When Do Online Consumers Shop in an Offline Store: The Moderating Effects of Product Characteristics

This study serves as an initial attempt to demonstrate empirically how online consumers react to the offline channel extensions (i.e., opening physical stores) of e-tailers. Specifically, we examine how the attributes of offline channels influence consumer intentions to switch to offline channels and how they also lead to incremental demands on online channels. We investigate how these effects vary across highly complex utilitarian and hedonic products. The results of the study indicate that although store openings encourage online consumers to shop there when purchasing highly complex utilitarian products, the addition of offline stores results counterintuitively in incremental patronage of the online channels when consumers shop for highly complex hedonic products. This study validates the guiding role of product characteristics in designing offline channels for e-tailers and suggests that incorporating product type and complexity into the design is likely to contribute to the development of stores tailored to specific consumer segments.     

Competing Online: Studying Consumer Choice Drivers for Online Financial Services

ABSTRACT

Given the rapid increase in the consumer use of online services and the increase in competition between firms that compete online, firms are faced with a crucial challenge. Having invested significant resources in transitioning consumers from using offline services to using online services, they now need to understand what drives consumers to choose between competing online services. Our study seeks an exploratory answer to the above challenge. Specifically, we consider, “what role do factors that drive consumers into using online services play in assisting firms better compete in the online space?” This paper explores the above question by quantifying the value that consumers of an online financial service place on having access to in-depth product information, an affordable online service, an easy to use online service, access to offline capabilities, and available marketing promotions. The results reported in this paper are based on a web-based discrete choice experiment in which 2,209 consumers were asked to compare various online financial service offerings, differing from each other in terms of the relative availability of our critical factors. The results demonstrate that consumer preferences (relative utilities) for various factors of an online financial service are different. Our results enable practicing managers to understand the factors that drive consumer choice when faced with competing online services. We believe that these results have both managerial and research implications for design, management and operations strategy formulation for online services.     

The Influence of Consumers’ Cognitive and Psychographic Traits on Perceived Deception: A Comparison Between Online and Offline Retailing Contexts

In this article, we examine the role of several consumers’ cognitive and psychographic traits in their perceptions of retailers’ deceptive practices (perceived deception) and the different effects on perceived deception associated with online vis-à-vis in-store shopping. Building on theoretical models of persuasion in consumer behavior, we hypothesize that the antecedents of perceived deception in traditional settings are the same as those on the Internet, while the intensity of the impact of these antecedents differs between the online and the offline environment. Results suggest that the effects of individual’s cognitive traits (Internet-based information search and perceived Internet usefulness) and risk aversion on perceived deception are more relevant when consumers shop online than when they purchase from traditional stores. Conversely, psychographic traits (shopping enjoyment and materialism) play a more important role in explaining perceived deception in the traditional shopping context as compared to the online channel. Several theoretical and managerial implications are derived from these findings.     

Consumer heterogeneity and online vs. offline retail spatial competition

This paper develops a game-theoretic spatial model featuring consumer heterogeneity in online vs. offline retailers’ spatial competition. We find that consumers’ browse-and-switch behavior intensifies the competition because both offline and online retailers’ price and profit decline when the behavior occurs, but it is not necessarily a threat to offline retailers especially when the product relates more closely to experience. We consider six equilibrium scenarios for different combinations of consumer behaviors when considering a hybrid retailer. The analysis taking consumer heterogeneity into consideration shows that the hybrid retailer operating both online and offline is not always the winner. Particularly, the business opportunity for the offline retailer lies in consumers’ willingness to pay in store, and whether the retailer launches an online store depends on the type of products and services provided.     

Consumer responses to offline and online low price signals: The role of cognitive elaboration

Low price signals (LPS), pricing tools where retailers promise to match or beat competitors' prices, have been increasingly popular in offline and online markets. We compare consumer evaluation of offline and online LPS as a function of how deeply they process the signals. Results of an experiment indicate that regardless of retail media consumers accept an LPS as an indicator of low price when they do not elaborate sufficiently on the signal. However, at high levels of elaboration, consumers challenge the assumptions underlying their acceptance of the signal at lower levels of elaboration whereby they become more skeptical of an online signal than an offline signal resulting in lower efficacy of the former. Implications of these findings for consumer vulnerability to false low price signaling are discussed along with other theoretical and managerial implications. Additionally, directions for future research are provided.     

