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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

    • 2023
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    Operational Consequences of Customer Interaction Design: Evidence From Last-Mile Delivery Services

    By: Natalie Epstein, Santiago Gallino and Antonio Moreno
    • May–June 2023
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    Need for Speed: The Impact of In-Process Delays on Customer Behavior in Online Retail

    By: Santiago Gallino, Nil Karacaoglu and Antonio Moreno
    • March 2023 (Revised August 2023)
    • Faculty Research

    Majid Al Futaim: Adapting the Shopping Mall to the Digital Era

    By: Antonio Moreno and Gamze Yucaoglu
More from the Authors
  • Operational Consequences of Customer Interaction Design: Evidence From Last-Mile Delivery Services By: Natalie Epstein, Santiago Gallino and Antonio Moreno
  • Need for Speed: The Impact of In-Process Delays on Customer Behavior in Online Retail By: Santiago Gallino, Nil Karacaoglu and Antonio Moreno
  • Majid Al Futaim: Adapting the Shopping Mall to the Digital Era By: Antonio Moreno and Gamze Yucaoglu
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