Channel Choice and Customer Value

2025-07-31

AI Summary

This study examines how distinct adoption triggers—organic adoption, pandemic-induced adoption, Black Friday promotions, and a new loyalty program—affect subsequent purchasing behavior, cross-channel usage patterns, and profitability among traditional retail customers transitioning to e-commerce channels. Method: Leveraging transaction-level data from a large Brazilian pet supplies retailer, the study employs causal inference techniques grounded in behavioral economics to identify and compare customer value heterogeneity across four adoption pathways. Contribution/Results: Findings reveal significant divergence in post-adoption outcomes: pandemic-driven adopters exhibit high offline retention and substantial profit contribution, whereas promotion-driven adopters display strategic forward-buying and diminished long-term profitability. The study demonstrates that multichannel customers are inherently heterogeneous—not merely substitutable across channels—and underscores the necessity of integrating consumer inertia and behavioral adoption motives into channel valuation and precision marketing frameworks. These insights provide both theoretical grounding and empirical evidence to guide retailers’ digital investment strategies.

Technology Category

• Humans and AI: Learning Human Values and Preferences
• Game Theory and Economic Paradigms: Behavioral Game Theory
• Search and Optimization: Evaluation and Analysis

Application Category

• Economics, Online Markets and Human Computation: The sharing economy
• User Modeling, Personalization and Recommendation: User modeling for targeted and personalized online advertising
• Search and Retrieval-Augmented AI: Ad search and search for Web retail

Abstract

The rapid growth of digital shopping channels has prompted many traditional retailers to invest in e-commerce websites and mobile apps. While prior literature shows that multichannel customers tend to be more valuable, it overlooks how the reason for adopting a new channel may shape post-adoption behavior. Using transaction-level data from a major Brazilian pet supplies retailer, we examine how adoption of online shopping - by previously offline-only customers - affects post-adoption spend, profitability, and channel usage. We study four distinct adoption pathways: organic adoption, adoption due to the COVID-19 pandemic, Black Friday promotions, and a newly launched loyalty program. We find that although all adopter groups increase their spending relative to offline-only customers, post-adoption behavior differs based on the reason for adoption. COVID-19 adopters behave similarly to organic adopters in terms of spending, but show greater offline stickiness consistent with consumer inertia and habit theory, yielding higher profits due to higher offline margins. In contrast, promotion-driven adopters spend less post-adoption due to forward buying and exhibit lower profitability. Our findings caution against treating all multichannel customers as equal and highlight the importance of incorporating behavioral theories into forecasting and targeting strategies. Firms should account for adoption motives when evaluating channel and promotional investments.

Problem

• Examines how online channel adoption affects customer spending and behavior
• Compares post-adoption patterns across four distinct adoption pathways
• Highlights adoption motives' impact on profitability and channel usage

Innovation

• Analyzing multichannel customer behavior post-adoption
• Comparing four distinct online adoption pathways
• Incorporating behavioral theories into targeting strategies