The end of the world as we know it? The influence of online channels on the luxury customer experience

Luxury brands claim to offer consumers pleasure and prestige and deliver high profits to retailers. While the global demand for luxury goods is increasing, consumers expect that the purchasing process these goods will accommodate their preferences on how, where, and when they want to purchase them. The changing nature of luxury markets and customers' purchasing behavior makes it necessary to understand why customers would choose an online channel to purchase luxury offerings. What are the features that make so appealing, attracting consumers towards them? Our study explores customers' motivations, the benefits and the experiences they are expecting and perceiving from the Online Luxury Experience (OLX). We examine the OLX and establish three corresponding luxury customer segments using online channels to purchase their luxury goods and services: the purists, opportunists, and e-lux. We highlight the differences between the segment's customer journeys and the implications for theory and luxury customer experience management.     

The effects of store brand loyalty on store loyalty: evidence from the Spanish market

This article studies the impact of retailers' store brands on store performance. Specifically, we analyze the extent to which store brands contribute to store loyalty. On the one hand, a positive relationship between customers' familiarity with and loyalty to the retailer's own brand and customers' loyalty to the retailer should result from the potential of the store brand to differentiate the retailer. On the other hand, an negative relationship between customers' familiarity with and loyalty to the retailer's own brand and customers' loyalty to the retailer may result from store brands' association with more price-sensitive customers, who have a higher propensity to buy at different stores that offer the best bargain. The empirical analysis, conducted with a sample of customers of leading retailers in the Spanish detergent market, shows no relationship between store brand loyalty and loyalty to the retailer. Although the purchase of store brands relates positively to higher loyalty to the retailer, this relationship deteriorates with the degree of exclusivity of store brands within the customer's shopping basket.     

Acquiring customers through online marketplaces? The effect of marketplace sales on sales in a retailer's own channels

Online retailers are increasingly using third-party online marketplaces (e.g., Amazon, Taobao) as an alternative sales channel to their website. While cross-channel sales elasticities have been established for many sales channel combinations (e.g., adding bricks to clicks), we lack an understanding of whether the use of third-party marketplaces grows or cannibalizes a retailer's sales. Practitioners argue that firms can build their e-commerce business through acquiring customers by selling on the marketplace. Indeed, a marketplace could complement a retailer's offering (e.g., acquiring new customer segments), although inventory effects might mitigate this complementarity. Alternatively, cannibalization might occur from losing customers from one's website to the online marketplace. The present research investigates which of the two opposing forces prevails using a time series of category sales data from one of the largest global marketplace sellers. The authors use vector autoregressive modeling to show that marketplace sales increase sales on a retailer's website (0.014% for every 1% in marketplace sales). This effect is strongest for categories with large choice and low product prices. Acquiring customers through the marketplace might be cheaper than through other sources (estimated at 24% of initial sales). However, online retailers should be aware that this strategy strengthens the marketplace and may have potential negative long-term consequences (e.g., through marketplace control of the customer relationship).     

Influence of salesperson characteristics and customer emotion on retail dyadic relationships

Retail salespeople often serve as a critical nexus between retailers and their customers. Salespeople can provide information and service that assist customers during the purchase process. Through buye–seller interaction, salespeople conceivably will influence how customers feel when shopping; in essence, salespersons are likely to have an impact on customers' emotions. Prior research has found that customer emotions have beneficial effects for both the store and the salesperson. Although previous work has considered the effect store environment has on customer emotions, no extant research has examined how customer emotions emerge after interacting with salespeople or what the outcomes of those emotions are. Consequently, this paper examines potential precursors of customers' emotions that arise during interaction with retail sales personnel, as well as consequences of those emotions. A conceptual framework is developed, propositions are posited, and retail management and research implications are presented.     

The Hare and the Tortoise: Do Earlier Adopters of Online Channels Purchase More?

Earlier adopters of a product or service tend to be more valuable than later adopters. Does this empirical generalization equally apply to earlier adopters of a multichannel retailer's new online channel too? This study segments customers on the basis of their responses to a new online channel and investigates the effects of their online channel adoption on purchase volumes across segments. The data cover 12.5 years of purchase history and individual transactions at a large multichannel French retailer of natural health products. Contrary to conventional wisdom, it is not innovators or early adopters, but rather the late majority segment that purchases more than the other segments, both before and after online adoption. Adoption of the firm's new online channel does not influence purchase volumes of heavy shopper segments (late majority and innovators), whereas light shopper segments tend to increase their purchases after adopting this new channel.     

