Online Retail Environment Research Articles

Does the digitalization of retailing disrupt consumers’ attachment to retail places?

This study breaks new ground in the marketing domain by extending the concept of place attachment to the study of the online retail environment. We provide empirical evidence that consumers can establish strong attachments not only with traditional offline places but also with online retail stores. Moreover, we assessed how distinct dimensions of the place affect the formation of consumers’ attachment and their behavioral loyalty. Our findings show that while consumers who feel a strong sense of attachment toward the place engage in spreading positive word-of-mouth regardless of the environment, their attachment to the store does not prevent them from switching to another provider, especially in the online environment.

Augmented reality interactive technology and interfaces: a construal-level theory perspective

PurposeIn modern e-commerce and omnichannel management, consumers can utilize visual information delivered by augmented reality interactive technology (ARIT) to relate to products and view them worn on themselves. Accordingly, ARIT is increasingly common in online retail environments because this dynamicproduct imagery decreases the gap between online and offline shopping. On the basis of construal-level theory (CLT), this study not only examines the system characteristics that impact the perceived ease of use and usefulness of ARIT but also explores how these system characteristics can successfully affect online consumers to adopt ARIT in retail settings.Design/methodology/approachIn this study, ARIT is applied mainly in an online clothes fitting context. By conducting a task-based laboratory study, 344 valid samples were collected. Structure equation modeling (SEM) was employed for further analysis.FindingsNavigation structure, graphic style and information content were identified as the three system characteristics that affect perceived ease of use and usefulness of ARIT. Of the three characteristics, information content has the greatest impact on perceived ease of use and usefulness of ARIT. The study also found that navigation structure, graphic style and information content all shape ARIT system characteristics, and this explains and predicts the perceived usefulness and perceived ease of use effect better than any original single system characteristic.Originality/valueInteractive marketing research indicates that the influence of immediately visualizing consumer–product matching effects creates excitement, arouses emotions and triggers curiosity to explore additional product purchase experiences. This study contributes to the present body of knowledge of the concept of ARIT systems. This is a pioneer research that uses CLT to act as a crucial psychological mechanism that dominates online fitting and apparel appraisal for consumers using ARIT. This study serves as a reference for designing and employing multisensory ARIT applications in interactive marketing to drive online sales.

Persuasive colours for trust in E-commerce: Dutch blue or Russian red?

ABSTRACT This study aims to investigate the effects of web store colours (blue or red) on e-commerce. Specifically, a comparison is made between consumers from two cultures: Dutch and Russian. They participated in an experimental survey and expressed their trust in a web store and their intention to purchase a low-involvement product (a laptop sleeve). The results showed that initial trust and cultural background seem to influence online purchase intention. Higher levels of initial trust were related to higher purchase intentions. Interestingly, where the more uncertainty-avoidant Russian consumers trusted the web store, the Dutch consumers were more likely to purchase the product, regardless of the colour they were exposed to. It is recommended to unravel the degree of localisation of web stores’ atmosphere in global e-commerce. Consumers from different cultural backgrounds might not feel and behave the same in a differently coloured, online retail environment.

Understanding the Value of Fulfillment Flexibility in an Online Retailing Environment

Problem definition: Fulfillment flexibility, the ability of distribution centers (DCs) to fulfill demand originating from other DCs, can help e-retailers reduce lost sales and improve service quality. Because the cost of full flexibility is prohibitive, we seek to understand the value of partially flexible fulfillment networks under simple and effective fulfillment policies. Academic/practical relevance: We propose a general method for understanding the practical value of (partial) fulfillment flexibility using a data-driven model, theoretical analysis, and numerical simulations. Our method applies to settings with local fulfillment (i.e., order fulfillment from the originating DC) prioritization and possible customer abandonment, two features that are new to the fulfillment literature. We then apply this method for a large e-retailer. We also introduce a new class of spillover limit fulfillment policies with attractive theoretical and practical features. Methodology: Our analysis uses dynamic and stochastic optimization, applied probability, and numerical simulations. Results: We derive optimal fulfillment policies in stylized settings, as well as bounds on the performance under an optimal policy using theoretical analysis, to provide guidelines on which policies to test in numerical simulations. We then use simulations to estimate for our industrial partner that a proposed fulfillment network with additional flexibility equates to a profit improvement on the order of tens of millions of U.S. dollars. Managerial implications: We provide an approach for e-retailers to understand when fulfillment flexibility is most valuable. We find that fulfillment flexibility provides the most benefit for our collaborator when gross profits are high relative to fulfillment costs or centrally held inventory is low. Also, we identify the risks of myopic fulfillment with additional flexibility and demonstrate that an effective spillover limit policy mitigates these risks. History: This paper has been accepted as part of the 2019 Manufacturing & Service Operations Management Practice-Based Research Competition. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2021.0981 .

