Journal of Marketing Channels

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Cross-selling across stores or within a store?

Impacts of cross-buying behavior in online
shopping malls

Wirawan Dony Dahana, Makoto Morisada & Yukihiro Miwa

To cite this article: Wirawan Dony Dahana, Makoto Morisada & Yukihiro Miwa (2019): Cross-
selling across stores or within a store? Impacts of cross-buying behavior in online shopping malls,
Journal of Marketing Channels, DOI: 10.1080/1046669X.2019.1646186

To link to this article: https://doi.org/10.1080/1046669X.2019.1646186

Published online: 20 Aug 2019.

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JOURNAL OF MARKETING CHANNELS
https://doi.org/10.1080/1046669X.2019.1646186

Cross-selling across stores or within a store? Impacts of cross-buying

behavior in online shopping malls
Wirawan Dony Dahana , Makoto Morisada, and Yukihiro Miwa
Graduate School of Economics, Osaka University, Toyonaka, Japan

ABSTRACT KEYWORDS
This study investigates the impacts of cross-buying behavior in an online shopping mall Cross-buying; store loyalty;
where customers can purchase from additional product categories from various independ- relationship duration; cross-
ent stores. We focus on the extent to which store loyalty and relationship duration moder- selling; hierarchical
Bayes model
ate the cross-buying effects on three behavioral traits: customers’ purchase rate, lifetime
duration, and spending. The results reveal that customers who engage in cross-buying more
intensely purchase more frequently, have longer expected lifetime duration, and spend
higher amounts in each transaction. The impacts on purchase frequency and customer
retention are even greater for customers who exhibit higher behavioral loyalty toward some
stores. However, store loyalty is found to weaken the association between cross-buying and
average spending. Further, relationship duration appears to weaken the effects of cross-buy-
ing on purchase rate and spending. These results provide new insights into the impacts of
cross-buying on customer value as well as managerial implications for shopping
mall owners.

Online shopping malls have emerged as key players in
the rising online retail market in many countries. For
example, Slice Intelligence reported that 43% of all
online retail sales in the United States went through
Amazon in 2016 (Business Insider Intelligence, 2017).
In Japan, Rakuten accounted for 25.6% of total e-com-
merce sales in the same year1, while Alibaba has
become the largest e-commerce business platform in
China (Xu et al., 2017). Arguably, the rapid growth in
these giant online providers is inseparable from their
high profitability, which to a large extent is attribut-
able to the sales of their tenants (Adkins Lehew,
Burgess, & Wesley, 2002). Hence, mall owners ultim-
ately benefit from supporting their tenants’ businesses
through the owners’ websites. Indeed, it is common
practice for online mall owners to entice their custom-
ers to buy additional products or services (i.e. to
cross-buy) from their hosted stores (Hendershott,
Hendershott, & Hendershott, 2001), suggesting that
the ability to efficiently cross-sell various products is a
key factor behind achieving long-term profitability
(Knott, Hayes, & Neslin, 2002; Li, Sun, &
Montgomery, 2011).
The notion that cross-buying drives customer life-
time value (CLV) has gained considerable support in
the literature (Blattberg, Malthouse, & Neslin, 2009).
Studies have shown that cross-buying can positively
affect lifetime duration (Li, 1995; Reinartz & Kumar,
2003), customer profitability (Garland, 2004;
Hallowell, 1996; Niraj, Gupta, & Narasimhan, 2001),
and purchase volume and frequency (Reinartz,
Thomas, & Bascoul, 2008). These variables are all crit-
ical components that directly determine the magni-
tude of CLV. In this respect, mall owners may want
to know how their revenues would improve by
encouraging their customers to cross-buy more
intensely. Accordingly, better understanding how
cross-buying influences the purchase behaviors and
ultimately CLV of online shopping mall customers
has become an important issue (Hendershott
et al., 2001).
Considering the important role of cross-buying, we
investigate how this behavior affects three behavioral
traits: purchase rate; lifetime duration; and spending
of customers patronizing an online shopping mall.
Figure 1 illustrates the definitions of these concepts

