Project Report

On

How Online and Offline Stores impact each other’s sales?

For

Business Research Methods (MGT - 23)

(Session: 2018-20)

Submitted by

MANVI YADAV (2K18/MBA/53)

Under the guidance of

Dr. Sonal Thukral

Assistant Professor

Delhi School of Management

Delhi Technological University (Erstwhile Delhi College of Engineering)

Shahbad Daulatpur, Main Bawana Road, Delhi – 110042, India

1
 Contents

Introduction 3

Literature Review 3

Objectives of the study 10

Research Hypothesis 10

Findings 11

Conclusion 13

References 13

Presentation 14

2
 How Online and Offline Stores impact each other’s sales?

Introduction

A customer might have a preference between online and offline purchases, but when it
comes to how they buy, “very few people exclusively shop online or only in store. They
marry the best of both worlds,” said Berg

The increase in technology provides good opportunities to the seller to reach the customer in
much easier, economic and faster way. In the recent years Online shopping is emerging very
fast as the new channel for the sellers and customers and thus, the attention of retail market
now hold by the internet. Millions of people shop online. At the same time it is also
important to see that the purchasing of product from in-store i.e. traditional market is
continuing since years. Just after payment for the product many customers still prefer going
for purchasing offline so as to hold and examine the product. Some customers prefer going to
online shopping, some go for offline and some may like to go for both kind of shopping.
Only the customers can decide which channel is best for them depending on to satisfy their
need and wants. Now, when one needs to start and run business, one should be able to make
people aware of the fact. Promotion and advertisement play an important role to make people
aware and let others know information about the business. Whether the business runs online
or offline, any kind of business requires customers to experience a good business turnaround.
However, the means through which a business can reach to customers is only advertising.
This is why advertisement plays an important role for any business. To be able to run in the
competitive environment business advertises about its services and products. Today, the
advertising industry has been able to become a huge industry as it offers large number of
products and services. This has resulted in an increased competition, which requires every
businessman to advertise and promote its product and services in the best possible manner.
Every promotional campaign aims to enable the reach of the products to the right people
which is done by increasing the awareness, drawbacks and benefits of the product. This is
very important for the success of any business. Online ads that are displayed can increase
both offline and online retail sales, which provides valuable insight for future marketing
decisions.

Literature Review

(Kitty Wang and Avi Goldfard, 2016) The study found the coexistence of substitution
across channels and complementarity in demand. The decrease in online sales and search is

3
associated with the opening of an online store if the retailer has a strong presence. However,
retailer does not have strong presence in places where the opening of an offline store is
associated with an increase in online sales and search. It has been found that online and
offline can be substitutes in distribution, they are complements in marketing communication.
It is always the presence of the store that drives complementarity. Data consist of 42,000
customers purchases from July 2010 to June 2012 provided by the firm(WCAI) that have
three different bricks-and-clicks retailers. It has been interpreted that the estimated
correlations between the store opening and changes in online sales and other activity as likely
to be causal. It has been identified that the main effect of local store openings by comparing
the change in outcomes in the same location before and after a store opens locally to the
change in outcomes in the same time period in other locations that did not have local store
openings. The article was published in the Journal of Marketing Research which investigate
the disparity between the findings from prior studies and the claims made by the industries.
One possibility is that the practitioners are wrong—they misinterpret demand shocks that hit
both online and offline channels as evidence of complementarity. Academics are wrong can
be the other possibility as they could not properly capture the complemetarity attributes. For
research author collect data from a single firm and provide evidence for both
compelemetarity and substitution. The data used were of purchases by 42,000 customers
from July 2010 to June 2012 of three bricks-and-clicks retailers owned by the same firm. On
average, it has been found that online sales increases marginally when a store opens offline.
However, when the locations are separated on the basis of prior brand presence, there is a
decrease in local online sales and browsing because of opening of an online store. On the
other hand, in locations where there is no strong prior presence of brand, the opening of an
offline store would result in increase in online sales and browsing. As a retail channel,
physical stores exhibit many advantages over online stores. Instant gratification is provided
by the physical store has been well documented, and consumers especially for the products
with non digital attributes such as fit and feel prefer offline stores. However, the online stores
provide advantage in terms of that it can help reach market that was previously unreachable
due to the physical limits of the offline stores. This study shows that as online and offline
(retail channels) simply substitute for one another. In this study, the authors argue that brand
awareness can be created with the help of local offline stores and, consequently, help in
acquiring new customers from that area. The customers who are newly acquired buy more
both offline and online. The authors in this study explore the reasons as to why online sales
might increase due to opening of an offline store. The authors talk about the straight
awareness-driven billboard effect and provide 4 types of evidence o support it, rather than a
living billboard which is complementary to existing brand equity. They show that there is an
increase in the first time customers due to opening of a new offline store from the
surrounding areas. This suggests that the information about the retail can be provide by the
offline store. The result shows that due to new customers there is an increase in online sales

