data from 19 major shoe retail chains and 3 department store chains, we quantify the entry effect of offline stores. Categorizing offline stores by assortment and price, we find that the entry of regular-price narrow-assortment stores generates a complementary effect that increases online purchases, while the entry of discount wide-assortment stores leads to a substitution effect that reduces online purchases. The store entry of other types has no significant effect on online purchases. We further find that the complementary effect is mainly driven by the mechanism of unsatisfied product exploration due to a narrow assortment in stores, rather than the mechanism of product uncertainty reduction due to overlapping products with lower prices online. Therefore, the complementary effect not only increases the online purchases of store-brand products but also creates spillovers to other brands. Moreover, the substitution effect driven by the reduced transportation cost is mitigated primarily by consumers’ proximity to pre-existing stores. 2021-08-01T07:00:00Z text application/pdf https://ink.library.smu.edu.sg/sis_research/2824 info:doi/10.1111/poms.13394 https://ink.library.smu.edu.sg/context/sis_research/article/3824/viewcontent/inter_retailer.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection School Of Computing and Information Systems eng Institutional Knowledge at Singapore Management University Electronic commerce Online and offline markets Showrooming Propensity score Computer Sciences E-Commerce Management Information Systems
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Electronic commerce
Online and offline markets
Showrooming
Propensity score
Computer Sciences
E-Commerce
Management Information Systems
spellingShingle Electronic commerce
Online and offline markets
Showrooming
Propensity score
Computer Sciences
E-Commerce
Management Information Systems
Tang, Qian
Lin, Mei
KIM, Youngsoo
Inter-retailer channel competition: Empirical analyses of store entry effects on online purchases
description This study empirically examines the effect of offline store entry on a competing online retailer in the footwear industry and investigates how this effect depends on the relative product assortment and price between the offline store and the online retailer. Using transaction data from a large online footwear retailer and offline store entry data from 19 major shoe retail chains and 3 department store chains, we quantify the entry effect of offline stores. Categorizing offline stores by assortment and price, we find that the entry of regular-price narrow-assortment stores generates a complementary effect that increases online purchases, while the entry of discount wide-assortment stores leads to a substitution effect that reduces online purchases. The store entry of other types has no significant effect on online purchases. We further find that the complementary effect is mainly driven by the mechanism of unsatisfied product exploration due to a narrow assortment in stores, rather than the mechanism of product uncertainty reduction due to overlapping products with lower prices online. Therefore, the complementary effect not only increases the online purchases of store-brand products but also creates spillovers to other brands. Moreover, the substitution effect driven by the reduced transportation cost is mitigated primarily by consumers’ proximity to pre-existing stores.
format text
author Tang, Qian
Lin, Mei
KIM, Youngsoo
author_facet Tang, Qian
Lin, Mei
KIM, Youngsoo
author_sort Tang, Qian
title Inter-retailer channel competition: Empirical analyses of store entry effects on online purchases
title_short Inter-retailer channel competition: Empirical analyses of store entry effects on online purchases
title_full Inter-retailer channel competition: Empirical analyses of store entry effects on online purchases
title_fullStr Inter-retailer channel competition: Empirical analyses of store entry effects on online purchases
title_full_unstemmed Inter-retailer channel competition: Empirical analyses of store entry effects on online purchases
title_sort inter-retailer channel competition: empirical analyses of store entry effects on online purchases
publisher Institutional Knowledge at Singapore Management University
publishDate 2021
url https://ink.library.smu.edu.sg/sis_research/2824
https://ink.library.smu.edu.sg/context/sis_research/article/3824/viewcontent/inter_retailer.pdf
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