CONTACT Wirawan Dony Dahana dony@econ.osaka-u.ac.jp Graduate School of Economics, Osaka University, 1-7 Machikaneyama, Toyonaka-Shi
560-0043, Japan.
This article was accepted under the editorship of Neil Herndon.
1
Based on the report of a survey on the actual conditions of Japanese e-commerce market conducted by Fuji Keizai Co., Ltd.
ß 2019 Taylor & Francis Group, LLC
2 W. D. DAHANA ET AL.
Relationship duration
Figure 1. An illustration of the key constructs of a hypothetical customer.
for a hypothetical customer. Suppose that we observed
the customer’s purchase history in a period between t1
and t6 (the study period) and we know when the cus-
tomer initiated the relationship with the mall (i.e. t0 ).
During the study period, the customer made four pur-
chases at t2 ; t3 ; t4 ; and t5 : Further, let us assume
that the customer terminated his or her relationship
with the firm at t7 : In online shopping malls, custom-
ers can turn to be inactive without notifying the mall
owners. Therefore, in general, the defection time t7
cannot be observed, even when the churn occurs dur-
ing the period between t5 and t6 : We define purchase
rate as the average purchase frequency of a particular
customer during the study period. Lifetime duration is
defined as the period since the last purchase was
made until a customer defects. This should not be
confused with relationship duration which is defined
as the period between the date of the relationship ini-
tiation t0 and the first date of the study period t1 :
Further, we define spending as the average purchase
amount per transaction.
We conceive that the impacts of cross-buying on
these behavioral traits should be more complicated
than those in other retail contexts because customers
can purchase additional product categories from a
large number of stores within a mall, most of which
are unfamiliar to them. In such a situation, the conse-
quences of cross-buying are expected to depend on
whether it is undertaken in frequently visited stores or
in other less familiar stores because prior experience
with a store is associated with the extent of the risks
perceived by customers when shopping there
(Stranahan & Kosiel, 2007). When customers buy add-
itional products from familiar stores, they should be
more confident about the quality of these products,
which may result in a more favorable product evalu-
ation (Anderson, 1973) or enhanced repurchase
behavior in such stores (Cummings & Venkatesan,
1976). Since the choice of the store in which custom-
ers engage in cross-buying is largely determined by
their commitment to the stores under consideration,
we expect the behavioral impacts of cross-buying to
be moderated by store loyalty.
Study period
Lifetime duration
The second source of complexity stems from the
fact that the exchange relationships in online shopping
malls involve three parties: customers, stores, and the
mall’s owner. According to Ngobo (2004), the extent
to which customers engage in cross-buying is influ-
enced by their evaluations of the provider’s ability to
confirm the quality of additional products. That is,
customers are likely to buy additional product catego-
ries from a store that is believed to offer as good qual-
ity as the ones they previously bought. In the context
of online shopping malls, cross-buying intention is
thus affected by customers’ trust not only in the store,
but also in the mall owner hosting the store. For rela-
tively new customers, their decisions to cross-buy
should depend on their trust in the store rather than
in the mall owner because they lack shopping experi-
ences in the mall. However, as they continue patroniz-
ing the mall, satisfactory experiences with some stores
may accumulate, leading to favorable evaluations of
the mall as a whole2 (Rabbanee, Ramaseshan, Wu, &
Vinden, 2012). Therefore, long-tenure customers
would not hesitate to cross-buy in a store even though
they are not familiar with it because they believe that
the mall owner confirms the quality of its tenants.
Therefore, we expect relationship duration to inter-
vene in the behavioral outcomes of cross-buying.
In sum, we argue that it is important to account
for the role of store loyalty and relationship duration
when analyzing the impacts of cross-buying by online
shopping mall customers. Accordingly, we propose a
research framework that allows for the interplay
between these variables to influence customer rela-
tionships. Based on the literature, we build testable
hypotheses concerning the main effects as well as the
interaction effects of cross-buying, store loyalty, and
relationship duration on customers’ purchase rate,
lifetime duration, and spending. By employing a hier-
archical Bayes extension of the Pareto/NBD model
(Abe, 2009, 2011 ) to link the behavioral traits with
the explanatory variables, we then empirically test our
2
Note that the causal relationship may be in the opposite direction. That
is, shopping mall loyalty induces store loyalty intention as suggested by
Majumdar, (2005). Future research may need to address which causal
relationship is more plausible.

