Revisiting the showrooming effect on online and offline retailers: The strategic role of in-store service |
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| Affiliation: | 1. School of Management, Northwestern Polytechnical University, Xi''an, Shaanxi 710072, China;2. Rowe School of Business, Dalhousie University, Halifax, NS B3H 4R2, Canada;1. WHU – Otto Beisheim School of Management, Burgplatz 2, 56179 Vallendar, Germany;2. Department of Marketing, Culverhouse College of Business, University of Alabama, Box 870225, Tuscaloosa, AL 35487-0225, USA;1. Ivey Business School, Western University, London, ON N6G 0N1, Canada;2. Rowe School of Business, Dalhousie University, Halifax, NS B3H 4R2, Canada;3. School of Business Administration, Southwestern University of Finance and Economics, Chengdu 610072, China;1. SILC Business School, Shanghai University, Shanghai 201899, China;2. Business School, The University of Edinburgh, Edinburgh, UK;3. School of Business, Guangdong University of Foreign Studies, Guangzhou 510420, Guangdong Province, China |
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| Abstract: | 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. |
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| Keywords: | Retail pricing In-store service Showrooming Competition Analytical model |
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