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Effects of Multichannel Coordination and E-Commerce Outsourcing on Online Retail Performance Iryna Pentina a; Ronald W. Hasty b a College of Business Administration, The University of Toledo, Toledo, Ohio, USA b College of Business, University of North Texas, Denton, Texas, USA Online Publication Date: 01 October 2009

To cite this Article Pentina, Iryna and Hasty, Ronald W.(2009)'Effects of Multichannel Coordination and E-Commerce Outsourcing on

Online Retail Performance',Journal of Marketing Channels,16:4,359 — 374 To link to this Article: DOI: 10.1080/10466690903188021 URL: http://dx.doi.org/10.1080/10466690903188021

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Journal of Marketing Channels, 16:359–374, 2009 Copyright # Taylor & Francis Group, LLC ISSN: 1046-669X print=1540-7039 online DOI: 10.1080/10466690903188021

Effects of Multichannel Coordination and E-Commerce Outsourcing on Online Retail Performance IRYNA PENTINA College of Business Administration, The University of Toledo, Toledo, Ohio, USA

RONALD W. HASTY Downloaded By: [Pentina, Iryna] At: 16:09 9 October 2009

College of Business, University of North Texas, Denton, Texas, USA

This article assesses the role of multichannel coordination strategy in impacting online performance, and the need for E-commerce functions outsourcing at the initial stages of multichannel integration. Our findings indicate that a higher degree of interchannel coordination increases retailers’ online sales. The article also concludes that integrated retailers that outsource more E-commerce functions, such as Web site hosting, site design, content development, order processing, E-mail marketing, Web performance monitoring, and E-logistics, do not show higher online sales performance than those who develop them in-house. Managerial implications of these findings are proposed, and directions for future research are outlined. Based on prior conceptual research, the article develops and empirically tests the construct of multichannel coordination. KEYWORDS E-commerce outsourcing, multichannel coordination, multichannel retailing, sales performance

INTRODUCTION Rapid proliferation of in-home broadband connectivity along with improved search engine technology has led to unprecedented growth in Internet product research and acquisitions (Aberdeen Group, 2006). Online sales (excluding travel) exceeded US$100 billion in 2006, following a spectacular Address correspondence to Iryna Pentina, Department of Marketing & International Business, College of Business Administration, The University of Toledo, 2801 W. Bancroft St., Toledo, OH 43606-3390. E-mail: [email protected] 359

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average annual growth of 25% during 2000–2006 (eMarketer, 2007). With one-tenth of the world’s population now shopping online (ACNielsen, 2005), the prospects for online selling are very optimistic. The development and speedy adoption of rich and flash Internet technologies make online stores more entertaining and convenient to users by providing proprietary videoand music-based content and dynamic and customized product viewing. Advances in mobile technology allow targeted, on-demand contextual and localized advertising and new levels of personalization and one-to-one marketing (CRM, 2007). Competing in this dynamic and technologically complex retail environment is a challenge for incumbent store-based retail companies that are experiencing increasing product commoditization, retail space saturation, slow growth, and lagging legacy infrastructure (Retail Forward, 2003). While adding an online channel to their existing channel mixes of stores, catalogs, and direct marketing appears to be a necessity just to keep up with the competition, new strategies need to be developed addressing the challenges of competing online. Surprisingly, current academic literature does not offer much insight on multichannel retail strategies and their impact on firm performance (Rangaswamy & Van Bruggen, 2005). Recent comprehensive reviews of multichannel retailing literature have emphasized insufficient research progress in the areas of strategic role of multichannel marketing, performance advantages of multichannel marketing, resource deployment in multichannel systems (Rangaswamy & Van Bruggen, 2005), channel synergy development, role of channel integration, and interchannel coordination (Neslin et al., 2006). This article addresses some of the gaps in the current multichannel literature, with particular focus on online performance effects of multichannel competitive strategies. In the following sections, we review the relevant literature, develop theoretical foundations, and advance research hypotheses. Next, we discuss the methods used in hypotheses testing and analyze test results. Finally, we provide a discussion of theoretical and practical implications of the findings, study limitations, and suggestions for future research.

