Customer Channel Adoption and Migration Behavior in an Extensive Channel Environment: An Abstract

Abstract

Multichannel retailing means retailers engage in selling merchandise through more than one channel (Levy and Weitz 2011). With the current development of the internet and modern technology in e-commerce, adopting multiple channels has become increasingly popular among retailers. However, what motivates channel adoption is extensive (e.g., Ansari et al. 2007; Kumar and Venkatesan 2015; Melis et al. 2015; Venkatesan et al. 2007). Previous studies establish the multichannel retailer generally with only two types of channels, the physical store and the online environment. Consequently, the attention of multichannel studies has been mostly on the growth of the online channels, such as channel switching behavior from offline channels to online channels (e.g., Melis et al. 2015; Vherhoef et al. 2007) or how the additional channel affects the sales and profitability of retailers (e.g., Avery et al. 2012; Pauwels and Neslin 2015; Van Nierop et al. 2011). Currently, the channel scope expands fast and includes more channels and some customer touchpoints such as social media, a company website, as well as traditional touchpoints (e.g., TV, radio, print, etc.) (Li and Kannan 2014; Verhoef et al. 2015). The major research question addressed is: what customer characteristics and channel characteristics stimulates new channel adoption in an environment with a substantial number of channels? Our unique data set consists of 5 primary channels (own physical stores, telephone ordering, own website, partner websites and mobile apps) for a total of 23 unique channel opportunities of a new Indian based, food retailing start-up with comprehensive records at both individual level and channel level. We propose that a customer’s decision to adopt a new channel is affected by both customer characteristics and retailer channel characteristics. We find that at the individual customer level, promotion is a key factor determining a customer’s adoption behavior. At the retailer channel level, intense promotion and good service encourage a customer to adopt a new channel. We segment customers into limited users and multichannel users by their usage level and find that the two types of customers behave differently in their channel migration process. We further find that the two types of customers bring different benefits to a retailer: multichannel shoppers generate more revenue, more transactions and utilize more promotions than limited channel users. The results provide useful insights for how retailers should create new channel strategies as well as consistent communications strategies.