A review of studies on virtual layout and atmospherics - potential applications to the fashion industry

ABSTRACT Retail layouts and atmospherics have been widely investigated within the physical retail environment, Research suggests that there is limited understanding of these elements in the virtual environment despite the fact that they would appear to be the easiest and most effective combination to implement by online fashion retailers. Considering potential applications in the fashion industry, a review of current literature on layout and atmospherics has identified the freeform layout as a valuable format for online fashion retailing. The freeform layout has been found to increase consumers’ hedonic motivations to purchase. Furthermore, design and visual cues have a significant influence on consumers, while aural cues despite being very important to the consumers’ experience appear to be underexploited in the online fashion space. This paper contributes a review of established retail elements, and identifies those that adapt well from the offline to online retail environment.

Insights and anatomy of brand experience in app-based retailing (eRBX): Critical play of physical evidence and enjoyment

A unique brand experience (BX) is vital for marketers to create differentiation for their brands in a hyper price sensitive e-tail industry. While BX as a concept evolved in a physical-retailing environment, only a few studies extended the same in the e-tailing environment. Using ISM (interpretive structure modeling) and the MICMAC (Matrix Impact Cross-Reference Multiplication Applied to a Classification) approach, this study attempts to address this gap by investigating the factors which form the BX in an app-based online retail environment (eRBX) and by highlighting insights on this. A literature review on BX and a collection of responses from 33 domain experts led to the identification of 20 factors and the showcasing of a multilevel interpretive relational structure of eRBX. Value for money and marketing communication emerged as first-order factors for eRBX in line with existing research. The authors' original contribution lied in finding two new multi-dimensional concepts of Physical Evidence (PE), and Enjoyment (E) in BX research. Ten critical influencing factors (CIF) were under PE, and five hygiene factors (HF) were under E for eRBX. Both these multi-dimensional concepts are further framed into an alternative paradigm of etailscape. This study can help practitioners to understand the insight and anatomy, for creating sustainable eRBX, and prioritize marketing investments accordingly.

Assortment optimization under cardinality effects and novelty for unequal profit margin items

This work focuses on assortment optimization problems concerned with the three ways a recommender system increases conversion rates: (1) improve accuracy, (2) provide consideration sets and (3) introduce novelty and diversity. To do so, we introduce a new random utility-based model, which in addition to item and user attributes, captures context effects, as well as the need to introduce novel items. We use this new model and an existing random utility model to study assortment optimization problems in which the value that a customer derives from an assortment reaches a maximum and then begins to decline with increase in size. We focus on an online retail environment, in which a trade-off exists between recommending items with high profit margins, but low consumer choice probability. We present polynomial-time algorithms to solve both optimization models. We computationally analyze the performance of the algorithms using real-world online transactional data.

