Abstract

E-commerce retail has witnessed a steady growth in sales with advances in digital technologies. However, one of the primary challenges that has plagued online retail is its inability to provide customers with the opportunity to “touch-and-feel” a product before purchasing, thereby resulting in a higher rate of product returns. To address this, online retailers, nowadays, are adopting various omnichannel configurations, such as operating an additional offline channel (i.e., either a showroom or a brick-and-mortar (BM 2) establishing a showroom (“Experience-in-Store-and-Buy-Online (ESBO)” channel) while selling the product online, and 3) selling the product through both a B&M store and the online channel while allowing in-store product returns (“Buy-Online-and-Return-In-Store (BORS)” channel). Additionally, we compare the retailer’s profit across various scenarios and propose several key managerial insights. Based on product attributes such as product standardization and product valuation, we recommend optimal omnichannel strategies for the retailer. For example, if the product is premium and highly personalized (e.g., designer apparel), the retailer should open an additional showroom.

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