Title:Business Analytics Issues in Multi-Channel Retailing

Speaker:Subodha Kumar, Distinguished/Chief Professor, Temple University, China Ministry of Education ChangJiang Scholar

Time:10:00 am, July 2, 2018

Location:Room 133, Main Building

Summary:

　　Customers often evaluate products at brick-and-mortar stores to identify their “best fit” product but buy it for a lower price at a competing online retailer. We begin with analyzing this free-riding behavior by customers (referred to as “showrooming”) and show that this is detrimental to the profits of the brick-and-mortar stores. Next, we examine price matching as a short-term strategy to counter showrooming. Since customers purchase from the store at lower than store posted price when they ask for price-matching, one would expect the price matching strategy to be less effective as the fraction of customers who seek the matching increases. However, our results show that with an increase in the fraction of customers who seek price matching, the store’s profits initially decrease and then increase. We then study exclusivity of product assortments as a long-term strategy to counter showrooming. This strategy can be implemented in two different ways. One, by arranging for exclusivity of known brands (e.g. Macy’s has such an arrangement with Tommy Hilfiger), or, two, through creation of store brands at the brick-and-mortar store (T.J.Maxx uses a large number of store brands). Our analysis suggests that implementing exclusivity through store brands is better than exclusivity through known brands when the product category has few digital attributes. We estimate the treatment effect of store openings on the online purchase behavior of its existing customers. We find that retailer’s store openings resulted in increase in the online purchases from its existing customers. We propose two mechanisms that could explain these results: (1) store engagement effect-higher customers’ engagement with the retailer due to higher store interactions, and (2) store return effect-reduced risk of online purchase due to the low cost option of store returns. We provide direct empirical evidence of these mechanisms on our field data. We further show that these effects are caused by reduction in customers’ distances from the retailer’s store due to the store openings. Many retailers and manufacturers adopt the practice of accepting product returns from consumers (via money-back guarantee) and retailers (via full-credit returns policy) respectively. While the extant literature focuses on either the manufacturer’s or retailer’s returns policy, this paper investigates both returns policies and finds that the manufacturer’s returns policy can actually induce the retailer’s returns policy by transferring consumer returns from the retailer to the manufacturer. Consequently, the manufacturer’s returns policy hurts the manufacturer when the manufacturer sells through non-competing retailers. Nonetheless, we find that the manufacturer is not destined to be hurt by accepting product returns when selling to competing retailers. More interestingly, this result holds when the retailers face a certain demand before sales, which is in sharp contrast to the extant literature. In a similar vein, product returns can benefit rather than hurt the distribution channel as a whole when the manufacturer sells through competing retailers.

Personal Profile：

　　Dr. Subodha Kumar is the Paul R. Anderson Distinguished Chair Professor of Supply Chain, Marketing, Information Systems, and Statistical Science at Temple University’s Fox School of Business. Prof. Kumar also serves as Director of the Fox School’s Center for Data Analytics. He also holds a Changjiang Scholars Chair Professorship at the Dongbei University of Finance and Economics in China and a Visiting Professorship at the Indian School of Business in Hyderabad, India.

　　His research and teaching interests include artificial intelligence, healthcare analytics, social media analytics, web analytics, cyber-security, supply chain analytics, software management, and data mining, among others. He has published 39 papers in reputed journals and 60 papers in refereed conferences. In addition, he has authored a book, and co-authored 2 book chapters, 2 Harvard Business School cases, and 2 Ivey Business School cases.

　　Prof. Kumar is the Deputy Editor and a Department Editor of Production and Operations Management (POM), and the Deputy Editor-in-Chief of Management and Business Review . He has served as a Senior Editor of Decision Sciences (DSI) and an Associate Editor of Information Systems Research . Additionally, he serves on the editorial boards of Journal of Database Management and International Journal of Social and Organizational Dynamics in IT . He is the conference chair for POMS 2018 and DSI 2018. Also, he co-chaired the Conference on Information Systems and Technology (CIST) in 2011 and the 25th Workshop on Information Technologies and Systems (WITS) in 2015. He has been keynote speaker and track/cluster chairs at leading conferences. He is the Associate Executive Director of POMS Information Technology Services, the Web Editor of POMS , and the Vice President of INFORMS Information Systems Society (ISS).

　　Prof. Kumar serves on the Advisory Boards of Insightzz and the Srini Raju Centre for IT and The Networked Economy (SRITNE) at the Indian School of Business. He has received numerous research and teaching awards. Recently, he received the Association of Former Students University Level Distinguished Achievement Award in Teaching ( which is among the most prestigious awards at Texas A&M University) and the Ricky W. Griffin Outstanding Research Achievement Award .