Online retailing: determinants of competition between multinationals and local firms in emerging markets

PurposeThe fundamental research question is which aspects of the external environment are most strongly associated with the differential market share between large multinational online retailers and smaller, local retailers in emerging markets. For the purposes of this study, the differential market share refers to the likelihood of having a higher market share for multinational online retailers than for local online retailers.Design/methodology/approachThe theoretical framework of the study is based on PESTLE analysis. This study uses longitudinal country-level archival data and conducts a stepwise logistic regression analysis to investigate the impact of environmental factors.FindingsThe results indicate that the effectiveness of law-making bodies and government involvement with information and communications technologies (ICTs) among other factors are significantly associated with a higher market share for multinational online retailers relative to local retailers.Research limitations/implicationsThe study examines the impact of certain external factors (i.e. socioeconomic variables and legal environment) on the differential market share between multinational online retailers and local ones. Future research should investigate additional factors such as cultural roles and internal operating dynamics of online retailers. The research emphasizes online retailing. A logical extension of the current study is to examine how the online retailing environment differs from the brick-in-store retailing environment relative to the competition. The current study investigates the differential market share between multinational and local online retailers only in the emerging markets setting. The results may differ if the developed market setting is also considered. We recommend that future research compares the developed markets and emerging markets settings relative to the differential market share between multinational and local online retailers.Practical implicationsNot all improvements in legal institutions are associated with improved market conditions for multinational online retailers. Managers of multinational online retailers must pursue some mitigation strategies to prevent institutional voids in emerging markets. Therefore, adapting the business model by collaborating and establishing relationships with local online retailers is an effective strategy to mitigate institutional voids (Dohet al., 2017; Yanget al., 2012). Moreover, multinational online retailers are recommended to collaborate with local governments to change unfavourable legal conditions (Dohet al., 2017; Boddewyn and Doh, 2011).Originality/valueThe extant literature on online retailing frequently addresses internal company characteristics and consumer behaviour. This study focuses exclusively on environmental factors associated with differential market share. We contribute to the literature on online retailing, retailing strategies and competition dynamics in emerging markets.

The Online Experience of Luxury Consumers: Insight into Motives and Reservations

Several research efforts provide insight into the corporate online strategies of luxury brands. However, little research has focused on how consumers perceive the luxury online experience. This research aims to understand the underlying motivations and reservations towards online luxury purchase. The perceived online experience of luxury consumers is examined within the framework of the functional theory of attitudes, rooted in the work of Katz (1960) and Shavitt (1989). An exploratory approach yielded a typology of five motivations: independent browsing, personalized communication, accessibility, and convenience; and three reservations: purchase of unfamiliar brands, lack of spontaneity and uninspiring online retail environments. This research contributes a much needed consumer perspective of luxury online retail to the existing literature. The findings have resulted in a comprehensive understanding of the online shopping luxury experience. Theoretically, the findings support the functional theory of attitudes and the influence of both hedonic and utilitarian dimensions on the online luxury experience. More practically, this work shows that recognition of the underlying motivations and reservations of online luxury consumers informs marketers and brand managers on how to adapt their online presence and initiatives.

Order fulfilment problem with time windows and synchronisation arising in the online retailing

In this paper, we study the order fulfilment problem with time windows and synchronisation, which arises in the online retailing environment. Given customer orders released in the time window of decision, the online retailer needs to decide which fulfilment centre should fulfil customer orders, how to rigidly coordinate and synchronise operations of different types of vehicles, and how to deliver orders while meeting customers' service time windows, to minimise expenses of order fulfilment. We first introduce a mixed-integer linear programming model, which faces a significant computation burden. To that end, we develop a decomposition-based approach. We conduct extensive experiments to verify the effectiveness of our approach by comparing it with a commercial solver, and a greedy heuristic. We also present managerial insights regarding how our approach could reduce the order transfer operations at the distribution centres and thereby optimise the e-order fulfilment expenses.

The Impact of Diurnal Preferences on Customer Satisfaction, Word of Mouth and Repurchasing: A Study in Indian College Online Shoppers

The importance of positive word of mouth (WOM) and repurchasing in competitive online retail environments demands their further study. Although customer satisfaction has been found to drive positive WOM and repurchasing, limited research has explored what type of customers feel more satisfied with online shopping. It was anticipated that the convenient nature of online shopping would better match the conscientious personality traits of customers with earlier sleep and wake times. Data collected from 334 Indian college students participating in this study using a snowball sampling method were analysed by multiple regression. As hypothesised, based on self-congruency theory, customers with earlier sleep and wake times were found to feel more satisfied with online shopping, which in turn enhanced their positive WOM and increased repurchase intention. Theoretical and managerial implications are discussed.

