Abstract
ABSTRACTCustomers switch among multiple channels offered by multiple firms and this means that multichannel shopping behavior also depends on the channels offered by competitors. To what extent do competitions’ channel offerings influence the use of a new online channel introduced by a firm? This important issue remains largely untapped by marketers and managers since it requires not only multichannel but also integrated multifirm data. This study investigates the impact of customers’ past and current purchases from competitors’ channels on channel choice with a focal firm that introduces a new online purchase channel. Furthermore, we examine the effect of new online channel adoption on customer purchases (firm choice and order size) from the focal firm and its competitors. The data contain eight-year individual transactions from ten competitive multichannel home decoration retailers. Our research reveals that customers’ previous purchases from competitors’ online channels increase the probability of online channel adoption from a focal firm that introduces its online channel later than its competitors. This effect is greater for existing customers than new customers who are acquired after the introduction of the new online channel. Customer adoption and use of this new online channel reduce purchase frequencies of competitors, but increase purchase frequencies of the focal firm, for both existing and new customers. Together these findings illustrate the role of competitors’ channels in determining customers’ channel choice of the focal firm. Retailers therefore should consider the effects of competitors’ channel offerings and tailor their channel strategies to accommodate the various needs of new and existing customers, when they plan to introduce a new online channel.
Highlights
The Internet has become a mainstream purchase channel
We examine the effect of new online channel adoption on customer purchases from the focal firm and its competitors
These results suggest that customers who purchase more frequently from competitors’ online channels are likely to have more online shopping knowledge and experience, so they are more likely to adopt and purchase from a new online channel introduced by the focal firm
Summary
The Internet has become a mainstream purchase channel. The online retail sales in the United States occupied 9 percent of the $3.2 trillion total retail market in 2013 and will continue to grow at an annual rate of nearly 10 percent through 2018 [22]. Prior to a late entrant introducing its own online channel, customers might already have had online shopping experience from competitors’ online channels as well as In such an environment firms must understand the effects of cross-channel offerings and competition on customer channel migration and channel choice in general. We investigate the effects of cross-channel competition on customer
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