Channel transparency and omnichannel retailing: The impact of sharing retail store product availability information

Abstract As more firms look to implement omnichannel strategies to mitigate the inherent information barriers between online and offline channels, understanding the outcomes of these initiatives is critical. This study empirically examines the impact of the decision to share brick‐and‐mortar (B&M) store product availability information with customers, specifically focusing on the scenario where a discrepancy exists in the product assortment of online and offline channels. We investigate the impact of this information sharing strategy on customer research shopping trajectories using a proprietary dataset collected from a leading North American retailer. Using a difference‐in‐differences approach, we find that this strategy helps boost the overall sales from customers who reside within the trade area of a retail store. At the channel level, the policy induces customers to migrate from the B&M channel to the online channel after learning that the product selection offered at their local retail store may not meet their needs, resulting in a significant increase in online sales, but a slight decrease in B&M sales. From an operational perspective, our empirical evidence suggests that sharing retail store product availability information leads to more customers using the expedited shipping service when shopping online. Furthermore, we also discover a slight increase in the overall return rate. We conclude by providing managerial implications on the functionality of the online and B&M channels and how retailers can coordinate services offered by both channels to improve the utility customers receive from the brand.