Serial product evaluations online: A three-factor model of leadership, fluency and tedium during product search

In any product search process, consumers encounter multiple products. In today's online retail environment, such product encounters are increasingly serial, such that consumers review products back-to-back (e.g., through swiping in mobile apps). The present research shows that for the serial evaluation of products, the serial position matters through an interaction of a leadership bias, conceptual fluency and tedium. During a product search, evaluations follow an S-shaped pattern consisting of (1) a primacy phase of declining evaluations (caused by a leadership bias towards the first product), (2) a wear-in phase of increasing evaluations (caused by increasing conceptual fluency after a recognition of the shared attributes of the product category), and (3) a wear-out period of declining evaluations (caused by tedium). Ten empirical investigations in an e-commerce setting granularly trace these three phases, establishing conceptually related overall boundary conditions (matching vs. searching products) and moderators (conditional vs. unconditional searching, product similarity, conceptual category knowledge, product image complexity) of the S-shaped pattern of serial product evaluations.

Spreading the Word: How Customer Experience in a Traditional Retail Setting Influences Consumer Traditional and Electronic Word-of-mouth Intention

The study of customer experience has gained substantial importance in the consumer behavior field because of how it impacts the development of long-term relationships with customers. The next frontier of customer experience research involves new contexts represented by new channels offered by retailers, thus sparking research interest in the experience lived by customers not only in physical stores but also in virtual stores as a clear representation of the concept of omni-channels. Within this context, consumers’ actions on social media are particularly important because they can act as product or service endorsements to other customers affecting their purchase intentions. In this article, we attempt to bridge the gap between real-world retail experiences and how they connect with the online retail environment through consumer behavior contrasting traditional and eWOM intention at the point of experience immediately after its consumption in a physical setting. In order to do so, a Bayesian hierarchical approach is used to provide an adaptable, low-sample statistical infrastructure for the analysis of the proposed relationships. Our findings show that customer experience in physical stores still have a higher impact on consumer traditional WOM intention than on eWOM intention.

COMPARATIVE ANALYSIS OF SELECTED PROBABILISTIC CUSTOMER LIFETIME VALUE MODELS IN ONLINE SHOPPING

The selection of a suitable customer lifetime value (CLV) model is a key issue for companies that are introducing a CLV managerial approach in their online B2C relationship stores. The online retail environment places CLV models on several specific assumptions, e.g. non-contractual relationship, continuous purchase anytime, variable-spending environment. The article focuses on empirical statistical analysis and predictive abilities of selected probabilistic CLV models that show very good results in an online retail environment compared to different model families. For comparison, eleven CLV models were selected. The comparison has been made to the online stores’ datasets from Central and Eastern Europe with annual revenues of hundreds of millions of euros and with almost 2.3 million customers. Probabilistic models have achieved overall good and consistent results on the majority of the studied transactional datasets, with BG/NBD and Pareto/NBD models that can be considered stable with significant lifts from the baseline Status quo model. Abe's variant of Pareto/NBD have underperformed multiple criterions and would not be fully useful for the studied datasets without further improvements. In the end, the authors discuss the deployment implications of selected CLV models and propose further issues for future research to address.

Modeling Emotive and Cognitive Origins of Consumer's Purchase Choices and Patronage Decisions

Despite the considerable role of consumers' emotive and cognitive origins in performing e-commerce transactions, a few empirical investigations systemically integrate the utilitarian and hedonic factors into the online retailing environment to uncover consumers' purchase choices and repatronage decisions. Built upon the dual-process framework and cognitive model (COG) of satisfaction decisions, this article proposes that anticipated elation (emotive factor) and trust propensity (cognitive factor) are the determinants of immersive satisfaction (emotive factors/outcome) and repatronage intention (cognitive outcome). The study further argues that the utilitarian and hedonic factors moderates the proposed relationships. A sample of 424 valid questionnaires was collected from experienced online consumers in Malaysia. Statistical analysis of the study was conducted using partial least square (PLS), which is a variance-based structural equation modeling (VB-SEM) technique, for both measurement and structural assessments. The empirical evaluation supports the structural relationships between exogenous and endogenous constructs in the online retailing environment. Additionally, utilitarian and hedonic product type moderates the proposed structural relationships, except for the relationship between anticipated elation and immersive satisfaction. The research's practical and theoretical implications are discussed.