4
in an area after opening of the store, and this increase continue for several months. At the
same time, the online sales from existing customers acquired before a local store opening do
not appear to change after the store opens. This is true irrespective of whether customer
residing in the area has a prior brand presence or not. Again, this suggests that the
information provided to these new customers by the store. They explore that the provision of
information about the fit and feel of the product results in generating complementarity. No
qualitative difference between apparel and other products has been found. In this way, no
evidence has been found that support the idea that important product attribute information
can be provided by the offline stores. The authors find no difference between places without
brand presence and places with such a presence even though product returns through online
do fall after a store opens, which again suggest that the product attribute information is not
responsible to drive the result. Therefore, the author presented the argument that the impact
of offline store for marketing communication are identified in areas where there is no brand
presence is more likely the brand existence information in general rather than the information
about the attributes of the product. Finding from the study suggest that offline and online
when viewed as retail channels are likely substitutes; however informative marketing
communications that are generated by the mere presence of offline stores creates
complementarities between offline and online channels. The evidence is consistent with the
store which serves as a billboard that provides information about the brand existence being
the most likely marketing communications role in this setting of the offline stores. Therefore
firm should pay more attention to remote areas when choosing a location where there are
potential customers but products are not yet selling well. Opening stores in these areas not
only yield an extra boost to both offline and online sales but will also enhance the awreness
of the brand.

(Randall A. Lewis and David H. Reiley, 2014) The study provides evidence that online
ads do produce effects beyond the click on both online and in physical stores purchases. It
also shows that the majority of the impact on purchases comes from viewers who never
clicked the ads. The population under study is the set of the retailer’s existing customers who
log in to Yahoo!. Online display ads can increase both online and offline retail sales,
providing valuable insight for future marketing decisions. Researchers, worked with an
unnamed national apparel retailer to evaluate the effects of the retailer's advertising. The
large-scale field experiment involved over three million Yahoo users. For two weeks, Yahoo
users in the experiment's treatment group saw branded apparel ads from the retailer whereas
users in the control group saw ads for Yahoo Search. Advertisers often change their levels of
advertising over time, as they run discrete campaigns during different calendar periods, but
this variation does not produce clean data for measuring the effects of advertising because
other variables also change concurrently over time. Relative to the baseline established by
the control group, the experiment showed that the retailer's campaign increased sales by 3.6

5
per cent or roughly three times the retailer's spending on ads. They attacked this problem by
matching customer records between the retailer and Yahoo. Importantly, they combined
customer-level online and offline sales data with a controlled experiment that allowed them
to assess how much the consumers would have purchased in. The absence of the ad
campaign. They determined that 84 per cent of the sales increase from the ads came from
offline sales.