hypotheses by using actual data. Subsequently, we
examine how cross-buying, store loyalty, and relation-
ship duration ultimately change CLV.
The main contributions of the current research are
threefold. First, to our knowledge, this is the first
research that investigates the behavioral impacts of
cross-buying of online shopping mall customers.
Thus, our results can help improve the generalizability
of previous findings on this issue. Second, this study
adds new insights into how the effects of cross-buying
vary across customers with different degrees of store
loyalty and relationship duration. This is particularly
important for mall owners willing to enhance the
cross-buying behavior of their customers by cross-
selling or using other promotion tools. For example, it
might be useful to address the question of whether to
encourage customers to cross-buy in a few focal stores
or a wider range of stores, regardless of their familiar-
ity to customers. Third, this study provides a better
understanding of the linkage between cross-buying
and CLV. The analysis illustrates the way in which
the effects of cross-buying are transferred to a change
in CLV through the purchase rate, lifetime duration,
and spending. Furthermore, it also exhibits how the
linkage is moderated by store loyalty and relation-
ship duration.
We organize the remainder of this article as
follows. In the next section, we review related studies
of the antecedents and consequences of cross-buying.
Subsequently, we discuss the theoretical underpin-
nings of our research framework and state our
hypotheses. We then explain the hierarchical Bayes
model that links cross-buying, store loyalty, and rela-
tionship duration with the behavioral traits. Following
this section, we describe the data used in the empirical
analysis and report the estimation results. We subse-
quently discuss the results of the hypothesis testing
along with some implications. Finally, we conclude
the article with limitations and a direction for
future research.
Literature review
The term “cross-buying” was first introduced by
Verhoef, Franses, and Hoekstra (2001) to describe the
purchasing behavior of a number of services from the
same provider. In subsequent studies, the operationali-
zation of the cross-buying variable has depended on
the type of transaction or product category of interest.
For example, Kumar, George, and Pancras (2008)
formulized cross-buying as the number of different
product categories that a customer has purchased
JOURNAL OF MARKETING CHANNELS 3
from a firm from the time of first purchase.
Venkatesan, Kumar, and Ravishanker (2007) meas-
ured cross-buying as the ratio of the number of prod-
uct categories from which a customer bought in each
transaction to the number of transactions the cus-
tomer made when shopping in a single channel.
Reinartz et al. (2008) proposed a two-dimensional
measurement termed cross-buying width and balance.
The former pertains to the number of distinct catego-
ries from which a customer has purchased over a year
(a time-varying measure), whereas the latter concerns
the dispersion (measured as the standard deviation) of
spending across categories. Despite these heteroge-
neous measurements, however, most studies of this
topic have investigated the antecedents and conse-
quences of cross-buying behavior.
Cross-buying antecedents
A stream of research elucidates the factors that may
drive consumers to buy various product categories
from the same seller. These drivers can be classified
into four types: socio-demographic characteristics,
psychographic characteristics, marketing effort by the
firm, and the market characteristics of the product
under consideration (see Figure 2). An early study of
this issue suggested that the current ownership of
product or services can be used to identify customers
who are more likely to adopt additional financial serv-
ices (Kamakura, Ramaswami, & Srivastava, 1991).
Further, certain demographic characteristics such as
education, sex, income, and age are responsible for
the differences in cross-buying tendencies among cus-
tomers. Li, Sun, and Wilcox (2005) provided evidence
that households headed by an individual with a high
level of education or a man tend to adopt additional
services more quickly than do other households.
Similarly, Verhoef et al. (2001) showed that older cus-
tomers tend to cross-buy more intensely than younger
ones and suggested that the number of services held
in the previous period has a positive association with
cross-buying.
The next potential determinant of cross-buying is
customers’ psychographic characteristics. Verhoef
et al. (2001) found that consumers’ perception of the
fairness of the prices charged by sellers (termed pay-
ment equity) is positively associated with cross-
buying. Ngobo (2004) suggested that the perceived
convenience of cross-buying from the same provider
and favorable evaluations of the provider’s ability to
provide different types of services can also positively
affect cross-buying intention. This finding received
4 W. D. DAHANA ET AL.

