Omnichannel retailing operations with coupon promotions

This paper explores an omnichannel retail system under which the retailer offers coupons via online channels for market share and profit. It investigates the action mechanism of coupon promotion on omnichannel price and operational decisions by employing a theoretical model. Three coupon distribution modes are investigated; a scenario in which the omnichannel retailer does not offer coupons, offers coupons with a common face value, or offers coupons with a different face value. The results show that the distribution of coupons does not always lead to increased market share. Rather, market volume may be reduced if the competition between different channels is intense. When conducting a coupon promotion, the retailer always charges a higher price, but if the negative effects of coupon promotion for the competitive channel are relatively large, the retailer will reduce their price. Larger cross-selling revenue comes from ‘Buy Online, Pick Up in Store’ channel, indicating a stronger willingness to offer coupons and higher profits for the retailer. If the retailer takes the channel characteristics and consumers' channel preferences into consideration and offers different coupon face values across channels, they will derive higher profits.     

Shopping in the omnichannel supply chain under price competition and product return

In recent years, omnichannel retailing has created value for prospective consumers. The rise of omnichannel retailing has changed consumers' buying habits, and manufacturers are facing stiff competition from retailers. To reduce this competition effect, manufacturers and retailers often work together to reduce showroom display costs. Despite this practice, there is little understanding of how omnichannel retailing impacts supply chain (SC) profit under competitive conditions. We investigate the test-in-store-and-buy-online (TSBO) retailing strategy and its impact on SC profit and price competition between manufacturers. The retailer sells products of both manufacturers through its website but displays products of only one manufacturer in the showroom, which bears the displaying cost. The retailer adopts a return policy for the other manufacturer. Stackelberg game was used to examine how members of the chain interact, and Nash equilibrium was used to find optimal strategies for players under decentralized and integrated channels. The results show that the TSBO strategy in retailing benefits all supply chain players under the integrated channel. A further interesting finding is that omnichannel SC profits are highest when retailers adopt a return policy. When two manufacturers compete and adopt different sales models, the manufacturer who uses the TSBO retail model reaps the most profit. Several other managerial insights are drawn from sensitivity analyses.     

Competitive sustainable processes and pricing decisions in omnichannel closed-up supply chains under different channel power structures

In recent years, omnichannel retailing and remanufacturing issues have rapidly emerged in the closed-loop supply chain (CLSC). The omnichannel is a combination of online and in-store retailing, and it affects supply chain relationships and channel power structures by changing value creation processes. It allows consumers a hybrid shopping experience where they can order products online and pick them up in the store or test in-store and buy online (TSBO). Despite this practice, no studies exist on CLSC considering omnichannel retailing under different channel power structures. We investigate the TSBO retailing strategy and its impact on CLSC profit considering price competition between manufacturer and remanufacturer under Manufacturer Stackelberg (MS), Retailer Stackelberg (RS), Vertical Nash (VN), and cooperation (CO) models game settings. In this paper, mathematical models are developed to drive the optimal solution. A two-part tariff coordination mechanism (i.e., IS model) is also used to integrate all supply chain members. The proposed models examine the environmental and social welfare benefits of adopting green innovation products and remanufacturing processes in omnichannel retailing. A numerical study is carried out to illustrate the proposed models' application. The results show that the IS model can synchronize the economic, environmental, and social aspects leading to significant increases in performance. Total supply chain profit under the CO model is the highest. The manufacturer and remanufacturer generate higher profits in the MS model, whereas the retailer makes higher profits in the RS and VN models. When a manufacturer only wants to increase profit with green processes and is not concerned about omnichannel processes, more resources must be allocated for green innovation.     

Service integration in omnichannel retailing and its impact on customer experience

Although omnichannel retailing has received considerable attention from scholars and practitioners in recent years, its impacts on customer experience and relationship outcomes remain unclear. Therefore, this study aims to examine the effects of two components of service integration in omnichannel retailing, namely service consistency and service transparency, on customer experience (i.e. flow and perceived privacy risk), and customer loyalty. Flow theory and hyperbolic discounting theory are employed to underpin these relationships. The data was collected using an online survey with 786 useable responses. Our findings indicate that service consistency has a direct and significant impact on flow and perceived risk while only the effect of service transparency on flow is significant. Moreover, both flow and perceived risk are related to customer loyalty to a retailer. Furthermore, it is found that showrooming behaviour and location-based service usage moderate the relationship between service consistency and privacy risk. The findings of the research provide important implications for a retailer regarding the development, implementation and management of omnichannel strategy.     