(Magid Abraham and Leonard M. Lodish, 1990) The research talks about the importance
of single source data and measuring incremental sales to measure the change in sales due to
advertising and promotion. Traditionally there was a lack of data to measure the incremental
sales so they consider many unexplained assumptions. Traditionally, the focus was on gross
rather than incremental sales. For advertising conventional wisdom believes that in every
case more advertising is better than less and In case of Promotion, conventional wisdom is
that when a company sells a lot of goods to the trade the promotion is successful. As a result,
in a typical market budget more than 65% accounts for promotions. The conventional
wisdom is challenged by the researchers in this paper. In tests (360) the variable is
advertising weight and The results are :
 Only half of the time the sales increases due to increase in advertising
 In case of trade promotion analyses for all brands in 65 different product categories
only 16% of the trade promotion were profitable
Researchers use a technique known as “split cable” market test to measure the productivity
of the Television advertising. Test market consist of about 3,000 households that receive ID
cards that is to be shown during the goods purchase from supermarkets(scanner-equipped).
Households received different advertisements.
To test advertising copy, some households receive advertisement A, while others
simultaneously receive advertisement B. To test advertising weight, households receive
different amounts of advertising for the same brand. The test (Split-cable) typically run for
one year, and was conduscted for both established and new products.
It has been found from 360 split-cable tests that advertising is more effective for new brands
than for established brands as a result 59% of new-product advertising tests showed a
positive impact on sales compared with only 46% of the tests for established brands. In case
of the established-brand experiments, increased advertising did not result in more sales. Nor
does advertising take a long time to work. When a particular advertising weight is effective,
it works relatively rapidly. Incremental sales begin to occur within six months. The converse
of this finding is even more important. Even if we continued advertising fir a year it will not
have any impact if advertising does not show effect within six months.
Researchers evaluated the effect of advertising on sales over a long period by analyzing 15
market tests upto 2 years after they ended. The control group viewed fewer advertisements
than the test groups during the test year. Then, The extra advertising has been stopped and
both groups saw the amount. There was an increase in sales for the groups receiving more
advertising.
To evaluate trade promotions, researchers have developed computer programs that measure
the marginal productivity of promotional events. . Anywhere from 30% to 90% of the time, a
consumer product is not on promotion in a particular store. Using sales data from individual

6
stores, the programs compare sales from these non-promotion weeks with those from
promotion weeks. Algorithms then project what the sales of the product would have been
during the promotion week if the promotion had not taken place. It has been found that only
16% of the promotions studied were profitable. If the product’s gross margin is less than
64%, the promotion will lose money because to cover the normal base sell manufacturer has
to sell an extraordinarily high number of cases to cover the normal base sale that would have
taken place without the promotion. Other disadvantages of promotions are that promotions
almost never have a positive long-term effect as established brands promotions usually
attract either current users or brand switchers and the other disadvantage is competitors
retaliate with promotions of their own.
Thus, the money should be allocated incrementally to various promotion and advertising
options. As long as a particular campaign remains productive the Ad execs should increase
spending and can be cut back as soon as its productivity declines can be seen in the market
tests. Similarly, a promotion can be three or four times efficient than the typical prior
promotion if it is an effective promotion idea. Therefore, a company should spend significant
resources to develop hard-to-imitate, creative promotion events, then use singlesource data to
test the idea.

(Garrett A. Johnson, Randall A. Lewis and David H. Reiley, 2016) The researcher study
the effect of advertisements displayed online on both in-store purchases and online
purchases. To study a randomized field experiment on three million users of Yahoo! And the
past customers of the retailer’s data are used. Researchers examined 2 consecutive weeklong
ad campaigns targeting the 3 million existing customers of the retailer and then matching
their subsequent online and in-store retail purchases with the exposure of advertising at the
individual level. The retail image ad shows the featured items attractive photos, detailed
information of the product, or call to action, but no prices. Experimental estimates suggested
that these ads had increased sales by 306% and profitability of the campaigns. In this study
three improvements in the design had been done to distinguish this experiment from the
previous which also uses the same retailer, described in Lewis and Reiley (2014).
1. Doubled the size of the data.(three million eligible users)
2. Control ads included which boosted the estimates precision.
3. Exceptional data on consumers also resulted in increasing the boost precision.
The experiment was designed to examine the ad exposure frequency impact. The experiment
included the full treatment group (exposed to the retailer’s ads) and a control group (exposed
to unrelated control ads). It also included the third group i.e a Half group that saw the control
ad and retailer ad with equal probability.

(Asim Ansari, Carl F. Mela, and Scott A. Neslin, 2008) The study focuses on the
management of multichannel available for customers. With this study researchers develop a
model of customer channel migration. This model was applied on the retailer that markets
through catalogs and over the web. This model is useful in identifying the key phenomena
which are required to understand the customer migration. No empirical research that details
on how in the multichannel environment the customers migrate between the channels had

7
been done before. The authors uses the four-year data and found that the web-oriented is an
emerging segment with the higher sales volume.

