Online and in-store purchase behavior: shopping channel choice in a developing economy

Abstract

Developing economies are still in the stage of e-commerce deployment, unlike in developed countries, where online shopping is already a common purchase channel. This research aims to assess the purchasing behaviors of end-consumers in regard to two alternative shopping channels: in-store and online, within a developing economy. A revealed-preference survey was conducted to collect the in-store and online purchase activity of households in Ukraine. The data collected presents the purchase channel choices of end-consumers for eleven commodities in two categories: experience goods and search goods. A descriptive analysis of in-store and online shopping was made, with an evaluation of average purchase cost and time expenditures for shopping, travel, and delivery processes. A pooled binomial logit model was then developed to assess the purchase channel choice based on a Random Utility Maximization Theory. The estimated values of a marginal probability effect are presented, and the significance levels of attributes influencing purchase channel choice are evaluated. The marginal probability effect is found to be greater for shopping cost than for time attributes for most of the studied commodity channel choices. The sensitivity assessment for purchase cost, delivery and travel time revealed that first-priority goods such as medicine, food, clothing and shoes depended more on the attributes’ values variation than other commodities considered in the study. The comparison of this research’s results with other studies has shown a higher importance of shopping cost than time attributes for channel choice decisions in the case of the developing economy.