Antecedents Consequences

Socio-demographics Psychographics
• Gender • Satisfaction
• Age • Trust Purchase frequency
• Income • Image
Reinartz et al. 2008; Kumar et al. 2008;
• Education • Perceived convenience
Lemon & Wangenheim 2009.
• Current product ownership • Payment equity
• Commitment
Li et al. 2005; Verhoef et al. 2001; Ngobo 2004; Aurier & N’Goala 2009;
Kamakura et al. 1991. Verhoef et al. 2001; Soureli et al. 2008;
Tung & Carlson 2015; Vyas & Raitani 2015 Lifetime duration
Evanschitzky et al. 2017.
Li 1995; Reinartz & Kumar 2003.
Cross-buying
Marketing Market characteristics
• Direct mailing • Product type
•
Spending
• Loyalty program Channel type
• Cross-promotion • Product variety/similarity
Hallowell 1996; Niraj et al. 2001;
• Pricing • Product complexity Garland 2004.
• Firm-generated content • Interpersonal relationship
• Proprietary web panel
Verhoef et al. 2001; Kumar et al. 2008; Ngobo 2004; Verhoef & Donkers 2005;
Liu & Wu 2007; Manchanda et al. 1999; Kumar et al. 2008, Bolton et al. 2004;
Kumar et al. 2016; Allen et al. 2016. Liu & Wu 2008; Jeng 2011.
Lifetime Value

Blattberg et al. 2009

Figure 2. Summary of literature review on cross-buying antecedents and consequences.

empirical support from a study by Tung and Carlson
(2015). Similarly, Evanschitzky, Malhotra,
Wangenheim, and Lemon (2017) also found that per-
ceived convenience can encourage consumers to buy
peripheral services in addition to a main service.
Focusing on financial service customers, Soureli,
Lewis, and Karantinou (2008) showed that cross-buy-
ing intention can be enhanced by customers’ image of
and satisfaction toward a bank, mediated by their
trust in the bank. The satisfaction–trust–cross-buying
linkage has also been observed among bank custom-
ers; however, Aurier and N’Goala (2010) found that
relationship commitment has no effect on cross-
buying tendency, contradicting the result of Verhoef
(2001) who found a significant positive effect of com-
mitment. This contradiction may be attributable to
inconsistent variable definition or measurement. As
Bolton, Lemon, and Verhoef (2004) pointed out, com-
mitment can be classified into affective commitment
and economic motive-derived calculative commitment,
where only the former is posited to have a positive
impact on cross-buying. More recently, Vyas and
Raitani (2015) showed that customers’ perception
of firm reputation induced by corporate social
responsibility initiatives positively affects cross-
buying intention.
Marketing mix variables such as direct mailings,
loyalty programs, cross promotions, and pricing have
been shown to be correlated with cross-buying
behavior. Verhoef et al. (2001) found that direct mail-
ings and loyalty programs have significant positive
effects on the number of services purchased by cus-
tomers. The positive impact of direct mailings was
also shown by Liu and Wu (2007). Furthermore,
Kumar et al. (2008) showed that the effect of the
number of catalogs sent per quarter on cross-buying
is inverted U-shaped, suggesting that the number of
products purchased by customers increases with the
number of catalogs sent up to a threshold beyond
which there is saturation or a decline in the incremen-
tal effect. In grocery markets, cross-promotion and
pricing have been shown to induce multi-category
purchases (Manchanda, Ansari, & Gupta, 1999). More
recently, Kumar and colleagues discovered that firm-
generated content in social media increases cross-buy-
ing, especially when it is combined with television or
e-mail advertising (Kumar, Bezawada, Rishika,
Janakiraman, & Kannan, 2016). Another recent study
by Allen, Dholakia, and Basuroy (2016) suggested that
the creation of retailer-sponsored web panels led to an
increase in the number of different products bought
by the participants.
Research studies have also reported that cross-
buying intensity is influenced by market or product
characteristics. Verhoef and Donkers (2005) found
that cross-buying behavior varies depending on the
type of channel through which customers initiated the
relationship with a firm. Bolton et al. (2004)