(Gert Assmus, John U. Farley, and Donald R. Lehmann, 1984) Researches did the meta
study to understand the relationship between the advertisement and its impact on sales. The
procedure, attempts to generalize results from a set of existing studies by Houston, Peter, and
Sawyer (1983), Cooper and Rosenthal (1980), Reilly and Conover (1983), Monroe and
Krishnan (1983), Sudman and Bradburn (1974) and Sawyer and Peter (1983). The study uses
the estimated parameters from 128 models reported in 22 studies which were published
before 1981. Half the studies are from marketing literature and half from econometric
literature.

(Magid Abraham, 2008) The study aims to understand the impact of online ads on offline
sales and also establishes the result that combination of search and display ads are more
effective. A firm’s software was installed on some two million people PC’s worldwide and
had the explicit permission to observe and track their online activities. The firm used the
information and data about users searches, sites visited, content viewed by the users and the
transactions made by the users. Analyses of this tracking led to understand the consumers’
behavior influenced by the online advertising. The firm measures the online sales by
determining who has viewed the ad and then comparing the consumers’ online purchase
made by those who have seen the ad and those who have not seen it. Another study was
conducted for a retailer whose vast majority revenue come from its physical store and has
overall more than $15 billion annual revenue. For a period of three-months, the impact on
revenue through online search and display ad holiday campaign was observed. It has been
found that running search ads are tend to be more effective than using display ads, if we use
the combination of both than it is more effective.

(Sridhar Balasubramanian, Rajagopal Raghunathan and Vijay Mahajan, 2005) The

study talks about that in the future consumers will use mix channels market. Since the
emergence of the multichannel environment consumers display complex shopping behaviors.
Multichannel environment includes Internet and traditional retail sales. Consumers may rely
on different channels to perform their shopping activities at different stage. The study
provides the answer for why and when consumers while shopping choose specific channels.
Authors divide overall utility into product and process. The study provides the conceptual
framework/model that include interviews with over around 30 customers. These customers
were active in traditional retail and/or online environments. They also interviewed customers
that purchased services online. Interviewing such customers helped them in understanding
the influences that drive channel choice. Typically there are three stages in a purchase
process: (a) to form a consideration set, (b) to choose a product, (c) buying the product.
Consumers’ objectives differ in different stages which influence their choice of channels.
The study talks about different goals and channel choices according to the goals. If the goals

8
of the customers are purely economic then consumers focus is on maximizing net utility.
Other goals includes the Quest for self-affirmation, Affirmation of thrift (Thrift is a trait that
seeks inexpensively acquiring products or services), affirmation of expertise, symbolic
meaning, gift giving as social exchange (convey symbolic meaning, a gift giver hopes),
agapic love (shows altruistic and selfless motive) or economic exchange(give gift to insure
more valuable gift in return), social interactions, experiential impact (the customers that
desire high simulation will prefer retail environment and consumers that desire low level of
simulation will prefer online environment for shopping. What and how consumers buy also
depends on the visual aspect of the channel), schema based channel choice (For some
consumers shopping can be a matter of routine and even ritual. Consumers rarely use
alternative channels when they follow established shopping scripts and schemas to compare
benefits and costs). Thus, the framework provides a research platform to understand the
channel choice of the consumer in the multichannel environment. To influence the choice of
the channel of the customers, the understanding of the construction of goals by the customers
at various stages plays an important role as consumers form their consideration set, but drop
them without the purchases due to their construction of goals.

