Experts Found That Online Stores May Greatly Increase Sales With A Physical Shop

A study found that online and catalogue-based shops may benefit from setting up physical stores. As per marketing experts, this research provides a signficant input to retailers who are thinking about the marketing value of this different medium.

Consumers see online and catalogue-based shopping in different perspectives. Some enjoy the hassle-free convenience of shopping right through their fingertips. Conversely, some people still prefer the overall retail therapy experience. This is specifically applicable to those who want to buy personal things like a pair of shoes.

The research was headed by Koen Pauwels from the Istanbul's Özyeğin University and Scott A. Neslin from the Dartmouth's Tuck School of Business. Both experts investigated the operation of a popular online and catalogue-based retailer that sells durables and apparel. They analysed the data from this company for a period of almost six years. During the time of the study, the retailer set up three physical shops. It was found that an increase in various transactions, such as purchases, returns and exchanges were noted in areas located 30 miles within the new stores. The said transactions were made and acted upon in various chanells.

According to the researchers, the overall net revenue of the company increased by 20 percent following the establishment of the physical stores. In addition, a rise in the number of overall transaction made were also noted. This is reportedly probably due to the fact that consumers felt more convenient in making transactions, given the near proximity of the store to their homes. The size of the transaction did not exhibit significant changes. Lastly, this intervention boosted the relationship of the company management and its customers, as it added a new medium for better and more frequent communication between them and thus all the more enhanced the retention of customers.

Further into the study, the authors observed that while online purchases remained the same, catalogue-based transactions decreased. According to them, this is probably because the consumers prefer to go to the physical store with a particular item in mind rather than undergo the entire browsing experience. Nonetheless, the overall revenue of the company improved due to the increase in the frequency of purchases. The study titled "Building with Bricks and Mortars: The Revenue Impact of Opening Physical Stores in a Multichannel Environment," will be published in the Journal of Retailing in June.

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