postulated that the type of service, whether hedonic or
utilitarian, can affect the association between commit-
ment and cross-buying. However, they did not empir-
ically test this proposition. Kumar et al. (2008)
provided evidence that the category of the first pur-
chase can lead to different cross-buying tendencies.
Furthermore, cross-buying heterogeneity may also be
attributable to category characteristics such as cat-
egory similarity and complexity. Ngobo (2004)
pointed out that cross-buying is less likely to occur if
service providers offer additional products that are
dissimilar to the core products customers already have
because they would perceive an inconsistency between
the core and the extension categories. Liu and Wu
(2008) provided support for the influence of product
similarity; they found that the effect of satisfaction on
cross-buying is stronger for product categories with a
higher degree of similarity and confirmed that cat-
egory complexity moderates the effect of satisfaction
the other way around. In addition, the extent of the
interpersonal relationship between the firm and its
customers positively affects cross-buying intention
because customers place more trust in a firm if they
have closer relationships with it (Jeng, 2008).
Cross-buying consequences
A few studies have reported that cross-buying posi-
tively affects lifetime duration. By using the propor-
tional hazard model, Li (1995) showed that customers
who adopt optional services in addition to a main ser-
vice are less likely to defect than those who only pur-
chase the main service. In a similar vein, Reinartz and
Kumar (2003) empirically demonstrated that custom-
ers who purchase from multiple departments within a
firm tend to have longer lifetime duration than those
who purchase from a single department. Their results
are intriguing because cross-buying was found to
cause a decrease in defection hazard by approximately
60% to 73%. However, no rational explanation for this
association was provided. It could be argued that cus-
tomers who purchase from a wide range of categories
would develop greater familiarity (Kumar &
Venkatesan, 2005), which in turn develop greater
intention to maintain their levels of satisfaction with a
firm’s products (Hoch, Bradlow, & Wansink, 1999;
Venkatesan et al., 2007). This favorable attitudes even-
tually leads to a longer lifetime of those who cross-
buy more intensely.
The second outcome variable that can be affected
by cross-buying is customer profitability. However,
the results of previous studies are mixed. The early
JOURNAL OF MARKETING CHANNELS 5
study by Niraj et al. (2001) investigated the effects of
the number of different items ordered on service cost
and customer profitability in the B2B context. Their
results revealed that neither effect appeared to be sig-
nificant, perhaps because the behavior of business cus-
tomers who decide to cross-buy is likely to be driven
by different motivations to that of individual custom-
ers. However, Garland (2004) found that customers
who use multiple financial services tend to contribute
a higher share of wallet (used as a proxy of profitabil-
ity). Kumar et al. (2008) also provided support for the
positive association between cross-buying and profit-
ability. Their empirical study suggested that an
increase in the number of product categories pur-
chased can positively affect the order contribution
margin. Furthermore, Hallowell (1996) found that
banks with a higher ratio of customers who purchase
multiple services from the same division are likely to
earn higher profits. These positive associations
between cross-buying and customer profitability may
arise from the fact that customers who buy various
products from the same provider also buy more fre-
quently and spend more money (Kumar et al., 2008).
Indeed, the positive effects of cross-buying on pur-
chase frequency and purchase amount were found by
Reinartz et al. (2008). In addition, Lemon and
Wangenheim (2009) empirically showed that higher
cross-buying intensity in a certain period leads to
higher core service usage in the subsequent period,
lending support for the positive association between
cross-buying and purchase frequency. However,
according to Shah, Kumar, Qu, and Chen (2012), the
impacts of cross-buying may not be as favorable for
customers who have limited budgets, demand higher
customer service, or tend to purchase products that
are on promotion.
Given its positive impacts on purchase frequency,
lifetime duration, and customer profitability, Blattberg
et al. (2009) concluded that cross-buying ultimately
increases CLV. Nevertheless, the causal relationships
should be interpreted cautiously since no experimental
study has thus far been undertaken on this issue.
Reinartz et al. (2008) argued that behavioral loyalty
(as measured by purchase frequency and spending in
a store) should be considered to be the antecedents of
cross-buying behavior rather than the other way
around. On the contrary, Lemon and Wangenheim
(2009) revealed that cross-buying increases purchase
frequency. Indeed, one can expect that the relations
