As online shopping becomes increasingly popular, it might be easy to view e-commerce as simply an extension of in-person retail. Many businesses are even blending the lines between online and offline channels, with companies like Amazon providing similar prices, services and imagery both on their websites and in their new brick-and-mortar stores.
However, new research from the University of Delaware’s Pratyush Sharma, assistant professor of MIS at UD’s Alfred Lerner College of Business and Economics, suggests that shoppers are looking for much different benefits from their online versus offline shopping experiences.
“As the recent bankruptcies of RadioShack and Toys “R” Us aptly demonstrate, old assumptions about customer satisfaction and loyalty are no longer valid as competitors shift strategies using newer technologies, causing immense shifts in consumer buying behavior,” wrote Sharma and his co-authors in the study, which was published recently in the Journal of Retailing. The study found, for example, that online shoppers are more concerned with getting a good deal than offline shoppers.
“We show that when retail customers buy electronic goods online, they view purchase value as a significant attribute in rating satisfaction,” Sharma said. “We also find that when customers buy online, they are more satisfaction-sensitive when making repurchase decisions than when they purchase offline. In other words, customer satisfaction is much more crucial to retain their loyalty in the online channel than offline.
“On the other hand, customers give stronger weight to the overall quality of the purchase experience for offline purchases when rating their satisfaction levels,” Sharma continued. Notably, these trends generally persisted across various demographics, including age, gender, education level and product types.
This study, the first to find clear responses to the pertinent question of what drives customers in the online versus offline worlds, offers interesting implications for both merchants and consumers. Sharma cautions retailers, for example, against treating online and offline shoppers like they are looking for identical benefits.
“Perhaps the most important implication of our study is to document that the inherent differences in online and offline channels have a tangible effect on customers, and efforts to create seamless customer experiences require some serious consideration by retailers,” Sharma said. “The assumption that customers utilize the channels in a similar fashion, and that identical strategies should work equally well, could be very detrimental for retailers.”
Sharma added that “common sense” differences between the two channels can help explain the differences between online and offline shopping expectations. For example, in-person shoppers’ desire for a high-quality purchasing experience makes sense, given their decision to leave their homes and visit a store.
“The offline channel requires effort, and incurs costs on customers by requiring them to spend time and gas to drive, find parking, and search for a limited range of products that can be displayed,” he said. “Having said this, customers can actually engage with products and the shopping environment, interact with sales agents, which allows for more satisfactory purchase experience.”
This suggests that retailers should focus on improving the shopping experience for in-person customers, while emphasizing bargains and value for online customers. They should also consider that online customers are less likely to remain loyal to a store if they are unsatisfied with their experience.
For shoppers, Sharma said, considering these factors can help them decide where and how to make purchases: “Often consumers make instinctive decisions to buy without thinking much of the purchase channel they choose. Perhaps the biggest takeaway for consumers is understanding how the purchase channel differences can affect their purchase experiences. Choosing a purchase channel and retailer wisely can be helpful in how their purchase experience unfolds.”