MULTICHANNEL COORDINATION AND THE DYNAMIC CAPABILITIES APPROACH Firms that have adopted multichannel retailing need to develop new competitive strategies in the novel dynamic environment of multichannel retailing. While academics discuss various strategic approaches (Gulati & Garino, 2000; Porter, 2001), industry analysts overwhelmingly support higher degrees of multichannel coordination and integration. Best practices show that these strategies can provide synergies that would mutually benefit both channels, at the same time positively affecting the bottom line (Johnson, 2004). Multichannel coordination refers to simultaneous and consistent employment of

Multichannel Coordination and E-Commerce Outsourcing Effects

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online, store, and (where applicable) catalog channels. Synergy implies using these channels in a manner that increases the effectiveness of each separate channel in providing a seamless shopping experience for customers, thereby contributing to the superior performance of the company. Companies can coordinate their store, catalog, and Internet marketing functions to create uniform consistent image and offer similar merchandise; integrate their order-processing, fulfillment, and distribution functions to reduce duplication and transaction costs; and combine their customer information databases to develop individualized customer service and targeting to increase customer loyalty. Thus, multichannel coordination appears to be a viable competitive strategy that adds value to the existing retailer offer. To date, no detailed analyses or tests of multichannel coordination’s impact on firm performance have been conducted. We argue that multichannel coordination represents a strategy that can be a source of competitive advantage for multichannel retailers by providing unique interchannel synergies.

Coordination of Marketing Functions Brand integration (Gulati & Garino, 2000) appears to be the most visible element of synergistic coordination. It entails extending the retailer’s brand name to its online channel, thus transferring the customer perception of the retailer’s reputation, service quality, and merchandise mix to its Web site. While signaling trust and credibility and helping reduce customer risk, this decision also influences customer expectations and may affect their satisfaction with the company. By making the retailer’s online channel easily located by typing its name, integrated branding automatically ensures site traffic and supports the retailer’s image of technological expertise (Goersch, 2002). The use of such Internet-based marketing tools as E-mail marketing, viral marketing, and site search for targeting the existing and new store and online customers benefits both channels. By sending targeted E-mails to store shoppers to promote new arrivals or seasonal sales, and including links to their online outlets, retailers encourage browsing and buying online (Ansari, Mela, & Neslin, 2005), as well as in the store. By making loyal store shoppers aware of additional opportunities to buy online, and online shoppers aware of specific store events, retailers create and reinforce brand awareness at a fraction of the traditional media costs (Internet Retailer, 2007). Using the Web site search tool, visitors can search for specific products, models, and colors, and, even if store inventories are not available for checking online, still get an idea of the assortments carried by the store. By giving consumers the opportunity to E-mail a friend the description and a picture of the product, viral marketing uses word-of-mouth to substantially increase its customer base, both online and in the stores. Channel cross-promotion and cross-selling is another powerful instrument of marketing coordination. Including the Web site address on the