are bidirectional; that is, cross-buying leads customers
6 W. D. DAHANA ET AL.
to buy more frequently and spend more with a seller,
and this eventually increases the probability that cus-
tomers purchase additional products or services from
the same seller. For this reason, we regard these rela-
tionships as associations rather than causal
relationships.
Research framework and hypotheses
In this study, we aim to elucidate the extent to
which cross-buying influences several behavioral
aspects of online shopping mall customers. Unlike in
other business settings, customers of online shopping
malls can buy additional product categories from the
various independent stores within a mall with which
they are familiar or less familiar. Arguably, custom-
ers should be more confident if they cross-buy from
a store they patronize because they have better
knowledge about the quality of its product offerings.
By contrast, customers perceive greater risks when
they purchase additional products from unfamiliar
stores (Stranahan & Kosiel, 2007). As a result, they
are likely to perceive disconformity about the quality
of the additional products purchased at unfamiliar
stores. Cognitive dissonance theory contends that
such a feeling of disconformity could lead to a less
favorable product evaluation (Anderson, 1973),
which in turn affects subsequent repurchase behavior
(Cummings & Venkatesan, 1976). Accordingly, the
way in which customers choose stores is worth con-
sidering when analyzing the behavioral impacts of
cross-buying in online shopping malls. Specifically,
the impacts of cross-buying might depend on the
extent to which customers are loyal toward the
stores in which they cross-buy, as store loyalty can
affect the sales of additional products (Lavayssi
ere &
Mullen, 2007).
In addition to customer loyalty toward individual
stores, it is critical to account for the role of the cus-
tomer’s relationship with the hosting mall. Recall that
cross-buying intensity can be affected by her/his
evaluation of a provider’s ability to deliver related
products or services of good quality (Ngobo, 2004).
This evaluation is likely to evolve with relationship
duration (Lemon & Wangenheim, 2009). Prior studies
suggest that customers who have a long relationship
with a service provider tend to have higher trust in
and commitment toward that seller (Kumar et al.,
2008; Morgan & Hunt, 1994). We conjecture that this
claim also applies to online shopping malls in that
long-tenure customers perceive the mall owner as
providing them with quality products through its ten-
ants. In this case, longer relationship duration reduces
the psychological barriers of risk-averse customers to
cross-buy from unfamiliar stores. In this regard,
Verhoef, Franses, and Hoekstra (2002) provide evi-
dence that relationship duration is positively associ-
ated with the number of services purchased. This line
of thinking provides a theoretical basis for predicting
that store loyalty and relationship duration intervene
in the associations between cross-buying and certain
behavioral outcomes.
As cross-buying may influence purchase frequency,
customer retention, and purchase amount, this study
examines the relationships among these variables in
the context of online shopping malls. For this pur-
pose, one can use information on the recency, fre-
quency, and monetary (RFM) characteristics as the
dependent variables. These variables are observable
and readily constructed from purchase history data.
However, as pointed out by Fader, Hardie, and Lee
(2005), the RFM variables tend to be correlated with
each other. To properly analyze the relationships
between these variables and cross-buying, it is thus
suggested to account for the mechanisms underlying
the observed behaviors along with their correlations.
Fader et al. (2005) further proposed the use of three
behavioral traits, namely the purchase rate, lifetime
duration, and spending per transaction, instead of the
RFM variables. Following this suggestion, we consider
these behavioral traits, whose definitions were pro-
vided in the introduction section, to be cross-buying
consequences.
Figure 3 illustrates the analytical framework of the
study. Here, we focus on three influencing factors:
cross-buying, store loyalty, and relationship duration.
Each variable is assumed to directly affect the pur-
chase rate, lifetime duration, and spending.
Furthermore, we predict that the effects of cross-
buying on these behavioral traits are moderated by
store loyalty and relationship duration. Additionally,
we expect the moderating effects of store loyalty to
depend on relationship duration. Furthermore, we
account for covariates to control for the variability in
demographic characteristics, device usage, and
response to marketing. For demographic variables, we
include age and sex. Regarding device usage, we dis-
tinguish between customers who mainly use mobile
devices from those who use PCs when making online
purchases. As suggested by Wang, Malthouse, and
Krishnamurthi (2015), we expect device usage differ-
ences to lead to differences in the purchase frequency