Customer segmentation by web content mining

This article introduces a new dimension, Interpurchase Time (T), into the existing RFM (Recency, Frequency, and Monetary) model to form an expanded RFMT model for parsing consumers' online purchase sequences in a long period to implement customer segmentation. The proposed RFMT model can track and discern changes in customer purchasing behaviors during their whole shopping cycle. Firstly, a web content retrieving system was developed to fetch publicly available customer data on a retailer's website, including demographic information (gender, age, location, etc.) and product information (name, price, date, etc.) of each purchase in a period from 2008 to 2019. The RFMT values of a customer were then computed from the retrieved data and subsequently analyzed by the hierarchical clustering to derive seven homogeneous clusters with specific customer profiles. Subsequently, demographic features and product preferences were identified for each cluster with business insights that can help the retailer to improve customer relationships and to implement targeted recommendation strategies.     

How customers motive attributions impact intentions to use an interactive kiosk in-store

This study explores the effect of customers motive attributions that is, the motives customers ascribe to a retailer for introducing interactive kiosks into the store, on their expectations of the technology and usage intentions. We study two types of motive attribution: (1) to self-serve the retailer's own economic goals or (2) to better serve customers' needs. Data were collected at a do-it-yourself retailer that recently installed interactive kiosks. Empirical results demonstrate that customer-serving motive attributions improve intention to use, both via expected performance and via expected enjoyment. Our findings also demonstrate that customers expect the interactive kiosk to be less enjoyable when attributing self-serving retailer motives. Managerial implications are discussed along with direction for future research.     

Increasing customer purchase intention through product return policies: The pivotal impacts of retailer brand familiarity and product categories

This study gauges customer perspectives to investigate how return policy generosity (the degree to which a retailer imposes minimal restrictions on returns) influences customer-perceived value and customer purchase intention. It also examines two moderators, retailer brand familiarity (the extent to which the retailer brand is well-known) and product categories (the difference between products with respect to the magnitude of effort required to make a return). An experiment with a 2 × 2 × 2 factorial design was conducted. The results show that return policy generosity increases customer purchase intention by enhancing the perceived value of the policy. Lesser-known retailers benefit more from generous return policies than their well-known competitors, particularly when a product requires significant return effort. Well-known retailers benefit from offering generous return policies only for product categories that involve low levels of return effort. The findings of this study suggest that if a retailer formulates a return policy without considering the moderating effects of retailer brand familiarity and product category, then it will tend to over-invest if the return policy is generous.     

How do customers meet their needs in in-store and online fashion shopping? A comparative study based on the jobs-to-be-done theory

Understanding customer needs is key for fashion retailers to stay competitive and innovative. Surprisingly, however, extant literature mainly explores customer needs in terms of a garment and its attributes rather than viewing shopping as a problem-solving process to meet customer needs. Moreover, these studies fail to address how customers meet their needs in-store (ISFR) and online fashion retailing (OFR). To fill this research gap, we empirically investigate customers' personal and social needs and how they can be met through the jobs-to-be-done theory. Findings reveal that, beyond the purchase of a garment, customer needs can be fulfilled through different ways, such as smart technology or a person's high interaction with social others in ISFR and the online shop experience or a social linkage without social interaction in OFR. Additionally, our findings offer potential service innovations for fashion retailing managers.     

Digital coupon promotion and platform selection in the presence of delivery effort

In recent years, physical retailers have started selling products to consumers through either third-party or self-operated online platforms. Doing so, they face demand which depends on digital coupon promotions, delivery effort by the platform (i.e., deliver products from retailers to consumers), and channel preference. In this paper, we develop a game-theoretic model to examine the interactions between the physical retailer's distribution channel choices and coupon promotions. In normal operation, retailers prefer to pay lower fees to the third-party platform, but we find, counterintuitively, that when carrying on a digital coupon promotion, the retailer can be better off paying a higher participation fee to the third-party platform. We also identify the conditions under which the retailer prefers the third-party platform over the self-operated platform with and without coupon promotions. Furthermore, we show that digital coupon promotions and delivery effort boost the retailer's profits by price discriminating among consumers with differing purchase utilities.     