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physical store signage, store bags, and employee uniforms helps create the image of consistency between the two channels, and steers consumers to the online channel when they need information or customer service or for assortment browsing (Goersch, 2002). Some retailers (e.g., Gap, Sears, Staples) have access to the Internet in their stores through store kiosks that help customers order products unavailable in stores or obtain more detailed information. By including store listings, locations, and hours on the Web site, as well as by advertising special store offers, or offering coupons and gift cards redeemable in their stores, retailers encourage online search and offline shopping (also known as research shopping). By encouraging research shopping, retailers reduce customer service costs and increase opportunities for cross-selling (Burke, 2002; Neslin et al., 2006). In addition, it has been shown that more Web site visits eventually account for an increase in store visits of the retailer (Teerling et al., 2006). In order to maintain a certain level of channel uniqueness, crossadvertising of special offers, e.g., offering accessories online for the apparel purchased in a store, or selling parts in the store for the appliances and electronics acquired online, further facilitates traffic to both channels. It is interesting that when consumers perceive that online and store-based channels are integrated, they are less likely to switch retailers in the case of stock-outs in one channel. Bendoly, Blocher, Bretthauer, Krishnan, and Vankataramanan (2005) found that faced with product unavailability in one channel, customers are more likely to look for the item in the retailer’s other channel(s) than buy from any of the competitors’ channels if they perceive the retailer’s channels to be closely integrated. Cost implications of integrated marketing have been considered by Berger, Lee, and Weinberg (2005), who developed an optimization model that suggests communication expenses for fully integrated channels are lower than those for partially integrated or separate channels. Consistent merchandising and pricing in both channels helps maintain the brand image of the retailer. Depending on the inventory capabilities and company goals, some companies offer wider selections online, while others limit online offerings to only certain categories of products. Some low-margin retailers use the Web for more expensive and bulky items (e.g., furniture on Target.com), while selling more low-margin merchandise in stores. High-end retailers limit their online offerings to create the image of exclusivity and increase store appeals. For instance, Nordstrom Inc. launched its Designer Collection micro-site, featuring 10 designers and showcasing highly stylized apparel. The site features store locations and designer event listings (Internet Retailer, 2006). Other retailers use the online channel to sell items that are not in high demand in the stores (e.g., extended sizes on Gap.com). Across-channels discounts, coupons, and store loyalty programs provide customer convenience and reinforce a seamless shopping experience. To emphasize channel uniqueness and account for differential


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inventory and fulfillment costs, retailers can have store clearance events or online specials without undermining the customer’s fairness expectations.


Operations, Logistics, and Information Management Coordination of purchasing, freight, warehousing, inventories, and logistics (Gulati & Garino, 2000) is a complex and involved process. It is complicated by the company’s existing distribution and information systems infrastructure, which may not be compatible with the newly developed Internet solutions. However, integrated order management and fulfillment provides not only significant cost savings, but also better control and guaranteed reliability for customers (Cao & Zhao, 2004). It enables Web site visitors to check store inventories, to order products online and pick them up in a store, and to return and repair in a store the merchandise purchased online (Montoya-Weiss, Voss, & Grewal, 2003). Closely related to operations coordination is the coordinated management of customer information (Goersch, 2002). By sharing information on store and online transactions of individual customers, retailers can personalize offerings, reward loyal consumers, send individualized E-mail promotions, and manage multichannel shopping behavior in ways that maximize customer value and company profits. Multichannel shoppers have been found to be more loyal and profitable than single-channel customers (according to Shop.org, they spend 33% per year more, and purchase 70% more frequently from stores), which makes them an attractive market segment (Shop.org, 2006). Creating and maintaining cross-channel databases and understanding individual preferences for channel use can help firms create superior multichannel shopping experiences. This can be achieved by using Customer Relationship Management (CRM) systems synchronized with the operations and logistics functions. By using the information on customer purchase history and patterns, firms may engage in price discrimination (Varadarajan & Yadav, 2002) based on customizing offerings to provide higher value that commands premium prices (Zettelmeyer, 2000). By providing maximum convenience and value, personalized service, and individualized communication at every point of contact, multichannel coordination can be a source of retailer differentiation and competitive advantage. By utilizing the retailer’s existing resources and competencies, and by implementing the coordination in a distinct manner with a unique goal, the multichannel competitive advantage can be sustained for a long period of time. Therefore, it can be argued that by closely coordinating its channels, a retailer can significantly increase its online sales performance. H1: Multichannel retailers with a higher degree of interchannel coordination will exhibit higher online sales.