Behavioral traits
Purchase rate
Control variables
Demographics
• Age
• Sex
Lifetime
Device usage
Marketing response
Spending
Figure 3. Hypothesis analytical framework of this study.
and order size of online shopping mall customers.
In addition, we include the extent to which customers
respond to sale or price promotions (deal proneness).
This variable is suspected to be associated with cus-
tomers’ purchase rate and spending in online shop-
ping malls (Roy, 1994).
In this empirical study, we examine the proposed
framework by using purchase history data of custom-
ers patronizing an online shopping mall that sells
fashion related products in Japan. Evidence from pre-
vious studies indicated that online behavior of
Japanese consumers is different from their US coun-
terparts (Chau, Cole, Massey, Montoya-Weiss, &
O’Keefe, 2002). Further, a study by Straub, Keil, and
Brenner (1997) suggested that Japanese consumers
may perceive high risks when adopting a new product
or technology as compared to those in other coun-
tries. Thus, in our context, the role of store loyalty
and relationship duration may be particularly import-
ant in governing purchase behaviors. In addition to
these differences, studies also reported some similar-
ities in buying patterns of fashion products among
consumers in Japan and other countries. Parker,
Hermans, and Schaefer (2004) discovered that while
Japanese consumers have different fashion conscious-
ness from that of Chinese consumers, their attitudes
toward fashion products appear to be similar with
those of US consumers. This finding was echoed by
Knight and Kim (2007) who found that Japanese cus-
tomers are as motivated by the need for uniqueness as
those in western countries. Nevertheless, cross-cultural
differences of cross-buying behavior in fashion retail
market have not been adequately addressed in the lit-
erature. Therefore, in the next subsection, we avoid to
state our hypotheses as specific to Japanese market;
rather, we leave the potential country-specific effect as
an empirical issue.
JOURNAL OF MARKETING CHANNELS 7
Relationship
duration
H3
H6
H5
Cross-buying
H1
H4
H2
Store loyalty
Main effect of cross-buying
We define cross-buying as the number of product cat-
egories purchased by customers during the study
period3. This definition, similar to those used by
Lemon and Wangenheim (2009) and Reinartz et al.
(2008), implies that we focus on recent cross-buying
experiences. Cross-buying has been shown lead to
higher purchase frequency, longer lifetime duration,
and purchase amount. These findings have been con-
sistently obtained in studies dealing with data from
different business contexts such as telecommunication
service providers (Li, 1995), airline companies (Lemon
& Wangenheim, 2009), and catalog retailers (Reinartz
et al., 2008; Reinartz & Kumar, 2000). While numer-
ous studies suggested behavioral heterogeneity across
markets, some researchers also pointed out that con-
sumers may exhibit similar behavioral patterns for dif-
ferent product categories (Ainslie & Rossi, 1998).
Further, Shankar, Smith, and Rangaswamy (2003)
revealed that consumers’ evaluation of a service in off-
line channels is the same as that in online channels.
Accordingly, we anticipate that the positive effects of
cross-buying should also apply to the context of
online shopping malls and thus propose the following
confirmatory hypotheses:
Hypothesis 1: Cross-buying is positively associated
with (a) purchase rate, (b) lifetime duration, and
(c) spending.
Main effect of store loyalty
Bloemer and De Ruyter defined store loyalty as “the
biased behavioral response (i.e. revisit), expressed over
time, by some decision-making unit with respect to
3
The data used in our analysis contain customers’ purchase history
records for one year. This restricted us to focus on recent cross-buying
activities because the data are left-censored.
8 W. D. DAHANA ET AL.
one store out of a set of stores” (Bloemer & De
Ruyter, 1998, p. 500). The authors distinguished true
store loyalty from spurious store loyalty, where the
latter refers to repeating store visits directed by iner-
tia. By contrast, true store loyalty entails customers’
commitment toward the focal store. In many applica-
tions, researchers use behavioral loyalty as a surrogate
for true loyalty because it is much easier to elicit from
purchase history data. For example, it has been opera-
tionalized as repeat purchases (Kahn, Kalwani, &
Morrison, 1986) and the share of wallet (Ailawadi,
Pauwels, & Steenkamp, 2008) with respect to a par-
ticular store. In this study, we use the term store loy-
alty to describe customers’ disproportionate revisit