The influence of multi-channel pricing strategy on price fairness and customer confusion

ABSTRACT

Multi-channel retailers face the challenge of coordinating marketing variables across their channels. In this respect, one of the main issues arising is whether to differentiate or integrate prices. Our study examines the impact of three multi-channel price differentiation instruments on perceived price fairness, customer confusion, and their consequences. In a scenario-based online experiment, we use a 2 x 2 × 2 between-subjects design and manipulate product price differentiation, online promotion and online shipping fees. The results indicate that price differentiation has an impact on fairness evaluations and customer confusion. Product price differentiation and online promotion are perceived as more unfair and lead to more confusion than price parity. Price fairness perceptions of shipping fees depend on product price differentiation. Customers perceive shipping fees as fairer than no shipping fees when prices are cheaper online but perceive shipping fees as less fair when prices are integrated. These results suggest that customers expect a consistent consideration of channel cost advantages and disadvantages and that shipping fees might serve as a cue for customers to consider the retailer’s channel costs. We further show that price fairness and customer confusion mediate effects of pricing instruments (in particular online promotion) on attitudinal and behavioral consequences.     

The Retailer's Perspective on the Link Between Logistical Resources and Perceived Customer Loyalty to Manufacturer Brands

The objective of this study was to investigate the relationships between logistics and brand‐related resources, and assess their impact on the retailer's perceptions of customer loyalty to manufacturer brands. On the basis of theoretical underpinnings of the resource‐based view, this study explores the relationships among four main variables: (1) variety of collaborative logistics technologies shared between retailers and manufacturers, (2) manufacturer's logistics operations quality provided to retailers, (3) retailer's brand differentiation orientation, and (4) retailer's perceptions of customers loyalty to manufacturer brands. An online survey was conducted on 313 senior marketing and supply chain managers from retailer firms. The results of the structural equation analysis support a mediated relationship between logistical resources and perceived loyalty to manufacturer brands. The retailers believe that shared logistics technologies enable manufacturers and retailers to offer higher levels of availability and visibility of preferred brands to their end‐user customers. In turn, the end‐users become more confident with their decisions to repurchase the same brand offerings.     

Searching offline and buying online – An analysis of showrooming forms and segments

Showrooming is behavior where customers search for information in brick-and-mortar stores and then purchase products online. While the literature conceptualizes showrooming as a one-dimensional variable, we argue that different forms of showrooming exist. We identify four showrooming segments that differ in retailer loyalty, usage of in-store information, devices, place and time of the online purchase. We show further that loyal vs. competitive showroomers differ in psychographic variables, such as price consciousness, desire for social contact and bad conscience during showrooming. The results have important implications for retailers aiming to keep customers in their own channels.     

Electronic Logistics Service Quality (e‐LSQ): Its Impact on the Customer’s Purchase Satisfaction and Retention

The Internet retailing industry continues to grow rapidly. Several Internet retailers are, however, struggling to retain customers due to the high level of competition among incumbents. We propose that customer satisfaction with the order fulfillment process is an important determinant of overall customer satisfaction with the retailer, as well as with the extent of customer retention enjoyed by the retailer. This paper offers a new concept for electronic logistics service quality and investigates the relationship between the quality of online fulfillment and the ensuing retention of customers, using archival data on 260 online retailers. The structural equation model results indicate that satisfaction with the physical distribution quality and cost are positively related with customer’s purchase satisfaction and customer retention. Additionally, the results indicate that while purchase satisfaction is a strong indicator of customer retention, underlying drivers of purchase satisfaction do not have nearly the same impact on customer retention directly as they have on purchase satisfaction.     

Now what? Evaluating the sales effects of introducing an online store

This study creates a framework for evaluating the sales impact of adding an online channel to an existing network of physical stores. Using a unique database consisting of pooled customer data from a Swedish retailer's online and offline stores, it investigates the purchase behavior of customers before and after the introduction of an online channel. The data overcome a crucial obstacle present in previous studies in that they permit matching of individual-level customer data for both online and offline behavior. The results show significant and substantial effects of online channel introduction on customer acquisition as well as on cannibalization of physical stores.     

The informational value of multi-attribute online consumer reviews: A text mining approach

In the digital age, customers use online reviews to minimize the risks associated with purchasing a product. Major online retailers help customers choose the right product by exposing reviews that received many “helpful” votes at the top of the review section. Given that reviews that have received the maximum helpfulness votes are considered more important in purchase decisions, understanding determinants of helpfulness votes offers clear benefits to online retailers and review platforms. This study focuses on the effect of review informativeness, which is measured by the number of attributes discussed in a review, and its interplay of review valence on customers' perception of review helpfulness. We applied a word-level bigram analysis to derive product attributes from review text and examined the influence of the number of attributes on the review's helpfulness votes. More importantly, we also suggested the moderating role of review valence. Estimation results of the Zero-inflated Poisson models on 21,125 reviews across 14 wireless earbuds indicated that as more attributes are discussed in a review, the more the review can earn helpfulness votes from customers. Furthermore, the positive association between the number of attributes and helpfulness was enhanced among negative reviews. This study contributes to customers' information processing literature and offers guidelines to online retailers in designing a better decision support system.     