Engaging consumers in multichannel online retail environment

PurposeWith India becoming world’s second largest user of smartphones (Ming, 2017) and with more users adopting mobile devices for online shopping, Indian online retailers now have to manage mobile channel in addition to existing traditional channel (of computers). Hence, the purpose of this study is to investigate the mapping of product characteristics with individual channel capabilities and its effect on online consumer behaviour, so that e-tailers can create enhanced online shopping experience for consumers.Design/methodology/approachA comprehensive research model is developed on the basis of the knowledge gained from multichannel retailing and e-commerce literature. Then, the model is empirically tested, with primary data collected from 344 customers, using structural equation modelling. The data are collected from customers across two product categories: electronics and fashion.FindingsThe results reveal that perceived usefulness, perceived risk and perceived self-efficacy are important drivers of online consumer behaviour for continued usage. The multi-group analysis confirms the moderation influence of platform type for some relationships across electronics and fashion.Practical implicationsThe findings underline the importance of multichannel complementarity across electronics and fashion. The preference of mobile devices for fashion and traditional devices such as computers for electronics provides valuable insights for online retailers towards management of multichannel e-commerce ecosystem.Originality/valueIn Indian context, this is the first empirical research on online multichannel retail setting, studying the impact of diverse channel formats on different product categories. The study’s findings give empirical basis to online retailers to look out for right product–channel fit strategy for engaging consumers in the long run.

Online retailing across e-channels and e-channel touchpoints: Empirical studies of consumer behavior in the multichannel e-commerce environment

This research contributes to broadening understanding of online retailing across electronic channels (e-channels, e.g., mobile devices) and e-channel touchpoints (e.g., mobile shopping apps) from a consumer perspective. Based on the multichannel retailing approach and theoretical considerations, the authors suggest an enhanced perspective on the online retailing environment and validate this multichannel e-commerce perspective by conducting both an online survey (N = 502) and an experimental study (N = 126). The results indicate that online retailing can be classified into four e-commerce categories that entail individual e-channel touchpoints, emphasizing the need for a more differentiated consideration of “the online channel.” This work advances marketing research and practice by illustrating that both technology-related quality and context-related situational benefit affect consumers' utilization of e-channels. Further findings show that retailers can enhance consumers' shopping experiences by providing alternative e-channel touchpoints (i.e., specific digital shopping formats) that contribute differently to the online customer journey.

Understanding the Value of Fulfillment Flexibility in an Online Retailing Environment

Problem definition: Fulfillment flexibility, the ability of distribution centers (DCs) to fulfill demand originating from other DCs, can help e-retailers reduce lost sales and improve service quality. As the cost of full flexibility is prohibitive, we seek to understand the value of partially flexible fulfillment networks under simple and effective fulfillment policies. Academic/Practical Relevance: We propose a general method for understanding the practical value of (partial) fulfillment flexibility using a data-driven model, theoretical analysis, and numerical simulations. We then apply this method for a large e-retailer. Our method applies to e-retailers with local fulfillment constraints and customer abandonment, two features that are new to the fulfillment literature. We also introduce a new class of spillover limit fulfillment policies with attractive theoretical and practical features. Results: We derive optimal fulfillment policies in various settings using theoretical analysis, which provides guidelines on which policies to test in numerical simulations. We then use simulations to estimate for our partner that a proposed fulfillment network with additional flexibility equates to a profit improvement on the order of tens of millions of U.S. dollars. Managerial Implications: We provide an approach for e-retailers to understand when fulfillment flexibility is most valuable, and find it provides the most benefit for our collaborator when fulfillment costs are high, or centrally held inventory is low. Also, we identify the risks of myopic fulfillment with additional flexibility and demonstrate that an effective spillover limit policy mitigates these risks. Methodology: Our analysis uses dynamic and stochastic optimization, applied probability, and numerical simulations.