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Dynamic Capabilities Approach and E-Business Functions Outsourcing The role of firm-specific competences in acquiring a competitive advantage in ‘‘high velocity’’ environments is emphasized by the dynamic capabilities approach that extends resource-based view (Barney, 1991; Hunt, 2000) to industries with rapid technological and market change (Teece, Pisano, & Shuen, 1997). In such industries, winners are characterized by the organizational capability to effectively renew, coordinate, and redeploy internal competences to achieve congruence with the changing business environment. ‘‘The very essence of most capabilities=competences is that they cannot be readily assembled through markets’’ (Teece et al., 1997, p. 517) and represent unique organizational skills. Among these dynamic capabilities are coordination=integration of activities inside the firm, organizational learning processes, and firm reconfiguration and transformation. It follows that a firm-specific, unique way of integrating such E-commerce functions as order processing and fulfillment, back-end systems, logistics, and CRM into the preexisting retailer infrastructure can lead to a competitive advantage. The dynamic capabilities approach posits that the source of a capability= competency is always internal to the firm and is causally ambiguous and inimitable (Reed & DeFillippi, 1990). Close coordination of retailer channels to provide a seamless customer experience with the company appears to represent a strategy that will be reinforced by the firm’s dynamic capabilities, since the interchannel synergies can be unique to each retailer and not easily imitated. Developing a state-of-the-art multichannel fulfillment operation (dedicated warehouses, information systems, telecommunications infrastructure, and human resources) requires large initial capital investments, as well as sustained infusions of money over time, particularly when the life cycles of information technology systems continue to compress with rapid technology changes (Harrington, 2000). By outsourcing these functions, retailers can not only realize cost savings, but also speed up their online channel introduction. Other reasons multichannel retailers outsource E-business functions include access to superior expertise, business risk mitigation, strategic flexibility, and asset transfer (by taking advantage of 3PL inventory financing; Chung, Jackson, & Laseter, 2007). This practice finds support in the Transaction Cost Theory (Coase, 1937; Rindfleisch & Heide, 1997; Williamson, 1975, 1981, 1985), which posits that non-core business functions should be outsourced if market production costs exceed the transaction costs of vendor selection, adaptation, performance monitoring, and assets safeguarding (Stump & Heide, 1996). However, if companies consider channel coordination their core and unique competency, outsourcing part or all of their E-business functions may detract from their competitive advantage. It will not allow developing socially complex, causally ambiguous and inimitable dynamic capabilities of integrating E-business and land-based operations and processes.



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In addition, using different providers for Web site hosting, payment processing, order fulfillment, customer service, and security will make channel coordination difficult and more costly, since numerous platforms and standards would need to be brought in sync. Further, agency and opportunism issues, as well as cultural differences, may increase costs and complicate the process of multichannel coordination and integration. Using integrated E-business solutions from a single provider (e.g., IBM’s WebConnections) with out-of-the-box services may reduce the retailer’s opportunity to differentiate itself from other multichannels and to create unique and inimitable interchannel synergies. A recent survey of 175 online retailers showed that many retailers prefer to operate most E-commerce programs internally (Internet Retailer, 2007). For example, 75% of respondents manage their own order fulfillment, 69% do not use an outside agency to help with paid and natural search programs, 76% do not employ an affiliate management company, and 71% do not employ an E-mail marketing company. The only functions the majority of online retailers in the survey currently outsource are payment processing (72%) and Web hosting (77%). No academic research to date has investigated the role of in-house development of E-business functions for strengthening firm online or overall performance. Using the logic of the dynamic capabilities approach, we propose that developing the majority of E-business-related functions in-house (as opposed to outsourcing) will strengthen the positive role of interchannel coordination for increasing company performance. H2: Multichannel retailers with a higher degree of interchannel coordination will exhibit higher online sales if they have more E-business functions developed in-house.

METHODOLOGY The sample includes 50 publicly traded multichannel retail companies that had E-business outsourcing and interchannel coordination data available in public sources. These retailers were listed in the COMPUSTAT database under the following Standard Industrial Classification (SIC) codes: 53 (general merchandise), 54 (food stores), 56 (apparel and accessories), 57 (home furniture, furnishings, and equipment), and 59 (miscellaneous retail). Additional data on these retailers were obtained from company annual reports and other publicly available sources.