Determinates of financial behavior: insights into consumer money attitudes and financial literacy

As consumer requirements for financial services permeate society, they link various financial institutions more closely together, developing divergent financial products. This research develops a conceptual framework for discussing consumer money attitudes, financial literacy regarding financial decisions, and financial behavior. Study findings suggest that consumers who have retention-planning and achievement-esteem attitudes toward money make high-risk financial decisions; anxiety toward money tends to exist mainly in low-risk investors. Financial literacy affects consumer financial behaviors, and demographic variables play segmentation roles. Theoretical contributions and management implications are provided in the study for related research, education departments and financial firms.     

Is transparency a good thing? How online price transparency and variability can benefit firms and influence consumer decision making

The internet has empowered consumers and changed the way they search and shop for products and services by increasing the availability and transparency of pricing and other comparative information. However, what is less clear from a managerial perspective is just how transparent pricing information should be. While it might seem that increasing price transparency would reduce consumer search, we find that it may actually increase search and delay. In this article, we review the use of firms’ application of price transparency in practice and propose that specific types of information can influence how transparent prices are to consumers, and how such transparency can influence consumer decisions in a way that is beneficial for the firm. We focus on a specific form of transparency: whether or not the consumer knows the range of pricing. We also discuss whether a high variability pricing approach versus a low variability pricing approach influences consumer decision making—and whether this influence is moderated by transparency.     

Information Search and Product Returns Across Mobile and Traditional Online Channels

Product returns will soon cost firms a trillion dollars annually; e-commerce appears more at risk for these costs relative to offline channels. Retailers thus need strategic insights into which factors increase customers’ return propensity and when the short-term costs of returns might be offset by future customer purchases. This article reports two studies that use transaction data from two large apparel e-tailers. Study 1 demonstrates that due to the differences between mobile and traditional online channels, consumers form a larger consideration set when they shop through mobile channels, and this distinctive search practice spills over onto return rates. That is, return rates are lower in mobile channels, and the use of the mobile channel also alters the effect of discount promotions. The findings in Study 2 suggest that future purchases by consumers, after a return, are contingent on category characteristics. In categories in which customers can easily learn from their previous return experience, product returns positively increase future spending, but the opposite is true in categories in which it is difficult to learn.     

Is Online Word of Mouth Higher for New Models or Redesigns? An Investigation of the Automobile Industry

Changing consumer preferences, entry of new competitors with better products, and product improvements by existing competitors make new products a necessary investment for most companies. In addition to the investments in R&D and production of new products, firms also need to invest in advertising to promote them. The growing use of social media by consumers therefore makes online consumer conversations an attractive additional format for firms to promote products at a lower cost. This is particularly so in the automobile industry where advertising costs are very high. Whether consumers discuss a newly introduced product, and help to promote it, however, may depend on how new the product is. This is the question that we investigate in the context of the automobile category. Specifically, we examine whether online consumer conversations are more likely for new models (e.g., Chevy Volt introduced in 2010) or redesigns of existing models (e.g., the redesign of Chevy Impala in 2010). We use data from two online sites where consumers discuss automobiles – consumerreports.org and edmunds.com – for our analysis. Our empirical investigation also accounts for the effects of sales on word of mouth and the simultaneity between sales and word of mouth. Additionally, we also consider the effect of satisfaction on word of mouth and the endogeneity of satisfaction. Our results across two datasets suggest that redesigns stimulate significantly more conversations than new models. Managerial and research implications of the findings are discussed.     

Relative importance of online versus offline information for Internet purchases: Product category and Internet experience effects

Across three studies we examine the relative importance of online versus offline information for Internet purchases. Study 1 reveals that the relative importance of online information is higher for utilitarian products (computer hardware and software) than for hedonic products (books, music, and movies). Study 2 shows that, in the case of online purchases, the relative importance of online information decreases with increasing consumer Internet experience. Consequently, offline information becomes relatively more important for consumers with high levels of Internet experience. In addition, the relative importance of online information is higher for utilitarian products than for hedonic products, supporting Study 1 results. Study 3 suggests a possible mechanism for the effect of Internet experience on decreasing importance of online information, showing that consumers' trust of online search engine information decreases with increasing Internet experience. We conclude with implications of our results for firms that sell products on the Internet.     

Shopping for fun or shopping to buy: Is it different online and offline?