Coupon Trading and its Impacts on Consumer Purchase and Firm Profits

When a retailer distributes manufacturer coupons to consumers without perfectly identifying their product valuations, consumers may have incentives to trade coupons. We develop a model to capture the coupon trading phenomenon and compare three scenarios: (I) no coupon, (II) coupon without trading, and (III) coupon with trading. We find that coupon trading can increase the profits of either the retailer or the manufacturers, but not at the same time. The retailer benefits from coupon trading when the coupon market is competitive and consumer hassle cost is low, while the manufacturers benefit from coupon trading when the coupon market is uncompetitive and consumer hassle cost is high. In addition, coupon trading does not always increase total demand. Firms benefit from coupon trading by charging higher prices, which leads to a decreased total demand. As a result, consumers end up with a higher average cost under coupon trading. We also compare coupon trading with improved coupon targeting, and find that coupon trading may allow firms to gain higher profits than improved coupon targeting. Further, we extend the main model to a competitive setting where the products are substitutable, and find that the main results still hold. Finally, we employ numerical analysis to identify the optimal coupon face values in different scenarios, and the results suggest that coupon trading combined with incentive mechanisms may lead to Pareto improvement for the channel as a whole.     

Is online-to-offline customer care support essential for consumer service?

Customer satisfaction is the main pillar for convenient and profitable retailing. The retail sector continuously tried to develop new strategies to improve consumer satisfaction. It is impossible to provide each service directly to the consumer by the retailer. In this direction, the retailer establishes customer care to provide the best service to consumers. Consumer care can provide promotional or prevention services, increasing the consumer's satisfaction level. This study is developed to show the impact of retailers' customer care service for an offline-to-online retailing strategy. The demand is consumer support, advertisement, and selling price dependent. For maintaining consumer service, some free home delivery policies are offered, when consumers ordered more than a certain percentage of the amount. Finally, the total profit of this O2O retailing system is calculated by the classical optimization technique. Some special cases are discussed in the numerical section to prove the impact of customer care services. Numerical results prove that customer care support enhances the profit by 48.20%, whereas investment in the advertisement and home delivery strategy helps the retail industry to earn 44.80% and 16.74% more profit, respectively. Finally, from this study, it is clear that customer care activities are essential to increase the profit of the retailing sector.     

Showrooming,Webrooming, and User-Generated Content Creation in the Omnichannel Era

Omnichannel retailing characterizes a seamless and integrated approach of diverse retail channels. Showrooming and webrooming are prominent shopping trends among consumers in omnichannel retail. The purpose of this study was to examine (1) whether omnichannel consumers’ psychographic characteristics (i.e., information attainment, price comparison, social interaction, assortment seeking, and convenience seeking) had an influence on showrooming and webrooming, which then had an influence on omnichannel consumers’ user-generated content creation intention on social media and (2) whether the social-local-mobile (SoLoMo) experience moderated the links between omnichannel consumers’ showrooming/webrooming and user-generated content creation intention. An online survey was administered to a total of 680 omnichannel consumers with showrooming and webrooming experience from a U.S. consumer panel. This study found that omnichannel consumers’ showrooming and webrooming positively affected user-generated content creation intention on social media. Omnichannel consumers’ information attainment, price comparison, and social interaction positively affected showrooming. Information attainment, social interaction, and assortment seeking positively affected webrooming. The SoLoMo experience moderated the link between webrooming and user-generated content creation intention on social media. Managerial implications were discussed.     