Measures (Table 1) DEGREE OF COORDINATION The degree of interchannel coordination was assessed by conducting a retailer Web site content analysis. Content analysis of Web sites has been


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previously done in research on online advertising and Web site interactivity (Bush, Bush, & Harris, 1998; Perry & Bodkin, 2002; Philport & Arbittier, 1997). A coding sheet as shown in the appendix was developed based on the existing channel coordination literature (Bendoly et al., 2005; Goersch, 2002; Steinfield, Mahler, & Bauer, 1999; Vishwanath & Mulvin, 2001) and the review of online retailing sites. It lists the parameters of store and online interchannel coordination (e.g., ability to check store inventory, ability to buy online and pick up in store, cross-channel promotions, etc.) that in aggregate reflect the intensity of integrating the online channel into the retailer’s overall operations. The coding sheet was pretested and validated on a student sample. Two independent judges assessed the presence of listed parameters on the Web sites of retailers in the sample. Interjudge reliability coefficient was 0.88 (p ¼ .01), and the disagreements were resolved by discussion. The score for the degree of channel coordination reflects the number of all coordination-related features available on each retailer’s Web site (ranging from 0 to 42). DEGREE OF E-COMMERCE CAPABILITY The one-time measure of the degree of in-house E-commerce capability was obtained from the 2006 directory of online retailers published by the Internet Retailer, company press releases, and other public information. The following areas were considered: Web hosting, site design, content management, order management, fulfillment, payment processing, site search, search engine marketing, E-mail marketing, affiliate marketing, Web analytics, CRM, E-commerce platform, Web performance monitoring, rich media, and content delivery. The number (minimum 0, maximum 16) of these functions developed in-house reflects the degree of in-house E-commerce capability. Two coders conducted the content analysis of the sources, and their disagreements were resolved by discussion and revisiting the sources.

TABLE 1 Measures Used in the Study Measure Online sales Degree of interchannel coordination Degree of in-house E-commerce capability

Formula=Description

Range in the sample

Reported by company and=or estimated in business press for 2006, $$ mln Count of interchannel coordination parameters present on retailer’s Web site on June 1, 2006 Count of E-business-related capabilities developed in-house, 2006

6.7–4,900 0–26

0–16


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TABLE 2 Sample Characteristics: Means and Standard Deviations SIC Code

Frequency

SIC 53 SIC 56 SIC 57 SIC 59 Total

10 25 4 11 50

2006 Online sales (in millions $$)

2006 Market share

771.83 163.27 258.95 935.76 462.58

0.12 0.01 0.01 0.01 0.032

(756.23) (253.74) (445.54) (1820.15) (971.45)

(0.19) (0.02) (0.002) (0.015) (0.09)

2006 Gross margin (%) 33.58 41.36 36.84 36.7 38.51

2006 Net income (in millions $$)

(8.42) (10.29) (9.82) (10.95) (10.27)

2040.2 180.2 53.2 489.3 610

(3342.5) (228.2) (195.4) (604.7) (1641.6)

ONLINE SALES PERFORMANCE


Data for annual online sales for 2006 in millions were obtained from company reports and from assessments provided by the business press.

EMPIRICAL ANALYSES AND RESULTS Frequencies, descriptive statistics, and correlations of the main variables used in testing Hypotheses 1 and 2 are reported in Tables 2 and 3. In order to test the hypotheses, multiple regression procedures were conducted using the SPSS 14.0 statistical package. A 6-month lag was used between the measures of the degree of interchannel coordination (assessed by the content analysis of retailer Web sites) and the company online sales (obtained from company reports). To test Hypothesis 1, a multiple regression was conducted, with the dependent variable online sales and the independent variable the degree of interchannel coordination. The SIC codes served as categorical dummycoded control variables, with SIC 56 selected as reference. The results are reported in Table 4. The test of Hypothesis 1 shows marginally significant coefficient (b ¼ .28, p ¼ .06). This means that retailers with the higher degree of interchannel coordination tend to achieve higher online sales. The SIC code control variables were not significant, suggesting the role of interchannel

TABLE 3 Means, Standard Deviations, and Correlations of Variables Variable

Mean

SD

1

2

1. Interchannel coordination 2. In-house E-commerce functions 3. Online sales ($ million)

17.64 3.38 462.58

3.45 2.84 971.45

0.51 0.35

0.012

Correlations in bold are significant at the 0.05 level (2-tailed).