Assessing customers’ perceived value of the online channel of multichannel retailers: A two country examination

Given the constant and often dramatic technological advancements that facilitate retailing, especially online channel adoption by industry and customers, research focusing on customers perceived value of the online channel of multi-channel retailer’s requires conceptual and empirical elaboration. This study advances understanding of customer perceived online channel value and how customer perceptions of value effect online channel satisfaction and online channel loyalty. Using data from a multi-country study, we provide a deeper understanding for multi-channel retailers of how to balance investments in various value drivers to enhance online channel satisfaction and customer loyalty.     

Loyalty Formation for Different Customer Journey Segments

The proliferation of new touchpoints empowers today’s customers to design their own journey from search to purchase. To address this new complexity, we segment customers by their use of specific touchpoints in the customer journey, investigate the association of several covariates with segment membership, consider the rise of mobile devices as potential “game changers” of existing segments, and explore how the relationships among product satisfaction, journey satisfaction, customer inspiration, and customer loyalty differ across segments. Based on anticipated utility theory and using latent class analyses on large-scale data from two samples of 2,443 and 2,649 journeys, we identify five time-consistent segments―store-focused shoppers, pragmatic online shoppers, extensive online shoppers, multiple touchpoint shoppers, and online-to-offline shoppers―that differ considerably in their touchpoint and mobile device usage, their segment-specific covariates, and their search and purchase patterns. The five segments remain unchanged in the two data sets even though the usage of mobile devices has increased substantially. Furthermore, we find that the relationships between various loyalty antecedents and customer loyalty differ between the segments. The insights from this paper help retailers develop segment-specific customer journey strategies.     

Better or Worse? Effects of online promotion habits on customer value: An empirical study

Online frequent and uninterrupted price discounts easily cause customers to form general tendencies to purchase promotions, or ‘online promotion habits’. Compared with offline promotion shopping, the distinct features of online promotion shopping make customer behaviours highly changeable and leave the effects of online promotion habits on customer value a puzzle. Using a dataset of real transactions from a leading online apparel retailer in China, this study makes continuous observations of customers’ online promotion habits. Drawing on the behavioural learning theory, we empirically investigate the dynamic effects of online promotion habits on customer value. The results reveal that after customers form online promotion habits, their customer value increases significantly. Furthermore, among customers with online promotion habits, online promotion habits exert an inverted U-shaped effect on customer value. Namely, as online promotion habits strengthen, customer value increases accordingly, yet negative outcomes show if online promotion habits exceed a certain level. We discuss the theoretical and managerial implications of our findings, which will enable researchers and practitioners to measure and dynamically manage customers’ online promotion habits.     

Cross-channel effects of omnichannel retail marketing strategies: A review of extant data-driven research

The authors review 50 empirical retailing research papers that have appeared over the last 20 years to take stock of what we know, need to know better, and do not know yet about within-retailer cross-channel effects of omnichannel retail marketing strategies on (a) consumer responses over their purchase journeys, i.e., online and/or offline search, purchase intention, frequency, amount, returns, loyalty, and (b) the retail firm's aggregate outcomes (e.g., sales, costs, profits, product returns) by channel and overall. Specifically, the authors focus on five strategies: (1) the addition of online channel by an offline retailer; (2) the addition (or subtraction) of offline channels by an online retailer; (3) addition of mobile shopping channel (website and/or app) by offline and/or online retailer; (4) cross-channel integration strategies; and (5) retail marketing mix strategies. The author/s integrate findings from empirical research on these strategies into a number of ‘insights’ about ‘what we know’. Prominent among these are the following: Adding a transactional online channel to an offline channel improves the retailer's overall sales even though offline channel sales can be cannibalized to some degree. Adding an offline channel by an online retailer, however, boosts online channel sales as well as overall sales of the retailer. Similarly, adding a mobile shopping channel usually increases customer purchase frequency and amount and overall sales of the retailer in the long-term. Strategies for greater cross-channel integration generally have a positive effect on a retailer's overall performance while online advertising has positive effects on offline channel consideration and sales as well as overall sales of a multichannel retailer. Other insights or findings that need further study or open questions are also identified. The paper closes with managerial implications of the derived empirical insights, and suggestions for future research.