Category-specific coupon proneness: The impact of individual characteristics and category-specific variables

In seeking to enhance the effectiveness of coupon promotions, researchers have long sought to identify “coupon prone” consumers. Previous measures of coupon proneness have not examined differences in coupon usage across product categories and have ignored the confounding effect of coupon attractiveness. An Item Response Theory (IRT)-based framework overcomes these limitations and yields category-specific estimates of propensity to redeem coupons that are independent of coupon attractiveness. The authors utilize an IRT-based model to estimate consumers’ category-specific propensities to redeem coupons for two product and two service categories, and investigate how coupon proneness varies across consumers and across categories as a function of individual characteristics and category-specific variables.The authors find that category-specific measures of propensity to redeem coupons achieve an average accuracy of 89 percent in predicting redemption intentions. Propensity to redeem coupons is also found to be related to category-specific brand loyalty and perceived coupon availability, as well as to individual characteristics such as general coupon proneness, value consciousness and price consciousness. These findings highlight the importance of studying coupon proneness at the category level and suggest that the IRT-based approach has considerable promise as a methodology for studying coupon usage. Using the approach proposed in this study, marketers can forecast the impact coupons are likely to have in their particular category, rather than relying on general coupon proneness measures to predict coupon redemption rates at the category level. The study's findings can also be used to identify categories and consumer segments where coupon promotions are likely to have a larger impact, and have important implications for managers planning joint couponing strategies.     

基于需求与储量相关条件下的供应链协调研究

供应链模型由一个制造商和零售商组成,其中制造商向零售商供应商品,零售商面临客户的商品需求与储量相关。在该模型中,制造商欲通过批发价和储量成本补偿方式来协调分散式供应链并赢利,使供应链分散式时的系统总储量等于集中控制时的储量水平。假定商品需求是依赖储量的函数和一个储量成本补偿。在单个零售商情形下,制造商需要增大批发价及支付给零售商的储量成本补贴来协调整个渠道并盈利。当两个及多个零售商竞争时,假定市场需求依赖于总储量水平,零售商按照储量比例分割市场。     

An omnichannel approach to retailing: demystifying and identifying the factors influencing an omnichannel experience

ABSTRACT

The purpose of this research is to identify the factors that influence an omnichannel experience. Omnichannel is an emerging approach to retailing that responds to the changing nature of how customers shop in alternation between online and offline shops, and the increasing use of digital devices (e.g. smartphones and tablets), as a consequence retailers are focusing and establishing a seamless integrated approach to their services. Omnichannel is now a hot topic in retailing but there is a lack of empirical studies into the factors that influence an omnichannel experience. Using a mixed methods approach, we propose and empirically test a conceptual model that identifies four factors influencing an omnichannel experience: brand familiarity; customisation; perceived value, and technology readiness. We conceptualise omnichannel to include three key channels; in-store, online and mobile. Two hundred and forty-six questionnaires were collected and analysed using PLS-SEM and 11 interviews were carried out with marketing/ omnichannel professionals. Our results indicate that brand familiarity has a strong influence on omnichannel (in-store, online and mobile) while perceived value has a negative impact on the mobile experience. Our results show that retailers need to consider multiple factors, such as brand familiarity, customisation, perceived value and technology readiness as influencing factors of an omnichannel experience, and plan the use of multiple touchpoints simultaneously to enhance their overall customer’s experience. Although this study demonstrates the significant factors influencing an omnichannel experience, questions remain regarding the exact use of each touchpoint by customers and the extent of overlap between the touchpoints. which .     

Online and offline retailing: What we know and directions for future research

The fast-paced growth of e-commerce is rapidly changing consumers’ shopping habits and shaping the future of the retail industry. While online retailing has allowed companies to overcome geographic barriers to selling and helped them achieve operational efficiencies, offline retailers have struggled to compete with online retailers, and many retailers have chosen to operate both online and offline. This paper presents a review of the literature on the interaction between e-commerce and offline retailing, highlighting empirical findings and generalizable insights, and discussing their managerial implications. Our review includes studies published in more than 50 different academic journals spanning various disciplines from the inception of the internet to present. We organize our paper around three main research questions. First, what is the relationship between online and offline retail channels including competition and complementarity between online and offline sellers as well as online and offline channels of an omnichannel retailer? Under this question we also try to understand the impact of e-commerce on market structure and what factors impact the intensity of competition /complementarity. Second, what is the impact of e-commerce on consumer behavior? We specifically investigate how e-commerce has impacted consumer search, its implications for price dispersion, and user generated content. Third, how has e-commerce impacted retailers’ key managerial decisions? The key research questions under this heading include: (i) What is the impact of big data on retailing? (ii) What is the impact of digitization on retailer outcomes? (iii) What is the impact of e-commerce on sales concentration? (iv) What is the impact of e-commerce and platforms on pricing? And (v) How should retailers manage product returns across online and offline channels? Under each section, we also develop detailed recommendations for future research which we hope will inspire continued interest in this domain.     