Moral licensing and moral cleansing applied to company-NGO collaborations in an online context

In this paper, we focus on a specific aspect of monetary value creation in CSR activities, namely, company–NGO collaborations in the solicitation of donations. During a customer's journey through an online retail environment, companies can control their presentation of options to donate to an NGO partner before or after the purchase of their products. We investigate how the sequence of purchase and donation requests influences the amount donated to an NGO and the potential revenues for a company. We apply two cognitive biases—moral licensing and moral cleansing—as theoretical bases. Prior research on moral licensing and moral cleansing frequently neglects ecological validity. Our research attempts to address this issue by applying experimental settings which increase the transferability of results into practical measures. The paper provides marketing managers with the opportunity to understand which sequence of donation and purchase options is the most suitable for their purpose.

Consumer attitudes towards bloggers and paid blog advertisements: what’s new?

PurposeReports show that 6.77m people published blogs on blogging websites and more than 12m people write blogs using their social network. However, few studies have explored consumer attitudes toward bloggers and their advertising. Therefore, an effort to discover how paid blog advertisements influence consumer attitudes toward bloggers and the products they advertise will help marketers gain an understanding of how to use bloggers as paid sponsors to influence consumer purchase intent. Using online survey approach, a study recruited participants (n=210) through an online survey platform (MTurk). The results indicated that the similarity between the consumer and the ad creator is an important psychological reason why consumers are more likely to perceive advertisements as more authentic, more affective, less deceptive and more credible, and they are thus more likely to trust the blogger. On the other hand, the importance of ad attribute (authenticity) does not significantly influence consumers’ intention to purchase products advertised by a blogger. As consumers are becoming more skeptical of advertisements, blogs need to be entertaining and a pleasure to view. Not only does the content need to be interesting, the design, flow and clarity of the blogs must also be considered important factors. In addition, advertising needs to be believable, credible and honest. In the online world, trust and credibility are still paramount in attracting consumers’ engagement; hence, promoting companies’ products and services through blogs can be an effective strategy to lower consumer skepticism barriers. The paper aims to discuss these issues.Design/methodology/approachParticipants answered questions about their attitudes toward bloggers and their advertising when purchasing products in an online retail environment. Furthermore, participants also answered questions about their perceived trust in the bloggers themselves as well as the authenticity and credibility of the brand-related communication received from bloggers. Moreover, they reported on their attitudes toward how deceptive they considered bloggers and their advertising to be. Finally, participants reported how paid blog advertisements influence their purchase intent.FindingsSimilarity toward the ad creator is an important psychological reason behind consumers’ attitude toward blogs. Consumers who follow a blog often have the same interests and are thus more likely to support bloggers. This idea can be used as a segmentation strategy to reach particular consumers. Consumers who perceive similarity with the ad creator are more likely to recognize the ads as more authentic, affective, credible and trustworthy as well as less deceptive, regarding the blogger. Blogs need to be entertaining and a pleasure to view. Not only does the content need to be interesting but the design, flow and clarity of the blog are also important factors. Blog advertising needs to be believable, credible and honest. In the online world, trust and credibility are still paramount in attracting consumers’ engagement with the website, bloggers or social media.Originality/valueTrust in the blogger did not influence consumers’ purchase intent; however, it did influence their attitude toward how similar they are with the blogger. In an online shopping environment, the human touch and personal contact between consumers and retailers has been lost. Consumers often leave the online transaction due to a lack of trust. Therefore, bloggers can be replacements for the missing “salesperson” in online interactions. Companies can use bloggers as the mediating person to reach their intended audiences, bridging the gap between the company and consumers.