Omni-Channel Retailing: Do Offline Retailers Benefit from Online Reviews?

Abstract

Abstract In the omni-channel retailing era, online reviews are being increasingly integrated into offline channels. In this study we explore the online review integration strategy for a pure offline retailer that takes the initiative to integrate selective online consumer reviews (OCR) from its competing online rival retailer into its in-store sales under two online selling formats. When the online retailer uses the reselling format, we find that the online review integration strategy is viable if the selected OCR are more informative than the offline retailer s in-store information services. However, when the online retailer uses the agency selling format, counter-intuitively, the offline retailer can adopt the same strategy even when the OCR are less informative than the in-store services if the spillover effect is negative, and the travel cost and the unit misfit cost are relatively small. In each case, we find that the offline retailer s review integration strategy mitigates market competition under some conditions, so benefitting the online retailer and/or the manufacturer as well. In the extension, we consider the context in which the offline retailer utilizes third-party reviews (TPR). We find that the offline retailer is willing to adopt TPR as long as its product is recommended by the TPR (under the TPR-only strategy), and it is also beneficial to integrate OCR and TPR simultaneously (under the OCR-TPR strategy). In addition, we compare all the feasible strategies and find that the OCR-TPR strategy is the optimal strategy most of the time.