The impact of information sharing and bullwhip effects on improving consumer services in dual-channel retailing

Data sharing among the supply chain players can be an exceptionally significant factor for the retailing industry. In this consideration, an improved retailing methodology for a dual-channel supply chain with a single retailer and manufacturer is built under the bullwhip effect and asymmetric data sharing. Retailer provides asymmetric information to the manufacturer regarding demand to increase their profit. In this scenario, measuring the bullwhip effect is essential in retailing strategy. By adopting an online-to-offline retailing strategy, industries can earn more profit and increase the satisfaction level of customers. The present study focuses on dual-channel retailing, where the demand for the product in both channels varies with the selling price. Keeping in mind the goal of sustainable development, an advanced transportation strategy is utilized in this study, along with some carbon emission costs. Autonomated inspection is utilized to identify defective products. Finally, centralized and decentralized profit functions are formulated for this study. Several cases and numerical examples are provided to validate this study. It is clear from the numerical findings that information sharing within the players provides 1.26% more profit compared to a decentralized case. Due to asymmetric information, which leads to the bullwhip effect, the retailing system faces loss. Thus, information sharing is 0.19% beneficial for dual-channel retailing. Sensitivity analysis for key parameters ensures the findings' applicability in the real world.     

Pricing behavior in the online DVD market

Using a data set with of 5508 observations collected in the online DVD market, we compare the pricing behavior between online branches of multi-channel retailers (MCRs) and online-only retailers. We find that (1) prices by online-only retailers are lower than prices by online MCRs by an average of $1.51 or 6.8 percent; (2) the price dispersion for the popular titles is sharply lower among online-only retailers than that among MCRs online; and (3) online-only retailers change prices more often than online MCRs although price changes by both types are few. The evidence suggests that the pricing efficiency diminishes as the multi-channel retailing format dominates the online retailing market.     

Comparing the effectiveness of rewards and individually targeted coupons in loyalty programs

Loyalty programs (LP) and rewards are ubiquitous in retailing, designed to increase customer expenditures and retention, gather abundant customer-level data, and design individually targeted coupons. Although studies have analyzed the individual impacts of LP rewards and targeted coupons on shopping trip incidence and expenditures, they have not compared the two instruments. By investigating the LP of a leading German grocery retailer that uses both LP rewards (points to redeem for free products) and individually targeted coupons, the current study establishes a comparison of their profitability and relative contributions to increasing shopping trips and expenditures. The investigated LP also relies on in-store kiosks to interact with customers, so they can decide when to redeem LP points and request coupons. By jointly modeling the effects of LP point redemptions and coupons on shopping trip incidence and expenditures, using their decision to access the kiosk as a dependent variable and rich data that span thousands of customers over 60 weeks, this study reveals that both instruments increase shopping trip incidence, kiosk access, and expenditures. The LP point redemptions have a stronger effect on shopping trip incidence; coupons have a stronger effect on kiosk access. Although a single redemption of LP points leads to a greater increase in expenditures than a single coupon redemption (€1.46 vs. €0.48), coupons yield three times greater expenditures after controlling for usage frequency; lower discounts also contribute to coupons’ higher profitability. Therefore, LP point redemptions and individually targeted coupons are complementary tools for retailers. This empirical study provides practical insights and pertinent managerial implications regarding the management and design of modern LPs.     

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.     

Antecedents of Coupon Proneness: A Key Mediator of Coupon Redemption

Coupons increase the buying power of consumers. Businesses use coupons to increase sales, new products adoption, and repeat buying. Billions of coupons are distributed annually via different methods. However, consumers redeem only a small fraction of these, thereby forgoing the potential cost savings. The authors investigated several factors that motivate coupon redemption. The data were obtained by surveying 353 U.S. consumers. Price consciousness, pride, and satisfaction in using coupons, and value consciousness were found to increase coupon use. The perception that the savings are not worth the effort decreased their use. The results suggest ways for managers to boost coupon use.     

