Consumer Pseudo-Showrooming and Omni-Channel Placement Strategies1
Authors: Gu, Zheyin (Jane); Tayi, Giri Kumar
Journal: MIS Quarterly (2017)
DOI: 10.25300/misq/2017/41.2.11
Recent advances in information technologies (IT) have powered the merger of online and offline retail channels into one single platform. Modern consumers frequently switch between online and offline channels when they navigate through various stages of the decision journey, motivating multichannel sellers to develop omni-channel strategies that optimize their overall profit. This study examines consumers’ cross-channel search behavior of “pseudo-showrooming,” or the consumer behavior of inspecting one product at a seller’s physical store before buying a related but different product at the same seller’s online store, and investigates how such consumer behavior allows a multichannel seller to achieve better coordination between its online and offline arms through optimal product placement strategies. We develop a stylized model in which a multichannel firm offers a product line consisting of two horizontally differentiated products. Consumers are uncertain about the true value of either product. A consumer’s uncertainty regarding a particular product’s value is fully resolved after inspecting that product in person, and can also be partially resolved after inspecting the other rela…