(Santiago Gallino and Antonio Moreno, 2012) The study talks about the integration of
online and offline channels by retailers so that the cost can be reduce and the value of
proposition can be improved which they make to their customers. For the research a
proprietary dataset has been analyzed to understand the impact of a buy-online-pickup-in-
store (BOPS) project. This implementation is associated with an increase in store sales and
traffic and reduction in online sales. The integration of online-offline can occur in a variety
of configurations (eg. B&M retailers show the inventory information of in-store online). This
project implements BOPS functionality as an experiment to study and understand the impact
of sharing the reliable inventory information with the customers. Now, since the information
about the inventory becomes more credible, the risk that customers face when they decide to
visit the store get reduced. Researchers evaluate the impact of implementation of BOPS on
customer behavior and company sales on both the brick and mortar and online channels. The
result of the study shows that there is an increase in B&M sales and sales transacted online
decrease when the functionality of BOPS is deployed. Providing BOPS functionality also
increases the credibility of the information about the availability of the product in-store in the
eyes of the customers and resulting in the increase in the number of the customers visiting
stores to purchase items after the product availability have been checked online. Researchers
further study the cart abandonment behavior of the customers and finally, this project has
been used for the evaluation of an online-offline strategy and the challenges that faced when
rely on a single channel data. Data has been taken from the leading nationwide retailers in
the US that has implemented BOPS capabilities. This retailer specializes in furniture, home
accessories and housewares and has B&M stores more than 80 in the Canada and US. The

9
data spanned from April 2011 to April 2012. The online stores throughout this period offered
information about the inventory availability at each of the stores. After October 11, 2011,
Ordered placed can be picked up at a B&M store. The information used in the analysis came
from online channel and the B&M channel. The approach used is difference-in-difference
(DiD), so the population was divided into control group (the population not affected by the
intervention) and treatment group (the population on which test is applied). Thus, BPOS
implementation leads to the additional sales and traffic in the store by the customers who
pick up their orders.

Objectives of the study

The main objective of this study is to :

1. Examine whether there is a significant relationship exist between Online store sales
and Offline store sales.
2. Understand how online and offline stores complement and can substitute each other.
3. Examine how online advertisements (search ad and display ad) affect the offline store
sales.
4. Understand how an advertising and promotion affect sales.
5. Determine how economic goals, quest for self-affirmation, quest for symbolic
meaning, quest for social interaction and experiential impact and reliance on schemas
and scripts responsible for the customers channel migration.
6. To understand the impact of reliable inventory information when integrating online
and offline channel.

Research Hypotheses

H0(1) : There exist a significant relationship between online and offline stores sales
Ha(1) : There exist no significant relationship between online and offline stores sales.

H0(2) : The opening of an offline store increase the online sales. The offline store
negatively impact the online store sales.
Ha(2) : The opening of an offline store decrease the online sales. The offline store
negatively impact the online store sales.

H0(3) : Search ads and display ads together increase offline store sales
Ha(3) : Search ads and display ads together do not increase offline store sales.

H0(4) : Advertisement and promotion increase both online and offline store sales.

10
Ha(4) : Advertisement and promotion do not increase both online and offline store sales.

The possible hypothesis can on the basis of customers economic goals, quest for self-
affirmation, quest for symbolic meaning, quest for social interaction and experiential impact,
and reliance on schemas and scripts are:

H0(5a) : Customers migrates to online channel due to economic goals.

Ha(5a) : Customers donot migrates to online channel due to economic goals.

H0(5b) : Customers migrates to online channel due to quest for self-affirmation.

Ha(5b) : Customers donot migrates to online channel due to quest for self-affirmation.

H0(5c) : Customers migrates to online channel due to quest for symbolic meaning.
Ha(5c) : Customers donot migrates to online channel due to quest for symbolic meaning.

H0(5d) : Customers migrates to online channel due to quest for social interaction.
Ha(5d) : Customers donot migrates to online channel due to quest for social interaction.

H0(5e) : Customers migrates to online channel due to experiential impact and reliance on
schemas and scripts.
Ha(5e) : Customers donot migrates to online channel due to experiential impact and
reliance on schemas and scripts.

H0(6) : Reliable inventory information when integrating online and offline channel
increases the sales of both the channel.
Ha(6) : Reliable inventory information when integrating online and offline channel
donot increases the sales of both the channel.

Findings

After reviewing various literatures it has been found that there exist a significant relationship
between the online and offline sales. The study by Kitty Wang and Avi Goldfarb found the
coexistence of substitution across channels and complementarity in demand and online and
offline can be substitutes in distribution, they are complements in marketing communication.
The decrease in online sales and search is associated with the opening of an online store if
the retailer has a strong presence. However, retailer does not have strong presence in places
where the opening of an offline store is associated with an increase in online sales and
search. Also, a positive relationship has been found between the offline store sales and online
display of advertisement. Advertisements and promotions are equally responsible for
increasing both online and offline sales. It is important to note that there are many other
factors which influence the customers to opt for either the online or offline channel.