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I. Pentina and R. W. Hasty TABLE 4 Results of Regression Analyses for Hypothesis 1 Dependent variable Independent variables Constant Interchannel Coordination SIC 53 SIC 57 SIC 59 R Square Adjusted R Square

Online sales Hypothesis 1 b

p

.280 .161 .037 .253

.111 .060 .289 .797 .093 .193 .121


Note. The greatest Variance Inflation Factor (VIF) among all models was below 1.25.

coordination in impacting firm performance is positive for all retail SIC codes. Hypothesis 2 was tested with a multiple regression that included the interaction independent variable of Interchannel Integration In-House E-Commerce Development in addition to the main effects of Interchannel Coordination and In-House E-Commerce Development, and the control dummy-coded variables denoting SIC codes (Table 5). The nonsignificant results show that multichannel retailers that develop more E-commerce solutions in-house to increase the degree of their interchannel coordination do not achieve higher online performance compared to those that achieve coordination by outsourcing the majority of their E-commerce functions.

TABLE 5 Results of Regression Analyses for Hypothesis 2 Dependent variable Independent variables Constant Interchannel Coordination In-House E-commerce Interchannel Coordination In-House E-commerce SIC 53 SIC 57 SIC 59 R Square Adjusted R Square

Online sales Hypothesis 5d b

P

.208 .227 .233

.571 .473 .775 .774

.165 .031 .268

.310 .841 .116 .188 .069

Note. The greatest Variance Inflation Factor (VIF) among all models was below 1.25.


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DISCUSSION The multichannel retailer strategy of closely coordinating inventories, customer information, logistics, marketing, and merchandising among the channels appears to improve short-term online sales. The fact that online sales are positively affected by interchannel coordination provides grounds to consider interchannel coordination an important E-commerce strategy capable of providing multichannel retailers with a competitive advantage. The role of unique higher-order competencies and skills in making multichannel coordination strategy more successful was not supported in this research. Integrated retailers that develop in-house E-commerce functions such as Web site hosting, site design, content development, order processing, E-mail and search engine marketing, Web performance monitoring, E-logistics, etc., do not show higher online sales performance than those that outsource them to third-party providers. It is possible that strategic outsourcing is a more beneficial approach at the initial stages of multichannel retailing when access to superior expertise is a key to competing in this highly dynamic and turbulent environment. We suggest that in-house development of E-commerce-related unique capabilities may help create and maintain a competitive advantage at more advanced stages of interchannel coordination, when multichannel customer needs are better understood and standards and expectations for interchannel coordination are solidified. With more multichannel retailers moving their E-commerce functions in-house (Internet Retailer, 2007), it would be interesting to test this proposition in the future. At present, it appears that the Transaction Cost Theory (Coase, 1937; Williamson, 1975, 1981, 1985) considerations prevail in retailers’ decisions to outsource E-commerce functions to third-party providers. We believe this research shows a dialectic connection between the Transaction Cost Theory and the dynamic capabilities approach by suggesting that at the initial stages of adopting channel innovation, transaction costs play an important role in managerial decisions, since using third-party solutions helps retailers lower transaction costs. As multichannel retailing matures, the need for differentiation may turn E-commerce-related skills and capabilities into core advantage-creating, higher order processes, and retailers would perform these functions in-house. It is an interesting idea that deserves further development and testing in the future.

LIMITATIONS AND FUTURE RESEARCH This research is among the first endeavors to understand the results of implementing multichannel retailing strategies on firm online performance.

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As such, the study has certain limitations that may simultaneously be considered suggestions for future research. The relatively short time lag used in testing the effects of interchannel coordination and E-commerce capabilities outsourcing may have contributed to some insignificant findings. We suggest this test be replicated at a later time when more recent data become available, and with a larger sample that would represent more retail categories. In addition, it is possible to trace the dynamics of E-commerce outsourcing decisions as interchannel coordination becomes more widely adopted. It would be interesting to understand whether transaction costs or unique dynamic capabilities determine the ‘‘make or buy’’ decision with respect to E-commerce-related functions for retailers.