The different faces of coupon elasticity

Coupons account for over two-thirds of all consumer promotional efforts initiated by the manufacturers of consumer goods. In this study, the impact of coupons on brand sales is investigated and how that impact decays over the life of the coupon is demonstrated. Specifically, we present an econometric model that can capture coupon effects in terms of equivalent price reduction, account for coupon effects over time, allow inference of coupon effects when retailers decide to double or triple the coupon value, and provide both self-coupon and cross-coupon elasticities at different levels of aggregation. A widely used sales response model is adapted, and an analytical model is proposed to estimate both the self-coupon and cross-coupon (face value) elasticities of sales at the store level. From the store-level elasticity estimates for a given week, the authors analytically derive the coupon elasticities for the chain level by aggregating across stores, and over the life of the coupon by aggregating over time. The proposed sales response model is estimated with the data obtained from three markets for various product categories, and the coupon elasticities are computed. The proposed framework allows one to demonstrate the hypothetical equivalence of a shelf-price reduction for a given coupon face value in each week. Also, the effect of doubling the face value of a coupon results in more than a proportionate increase in elasticity. The authors find that both self and cross-coupon elasticities are much smaller in magnitude than the average self and cross-price elasticity measures reported in the literature.     

The dark side of up-selling promotions: Evidence from an analysis of cross-brand purchase behavior☆

This research investigates how up- and down-selling promotions affect customers’ cross-brand purchasing and churn behavior at a multi-brand retailer. We employ a hidden Markov model that accounts for the dynamics of customers’ latent brand preferences and attrition and captures the resulting purchase behavior in response to promotional offers. Using data on coupon promotions and purchase transactions from an online retailer, we find that coupons for a higher-end brand increase customers’ likelihood of purchasing the brand. While this suggests that the retailer can increase its short-term revenues by sending coupons for the higher-end brand to customers of the lower-end brand, we find that customers up-sold via coupons are more likely to switch back to the lower-end brand, in comparison to other customers of the higher-end brand, limiting the positive effect of up-selling promotions in the long term. Moreover, lower-end brand customers’ promotion-induced brand switching leads to their increased attrition from the retailer, which negatively affects long-term purchase behavior and revenues. In contrast, when triggered by down-selling coupons, customers’ brand switching does not impact their attrition. Based on these findings, we demonstrate how our model-based approach can assist marketers’ multi-brand couponing decisions.     

Perceived Omnichannel Customer Experience (OCX): Concept,measurement, and impact

Efforts to measure customer experiences (CX) in multifaceted, omnichannel, retail contexts are crucial but lacking research guidance. Prior service quality literature has established methods for measuring CX in traditional, single-channel contexts but not adapted such measures to omnichannel contexts. With a mixed method research design and studies in eight phases, the authors propose a comprehensive measurement instrument that incorporates a schema- and categorization-based theoretical conceptualization of how customers assess omnichannel retail experiences; they also integrate means–end chain theory to explain perceived omnichannel customer experience (OCX) as a construct. This construct captures multiple omnichannel evaluation dimensions: social communications, value, personalization, customer service, consistency of both product availability and prices across channels, information safety, delivery, product returns, and loyalty programs. Multiple applications of the measurement model empirically confirm the suitability of this instrument in consumer goods omnichannel retail settings. Its 36 items reflect nine first-order quality dimensions that combine to form the overall, second-order OCX construct. The measurement instrument offers sound psychometric properties, as confirmed by several reliability and validity tests, and predicts customer behavior reliably across studies. Thus, the OCX measurement instrument offers utility for theory, management practice, and further research.     

Pricing coordination of a dual-channel supply chain considering offline in-sale service

With the rapid development of e-commerce, the problem of pricing conflicts between online and offline channels has become increasingly prominent. And the in-sale service has become an important factor influencing consumers' purchase decisions. To study the impact of in-sale service, this paper establishes a dual-channel supply chain model considering offline in-sale service. Using Stackelberg's game theory and backward induction, it solves the optimal pricing of supply chain members and makes comparisons in both cooperative and non-cooperative situations. Finally, it coordinates the supply chain through a two-part tariff contract. The results show that (1) The optimal wholesale price and offline retail price are positively correlated with in-sale service quality. And the opposite of the optimal online direct selling price. (2) With the quality of in-sale service improving, the retailer's profit will increase and then decrease but the manufacturer's profit will always decrease under non-cooperation. The total profit of the supply chain will rise and then fall under cooperation. (3) The two-part tariff coordination maximizes profits with the manufacturer reducing the wholesale price and the retailer paying a transfer cost. (4) Cooperative decision is better than the non-cooperative decision in terms of the supply chain as a whole.