11
According to a study on Consumers in a multichannel environment we examined that on the
basis of the utility and goals of the consumers channel choice at the stages of forming a set of
products which is to be bought, selecting a product from the set and then finally purchasing
the product will differ. Such as if the consumer has some economic goals i.e. maximizing
utility and reducing cost then the online channel is the choice for the formation of
consideration sets as it is easier to compare the products online. Lastly, the integration of
online and offline channel increase the sales of offline store when reliable inventory
information is present online. The reason being the credibility of the inventory information

12
assures the customers that the product is available in-store. This result in some customers
shift from online to in-store.

Conclusions

This study provides a case study helpful in understanding how the online and offline sales of
the stores are related with each other. It is important to note that there are no signs showing
slow down in the demand for bricks and mortar stores, but retailers cannot afford to lose
focus on the e-commerce trends. Many factors that affect the sales have been covered in this
study. Factors such as opening of a brick & mortar store in the region having prior brand
presence or not, advertisement & promotions, inventory information available online,
product and process utility are responsible for channel migration by the customers. The
limitation of this study is that it provides a conceptual understanding of the concepts based
on reviewing the existing literature. This study does not test empirically due to unavailability
of the data. It can be tested using either experimental or survey based approach.

References

Wang, Kitty, Avi Goldfarb. 2016. Can offline stores drive online sales? Journal of Marketing
Research.
Ansari, Asim, Carl Mela, and Scott Neslin. 2008. Customer Channel Migration. Journal of
Marketing Research 45(1), 60-76.
Balasubramanian, Sridhar, Rajagopal Raghunathan, and Vijay Mahajan. 2005. Consumers
in a Multichannel Environment: Product Utility, Process Utility, and Channel Choice.
Journal of Interactive Marketing 19(2), 12-30.
Lewis, Randall, and David Reiley (2014), “Online Ads and Offline Sales: Measuring the
Effects of Retail Advertising via a Controlled Experiment on Yahoo!” Quantitative
Marketing and Economics, 12 (3), 235–66.
Abraham, Magid (2008), “The Off-Line Impact of Online Ads,” Harvard Business Review,
86 (April), 28.
Assmus, Gert, John U. Farley and Donald R. Lehmann (1984), “How Advertising Affects
Sales: Meta-Analysis of Econometric Results,” Journal of Marketing Research, 21 (1),
65074.
Magid Abraham , Leonard M. Lodish (1990), “The Getting the Most Out of Advertising and
Promotion,” Harvard Business Review,May-Jun;68(3):50-1, 53, 56 passim.
Gallino, Santiago and Antonio Moreno (2014), “Integration of Online and Offline Channels
in Retail: The Impact of Sharing Reliable Inventory Availability Information,” Management
Science,60(6),1434–51.

13
Johnson, G. A., Lewis, R. A., & Reiley, D. (2016b). When less is more: Data and power in
advertising experiments. Marketing Science. Forthcoming.

14
 Project Report
On

How Online and Offline Stores

impact each other’s sales?

Introduction

A customer might have a preference

between online and offline purchases, but
when it comes to how they buy, “very few
people exclusively shop online or only in
store. They marry the best of both worlds,”
said Berg

15
 Objectives of the study

The main objective of this study is to :

•Examine whether there is a significant relationship exist between Online store

sales and Offline store sales.
•Understand how online and offline stores complement and can substitute each
other.
•Examine how online advertisements (search ad and display ad) affect the offline
store sales.
•Understand how an advertising and promotion affect sales.
•Determine how economic goals, quest for self-affirmation, quest for symbolic
meaning, quest for social interaction and experiential impact and reliance on
schemas and scripts responsible for the customers channel migration.
•To understand the impact of reliable inventory information when integrating
online and offline channel.

Research Hypotheses

H0(1) : There exist a significant relationship between online and

offline stores sales
Ha(1) : There exist no significant relationship between online and
offline stores sales.
H0(2) : The opening of an offline store increase the online sales.
The offline store negatively impact the online store sales.
Ha(2) : The opening of an offline store decrease the online sales.
The offline store negatively impact the online store sales.
H0(3) : Search ads and display ads together increase offline store
sales
Ha(3) : Search ads and display ads together do not increase offline
store sales.