Consumers can shop both online and offline, either for fun or for needs. We investigate the consequences of shopping for fun or for need on word-of-mouth (WOM), intentional loyalty, and price consciousness directly comparing the offline and online settings. We find differences in the relationships among the considered variables, with the offline context being characterized by a simplified structure of causalities, greater maturity, and fewer but stronger ties among the considered constructs, compared with the online context. Furthermore, the content of WOM changes: consumers share experiential issues when they shop for fun, and efficiency issues when their shopping is goal-oriented     

A comparison of online and offline gender and goal directed shopping online

The aim of this paper is to model the effect of the consumers’ perceptions of their offline and online gendered behaviour on online utilitarian shopping motivation and purchase intentions. We hypothesise that when consumers shop online, their behaviour is mediated by two gendered behaviours, namely offline and online. To test this hypothesis, 515 usable responses were collected in face-to-face interviews. The conceptual model was tested with confirmatory factors analysis (CFA) and structural equation modelling (SEM) across five product categories. Our findings show that the effect of a consumer's perception of their gendered behaviour offline vs. online on online utilitarian shopping motivation and purchase intentions is significantly different. In particular we found that utilitarian shopping motivation online has a significant effect on purchase intentions online mediated by gender (online) overall: strongly for females but not for males. Conversely, utilitarian shopping motivation online has a significant effect on purchase intentions online mediated by gender (offline) for males but not overall and for females.     

Consumers' Perceptions of Online and Offline Retailer Deception: A Moderated Mediation Analysis

This research examines the effects of consumers' perceptions of retailers' deceptive practices on their evaluations of online and offline retailers. Results from two samples of consumers (shopping in online versus offline channels) show the direct and indirect influence of consumers' perceptions of retailers' deceptive practices on consumers' evaluations, including product satisfaction, retailer satisfaction and word-of-mouth. Perceptions of deception influence retailer satisfaction through product satisfaction, and word-of-mouth through retailer satisfaction. These mediated effects are further moderated by the online vs. offline purchase channel. Implications for theory and management are discussed.     

Financial literacy education and behaviour unhinged: combating bias and poor product design

The growth of products available in the consumer financial market has provided more choice and formal control over household financial decisions than ever before. Financial literacy education programs are generally assumed to improve consumer behaviour in relation to financial products and services. However, there is scant evidence that demonstrates the causal link between education, literacy and behaviour. Through the use of a sample study, we show that the actions of individuals who are financially literate do not necessarily mean they will demonstrate good financial behaviour. We propose that in order to improve the financial behaviour of consumers, two critical areas need to be addressed. Firstly, the objectives of financial literacy programs should be not only to educate consumers about financial markets and products but highlight to individuals the psychological biases and limitations that they as humans cannot easily avoid. Secondly, the regulation of financial products sold to consumers needs alteration to meet the aim of protecting retail consumers from complex financial products that are confusing, ambiguous and inappropriate. We propose regulation and redesign of product information offerings using techniques employed in ecological interface design models to derive a suitability test for consumer financial products.     

“What’s the Harm in Being Unethical? These Strangers are Rich Anyway!” Exploring Underlying Factors of Double Standards

Previous studies show evidence of double standards in terms of individuals being more tolerant of questionable consumer practices than of similar business practices. However, whether these double standards are necessarily due to the fact that one party is a business company while the other is a consumer was not addressed. The results of our two experimental studies, conducted among 277 (Study 1) and 264 (Study 2) participants from a Western European country by means of an anonymous self-administered online survey, demonstrate that the respondents were not only harsher in their judgments of unethical business (vs. consumer) behavior, but also harsher in their judgments of unethical behavior by prosperous (vs. non-prosperous) consumers and prosperous (vs. non-prosperous) business companies (Study 1). Further, they were also less tolerant of unethical behavior by consumers (vs. one’s best friend) and business companies with which they have a less than good (vs. a good) relationship (Study 2). These results indicate that double standards are due to differences in perceived wealth between subjects and in the individual’s relationship with subjects. These two factors imply that double standards are not strictly reserved to consumer–business relations, but might also be used in business–business and consumer–consumer relations. Further, these results indicate that companies need to be aware of the fact that good financial figures may backfire as they might lead individuals to be more critical of a company’s deceptive practices. Moreover, these findings point to the importance of businesses investing resources—and to keep investing resources—in developing a good relationship with stakeholders as these good relationships lead to stakeholders being less prone to make moral condemnations.     

The multichannel pricing dilemma: Do consumers accept higher offline than online prices?

Whether to unify or discriminate prices in offline and online channels is a controversial topic that can be central to whether offline retailers survive in the marketplace. Field data evidence from a large multichannel retailer reveals a sobering picture. On average, only offline price premiums of approximately 2% seem feasible, and such premiums vary largely by product categories and price levels. High-priced products, which consumers perceive as risky, tend to allow offline price premiums, as do low-priced, takeaway items. However, in between these two extremes, the results show no potential for offline price premiums. Drawing on price fairness theory, we further explore consumer responses to higher offline prices in three experimental studies. In contrast with the assumptions of price fairness theory, the provision of purchase advisory services and communication of the price motive hardly stimulate consumer acceptance of higher offline prices in our context. However, the findings reveal important heterogeneity in consumer responses depending on their market segment, because some market segments indeed respond less negatively to higher offline prices. In addition, consumers accept offline price premiums for unplanned purchases.     