THEORETICAL CONTRIBUTION AND MANAGERIAL IMPLICATIONS This article contributes to the body of marketing knowledge by assessing the role of multichannel coordination strategy in impacting online performance, and the need for E-commerce functions outsourcing at the initial stages of multichannel integration. These findings may be useful to theorists by identifying the relevant variables to be considered in future research and suggesting research directions to be pursued. The finding of the positive effect of channel coordination on online sales emphasizes the importance of this strategy. It poses further research objectives of distinguishing the role of brand-name and marketing-related coordination from that of logistics and infrastructure-based coordination. It would be interesting to find out whether these types of coordination among store, catalog, and online channels differentially affect retail performance. This article is the first to develop and use the empirical measure of multichannel coordination based on prior theoretical discussions. The development and empirical validation of this construct contributes to future research on multichannel retailing by providing a reliable and convenient way to assess the magnitude of the integration effort retailers are directing at creating seamless brand experiences for consumers across channels. This measure can be instrumental to marketing researchers studying the effect of multichannel integration on such important performance indicators as customer satisfaction and brand loyalty. By starting the conversation about multichannel strategies, this study may have initiated a new research stream that may turn out to be both managerially relevant and theoretically solid. This research is also beneficial to practitioners who are developing entry strategies for digital and mobile marketplaces by outlining potentialities for competitive advantage. Its findings provide valuable guidelines to managers by identifying the firm-specific competencies that can strengthen or weaken the manner of adopting multichannel strategies. In particular, this study


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suggests that a high degree of interchannel coordination increases retailers’ online sales and therefore warrants capital investments. It also concludes that the dynamic capabilities of in-house E-commerce may not be effective at the initial stages of multichannel retailing: short-term (6 months) online sales are not affected by in-house development vs. outsourcing of E-commerce functions.


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Company Name___________________________________________________


Please browse the Web site of the retailer and indicate if the following items and services are available to customers:

Store Locator Provides store listing based on zip code Provides store addresses Provides store telephone numbers Provides store hours Provides directions to stores Provides information on store sales Provides opportunity to browse store circulars and advertising Provides opportunity to purchase online from store circulars Creates printable shopping lists for shopping in stores

Yes Yes Yes Yes Yes Yes Yes Yes Yes

No No No No No No No No No

Inventory Allows to check store inventory in real time Allows to put items on hold in a store Allows to buy online and pick up in store Allows store exchanges of items bought online Allows returns to stores of items bought online Allows tracking the order progress online Operates gift registry across the store and online channels

Yes Yes Yes Yes Yes Yes Yes

No No No No No No No

Value-Added Offers gift wrapping=boxes for items purchased online Offers gift messages for items bought online Allows personalization of items bought online Allows packing several items bought online as one gift Allows product customization (special color, packaging, etc.) online

Yes Yes Yes Yes Yes

No No No No No

374


Cross-Promotions and Consistency Recommends products based on customer’s prior online purchasing and browsing history Allows to browse catalogs online Allows to order from catalogs online Allows to order catalogs Offers coupons online for offline purchases Allows to redeem offline coupons in the online store Allows to redeem gift cards in both channels Advertisement of store events Web site can be found by typing the retailer’s name Provides online support and customer service for products bought in other channels Provides information on product lines available in stores

Yes

No

Yes Yes Yes Yes Yes Yes Yes Yes Yes

No No No No No No No No No

Yes

No


If you have shopped both in stores and online from this retailer, please respond to the following: Web site design reflects offline image and positioning of retailer (e.g., high=low-end, lifestyle, etc.) Offers wider assortment online than in stores Offers fewer items online than in the store Prices are consistent across channels Merchandise is consistent across channels Customer support and policies are consistent across channels Offers online unique products to supplement store purchases

Yes

No

Yes Yes Yes Yes Yes Yes

No No No No No No

Information Management Customers have online access to personal purchase history from the Web site Customers have online access to personal purchases history in stores Pending online orders are modifiable and cancelable Pending store orders are modifiable and cancelable online Recommendation of products and services based on previous purchases in all channels Provides information services that add value to customer shopping experience (e.g., price comparisons, decision-making tips, etc.)

Yes

No

Yes Yes Yes Yes

No No No No

Yes

No