16
 Research Hypotheses

H0(4) : Advertisement and promotion increase both online and offline store
sales.

Ha(4) : Advertisement and promotion do not increase both online and offline
store sales.

H0(5) : Reliable inventory information when integrating online and offline

channel increases the sales of both the channel.

Ha(5) : Reliable inventory information when integrating online and offline

channel donot increases the sales of both the channel.

Literature Review

(Kitty Wang and Avi Goldfard, 2016) The study

found the coexistence of substitution across channels and
complementarity in demand. The decrease in online sales
and search is associated with the opening of an online
store if the retailer has a strong presence. However,
retailer does not have strong presence in places where
the opening of an offline store is associated with an
increase in online sales and search. It has been found
that online and offline can be substitutes in distribution,
they are complements in marketing communication. It is
always the presence of the store that drives
complementarity.

17
 Literature Review
 (Randall A. Lewis and David H. Reiley, 2014) The
study provides evidence that online ads do produce effects
beyond the click on both online and in physical stores
purchases. It also shows that the majority of the impact on
purchases comes from viewers who never clicked the ads. The
population under study is the set of the retailer’s existing
customers who log in to Yahoo!. Online display ads can
increase both online and offline retail sales, providing
valuable insight for future marketing decisions. Researchers,
worked with an unnamed national apparel retailer to evaluate
the effects of the retailer's advertising. The large-scale field
experiment involved over three million Yahoo users. For two
weeks, Yahoo users in the experiment's treatment group saw
branded apparel ads from the retailer whereas users in the
control group saw ads for Yahoo Search.

Literature Review
(Magid Abraham and Leonard M. Lodish, 1990 The research
talks about the importance of single source data and measuring
incremental sales to measure the change in sales due to advertising
and promotion. Traditionally there was a lack of data to measure
the incremental sales so they consider many unexplained
assumptions. Traditionally, the focus was on gross rather than
incremental sales. For advertising conventional wisdom believes
that in every case more advertising is better than less and In case of
Promotion, conventional wisdom is that when a company sells a lot
of goods to the trade the promotion is successful. As a result, in a
typical market budget more than 65% accounts for promotions. The
conventional wisdom is challenged by the researchers in this paper.
In tests (360) the variable is advertising weight and The results are :
 Only half of the time the sales increases due to increase in
advertising
 In case of trade promotion analyses for all brands in 65 different
product categories only 16% of the trade promotion were profitable

18
 Literature Review
(Garrett A. Johnson, Randall A. Lewis and David H. Reiley, 2016)
The researcher study the effect of advertisements displayed online on both
in-store purchases and online purchases. To study a randomized field
experiment on three million users of Yahoo! And the past customers of the
retailer’s data are used. Researchers examined 2 consecutive weeklong ad
campaigns targeting the 3 million existing customers of the retailer and
then matching their subsequent online and in-store retail purchases with
the exposure of advertising at the individual level. The retail image ad
shows the featured items attractive photos, detailed information of the
product, or call to action, but no prices. Experimental estimates suggested
that these ads had increased sales by 306% and profitability of the
campaigns. In this study three improvements in the design had been done
to distinguish this experiment from the previous which also uses the same
retailer, described in Lewis and Reiley (2014).
 Doubled the size of the data.(three million eligible users)
 Control ads included which boosted the estimates precision.
 Exceptional data on consumers also resulted in increasing the boost
precision

Literature Review

(Asim Ansari, Carl F. Mela, and Scott A. Neslin,

2008 The study focuses on the management of
multichannel available for customers. With this study
researchers develop a model of customer channel
migration. This model was applied on the retailer that
markets through catalogs and over the web. This model is
useful in identifying the key phenomena which are
required to understand the customer migration. No
empirical research that details on how in the
multichannel environment the customers migrate
between the channels had been done before. The authors
uses the four-year data and found that the web-oriented
is an emerging segment with the higher sales volume.

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 Literature Review

(Gert Assmus, John U. Farley, and Donald R.