Revisiting the showrooming effect on online and offline retailers: The strategic role of in-store service

This study revisits the showrooming effect on online and offline retailers and is the first to examine the strategic role of in-store service in this regard. Considering the effect of in-store service in attracting consumers to offline channels and the showrooming effect of persuading offline consumers to purchase online, we propose a model consisting of two firms, a brick-and-mortar (BM) store and an e-tailer that can invest the staff or facilities necessary to deliver in-store services to consumers. Based on the service decisions, the two firms make their pricing decisions. We compare the optimal decisions of retailers in the cases without and with showrooming to explore the interaction between in-store service and showrooming. Our findings indicate that when a customer bears a high travel cost to visit the BM store, the store should lower the price, and improving the in-store service is ineffective in countering the consumer's showrooming behavior. Moreover, the service level in the case with showrooming can be either higher or lower than in the case without, and the outcome mainly depends on the efficiency of the service investment. Interestingly, in-store services can lead to a win–win situation for both online and offline retailers with showrooming. This study can also be extended to the case of powerful e-tailers or competing BM stores.     

See How Much We’ve Sold Already! Effects of Displaying Sales and Stock Level Information on Consumers’ Online Product Choices

Many online retailers make sales and stock level information live available to customers on their websites and offline retailers also increasingly can display this information. Yet it is unclear how consumers perceive such information and how it influences consumer choice. High sales and low stock may both signal popularity and quality, which will stimulate further sales. We however argue that sales level is more diagnostic than stock level as a cue and hence the effect of sales level on consumer choice will be stronger than that of stock level. Also, when both cues are available, the effect of sales level is expected to dominate. In addition, brand familiarity is expected to moderate these effects. These hypotheses are tested in two scenario-based online experiments in which participants choose between competing products for which information about either sales levels, stock levels, or both sales and stock levels is displayed. Results support the hypotheses and also show that sales level is indeed a more diagnostic cue than stock level. Analyses further reveal how perceptions of the popularity and quality of a product mediate the effects of sales and stock levels on consumer choice. The findings imply that retailers can successfully use sales and stock level information to induce quality perceptions and influence consumer choices.     

Taking Fake Online Consumer Reviews Seriously

Evidence discussed in this article indicates that consumers rely heavily upon consumer reviews when making decisions about which products and services to purchase online. Sellers and their marketeers are aware of this, and as a result, some of them succumb to the temptation to generate fake consumer reviews. This article argues that policymakers and regulators need to take fake reviews seriously. This is because they undermine a (potentially) effective and efficient mechanism for overcoming information asymmetry between online sellers and buyers. Consumer reviews also offer a powerful mechanism for regulating the marketplace. Sellers who sell sub-standard products or engage in sub-standard selling practices risk reputational damage. Genuine consumer reviews can therefore moderate bad seller behaviour and assist in improving the quality and efficiency of the marketplace. Although there are laws in many jurisdictions that prohibit misleading and deceptive conduct, detecting fake reviews is complex and difficult. This article proposes that one way of increasing the effectiveness of regulatory oversight is for regulators to add an “alliance approach” to their existing arsenal of regulatory systems and mechanisms.     

What factors determine e-satisfaction and consumer spending in e-commerce retailing?

Evidently, the Internet has resulted in a fundamental shift in retailing practice, creating a shift in both consumer and business behavior, which has been compared to that of the Industrial Revolution. The purpose of this paper is to analyze customer satisfaction in e-commerce market. In particular, we determine the factors that affect customer e-satisfaction and the relationship between customer satisfaction and consumer spending in e-commerce retailing. We focus on how American based e-commerce firms are impacted by these developments and how marketing practices have reflected the developing e-commerce situation. The results show that customer satisfaction does have an impact on consumer spending in American based e-commerce retailers. Further, the relationship between customer satisfaction and consumer spending is positive, where higher e-satisfaction results in more spending in e-commerce. The results also show that there is a direct relationship among e-service quality, e- satisfaction and e-loyalty in terms of online spending by consumers. However, the analysis shows that e-commerce still faces challenges compared with traditional offline retailers since customers cannot feel and try the products, and may end up choosing the products that they do not want.