Complementarity and Cannibalization of Offline-to-Online Targeting: A Field Experiment on Omnichannel Commerce
Authors: Luo, Xueming; Zhang, Yuchi; Zeng, Fue; Qu, Zhe
Journal: MIS Quarterly (2020)
<jats:p>As the online channel is crucially important, traditional offline retail stores seek to induce their existing consumers to buy online with incentives (i.e., offline-to-online targeting). However, it is debatable whether such targeting is truly effective. While advocates argue that online shopping should complement a firm’s store channel, critics counter that doing so may result in cannibalization. Drawing on the channel interplay literature and considering customers’ travel costs, we examine whether and how inducing online shopping complements or cannibalizes a firm’s offline sales. Using a randomized field experiment on over 11,200 customers of a large department store, we provide causal evidence for both the complementarity and cannibalization effects of online and offline channels. Offline-to-online targeting engenders higher online purchases (as intended) than no targeting. The local average treatment effects models suggest that once induced to buy online, consumers who live near the retailer’s physical store tend to increase their offline spending and total sales by 47% (i.e., complementarity effects for nearby consumers). However, for consumers who live far away from…