Lehmann, 1984 Researches did the meta study to
understand the relationship between the advertisement
and its impact on sales. The procedure, attempts to
generalize results from a set of existing studies by
Houston, Peter, and Sawyer (1983), Cooper and
Rosenthal (1980), Reilly and Conover (1983), Monroe
and Krishnan (1983), Sudman and Bradburn (1974) and
Sawyer and Peter (1983). The study uses the estimated
parameters from 128 models reported in 22 studies
which were published before 1981. Half the studies are
from marketing literature and half from econometric
literature.

Literature Review

(Magid Abraham, 2008) The study aims to

understand the impact of online ads on offline sales
and also establishes the result that combination of
search and display ads are more effective. A firm’s
software was installed on some two million people
PC’s worldwide and had the explicit permission to
observe and track their online activities. The firm
used the information and data about users searches,
sites visited, content viewed by the users and the
transactions made by the users. Analyses of this
tracking led to understand the consumers’ behavior
influenced by the online advertising.

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 Literature Review

(Sridhar Balasubramanian, Rajagopal

aghunathan and Vijay Mahajan, 2005) The
study talks about that in the future consumers will
use mix channels market. Since the emergence of the
multichannel environment consumers display
complex shopping behaviors. Multichannel
environment includes Internet and traditional retail
sales. Consumers may rely on different channels to
perform their shopping activities at different stage.
The study provides the answer for why and when
consumers while shopping choose specific channels.

Literature Review

 (Santiago Gallino and Antonio Moreno, 2012)

The study talks about the integration of online and
offline channels by retailers so that the cost can be
reduce and the value of proposition can be improved
which they make to their customers. For the research
a proprietary dataset has been analyzed to
understand the impact of a buy-online-pickup-in-
store (BOPS) project. This implementation is
associated with an increase in store sales and traffic
and reduction in online sales

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 Findings

Conclusions

 This study provides a case study helpful in understanding how

the online and offline sales of the stores are related with each
other. It is important to note that there are no signs showing
slow down in the demand for bricks and mortar stores, but
retailers cannot afford to lose focus on the e-commerce
trends. Many factors that affect the sales have been covered in
this study. Factors such as opening of a brick & mortar store
in the region having prior brand presence or not,
advertisement & promotions, inventory information available
online, product and process utility are responsible for channel
migration by the customers. The limitation of this study is
that it provides a conceptual understanding of the concepts
based on reviewing the existing literature. This study does not
test empirically due to unavailability of the data. It can be
tested using either experimental or survey based approach.

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 References

 Wang, Kitty, Avi Goldfarb. 2016. Can offline stores drive online sales? Journal of Marketing
Research.
 Ansari, Asim, Carl Mela, and Scott Neslin. 2008. Customer Channel Migration. Journal of
Marketing Research 45(1), 60-76.
 Balasubramanian, Sridhar, Rajagopal Raghunathan, and Vijay Mahajan. 2005. Consumers
in a Multichannel Environment: Product Utility, Process Utility, and Channel Choice. Journal
of Interactive Marketing 19(2), 12-30.
 Lewis, Randall, and David Reiley (2014), “Online Ads and Offline Sales: Measuring the Effects
of Retail Advertising via a Controlled Experiment on Yahoo!” Quantitative Marketing and
Economics, 12 (3), 235–66.
 Abraham, Magid (2008), “The Off-Line Impact of Online Ads,” Harvard Business Review, 86
(April), 28.
 Assmus, Gert, John U. Farley and Donald R. Lehmann (1984), “How Advertising Affects
Sales: Meta-Analysis of Econometric Results,” Journal of Marketing Research, 21 (1), 65074.
 Magid Abraham , Leonard M. Lodish (1990), “The Getting the Most Out of Advertising and
Promotion,” Harvard Business Review,May-Jun;68(3):50-1, 53, 56 passim.
Gallino, Santiago and Antonio Moreno (2014), “Integration of Online and Offline Channels in
Retail: The Impact of Sharing Reliable Inventory Availability Information,” Management
Science,60(6),1434–51.
Johnson, G. A., Lewis, R. A., & Reiley, D. (2016b). When less is more: Data and power in
advertising experiments. Marketing Science. Forthcoming.

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