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The effect of Internet distribution on brick‐and‐mortar sales

The effect of Internet distribution on brick‐and‐mortar sales I examine the introduction of an online shopping service by a large supermarket chain also operating a network of brick‐and‐mortar stores. The establishment of the Internet channel led to a 13 percent increase in overall revenues, with limited cannibalization of traditional sales. I study the mechanisms underlying this result, focusing on two areas. First, I demonstrate the importance of the reduction of customers' travel costs in the attraction of new business. Second, I provide some evidence that revenues increase more in markets where the chain faces more competitors, suggesting that the online channel can help divert business from rival supermarkets. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Rand Journal of Economics Wiley

The effect of Internet distribution on brick‐and‐mortar sales

Pozzi, Andrea
The Rand Journal of Economics , Volume 44 (3) – Sep 1, 2013
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References (32)

Publisher
Wiley
Copyright
© The RAND Corporation
ISSN
0741-6261
eISSN
1756-2171
DOI
10.1111/1756-2171.12031
Publisher site
See Article on Publisher Site

Abstract

I examine the introduction of an online shopping service by a large supermarket chain also operating a network of brick‐and‐mortar stores. The establishment of the Internet channel led to a 13 percent increase in overall revenues, with limited cannibalization of traditional sales. I study the mechanisms underlying this result, focusing on two areas. First, I demonstrate the importance of the reduction of customers' travel costs in the attraction of new business. Second, I provide some evidence that revenues increase more in markets where the chain faces more competitors, suggesting that the online channel can help divert business from rival supermarkets.

Journal

The Rand Journal of Economics – Wiley

Published: Sep 1, 2013

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