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  • September 2020
  • Article
  • Management Science

Customer Supercharging in Experience-Centric Channels

By: David R. Bell, Santiago Gallino and Antonio Moreno
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Abstract

We conjecture that for online retailers, experience-centric offline store formats do not simply expand market coverage, but rather, serve to significantly amplify future positive customer behaviors, both online and offline. We term this phenomenon “supercharging” and test our thesis using data from a digital-first men’s apparel retailer and a pioneer of the so-called zero inventory store (ZIS) format—a small-footprint, experience-centric retail location that carries no inventory for immediate fulfillment, but fulfils orders via e-commerce. Using a risk-set matching approach, we calibrate our estimates on customers who are “treated,” that is, have a ZIS experience, and matched with identical customers who shop online only. We find that after the ZIS experience, customers spend more, shop at a higher velocity, and are less likely to return items. The positive impact on returns is doubly virtuous as it is more pronounced for more tactile, higher-priced items, thus mitigating a key pain point of online retail. Furthermore, the ZIS shopping experience aids product discovery and brand attachment, causing sales to become more diffuse over a larger number of categories. Finally, we demonstrate that our results are robust to self-selection and potentially confounding effects of unobservable factors on the matched pairs of customers. Implications for retailing practice, including for legacy, offline-first retailers, are discussed.

Keywords

Retail Operations; Marketing-operations Interface; Omnichannel Retailing; Experience Attributes; Quasi-experimental Methods; Operations; Internet and the Web; Marketing Channels; Consumer Behavior; Retail Industry

Citation

Bell, David R., Santiago Gallino, and Antonio Moreno. "Customer Supercharging in Experience-Centric Channels." Management Science 66, no. 9 (September 2020).
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About The Author

Antonio Moreno

Technology and Operations Management
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More from the Authors

    • June 2022
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    Zalando: Becoming the Starting Point for Fashion

    By: Antonio Moreno, Leela Nageswaran, Emilie Billaud and Federica Gabrieli
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    Worten Portugal: Becoming a Digital Marketplace

    By: Antonio Moreno, Pedro Amorim and Tonia Labruyere
    • October 2021 (Revised October 2021)
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    Operations in an Omnichannel World

    By: Antonio Moreno
More from the Authors
  • Zalando: Becoming the Starting Point for Fashion By: Antonio Moreno, Leela Nageswaran, Emilie Billaud and Federica Gabrieli
  • Worten Portugal: Becoming a Digital Marketplace By: Antonio Moreno, Pedro Amorim and Tonia Labruyere
  • Operations in an Omnichannel World By: Antonio Moreno
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