behaviors to several stores in an online shopping mall.
We distinguish this from shopping mall loyalty, which
can be defined as “a shopper’s attitudinal predispos-
ition consisting of intentions to continually patronize
the mall through repeat shopping” (Chebat, Hedhli, &
Sirgy, 2009, p. 55), although both constructs are
closely related (Rabbanee et al., 2012). In our defin-
ition, a customer whose purchases are concentrated in
one or a few stores within a mall is regarded as
highly loyal.
The effect on purchase rate
A number of researchers propose a decomposition of
store loyalty into its attitudinal and behavioral ele-
ments. Attitudinal loyalty pertains to “a customer’s
propensity to recommend a store or brand and hold
generally positive attitudes”, whereas behavioral loy-
alty refers to “the actions that result from those
attitudes” (Kamran-Disfani, Mantrala, Izquierdo-
Yusta, & Martınez-Ruiz, 2017, p. 17). Both constructs
are closely related and it is suggested that attitudinal
loyalty gives rise to behavioral loyalty (Dick & Basu,
1994). For shopping malls’ customers, positive atti-
tudes toward some stores tend to be generalized to
favorable attitudes toward the hosting mall (Rabbanee
et al., 2012). This implies that attitudinal and behav-
ioral loyalty toward some stores can lead to behavioral
loyalty toward the mall as whole, which is consistent
with a finding that positive attitudes toward a store
directly influence quality perception, and eventually
increase store visit frequency (Darley & Lim, 1993). In
fact, Korgaonkar, Lund, and Price (1985) provided
empirical support for the association between attitudes
and customers’ shopping frequency. Therefore, cus-
tomers loyal to some stores within a shopping mall
are predicted to have favorable attitudes toward the
hosting mall, making them more inclined to shop
more frequently on the mall’s website.
The effect on lifetime duration
Previous studies contend that store loyalty is preceded
by customers’ commitment to maintain their benefi-
cial relationship with the store (Beatty & Kahle, 1988;
Garbarino & Johnson, 1999; Gundlach, Achrol, &
Mentzer, 1995). That is, loyal customers are likely to
have a greater desire to continue their patronage of
the same store in the future. The rationale is that loyal
customers will usually perceive the focal store as offer-
ing higher quality and value, or better prices relative
to its competitors (Sirohi, McLaughlin, & Wittink,
1998). Moreover, store loyalty is associated with
higher satisfaction and trust (Garbarino & Johnson,
1999; Kumar, Dalla Pozza, & Ganesh, 2013; Mittal &
Kamakura, 2001). Indeed, Kamran-Disfani et al.
(2017) confirmed that trust plays a mediating role in
the satisfaction–loyalty linkage. Given the positive
association between trust and store loyalty, loyal cus-
tomers would bear higher switching costs when they
make a shopping trip to competing stores (Morgan &
Hunt, 1994). This results in barriers that prevent loyal
customers from churning. Accordingly, we expect life-
time duration to increase as store loyalty rises.
The effect on spending
According to Ailawadi et al. (2008), store loyalty has a
negative relationship with price consciousness.
Furthermore, Lichtenstein, Bloch, and Black (1988)
argued that less price-conscious consumers have
higher levels of price acceptability and consequently
wider latitude of price acceptance. As a result, loyal
customers (i.e. those who are price-unconscious) are
likely to spend more money in a shopping mall
because they make purchases regardless of whether a
product is on promotion (Lichtenstein, Ridgway, &
Netemeyer, 1993). Krishnamurthi and Raj (1991) also
indicated that loyal consumers are less price-sensitive
when deciding on a brand. Hence,
Hypothesis 2: Store loyalty is positively associated
with (a) purchase rate, (b) lifetime duration, and
(c) spending.
Main effect of relationship duration
The effect on purchase rate
Regarding the effect of relationship duration on the
purchase rate, there are conflicting results in the lit-
erature. Bolton, Kannan, and Bramlett (2000) found
that membership duration has no significant effect on
the number of transactions made by financial service
customers. However, for entertainment and communi-
cation services, Bolton and Lemon (1999) revealed

that cumulative satisfaction significantly increases cus-
tomers’ product usage in subsequent periods, indicat-
ing a positive association between relationship
duration and purchase frequency. Despite this contra-
diction, we expect relationship duration to moderately
affect purchase frequency because our setting (i.e. dis-
crete transactions) is closer to that in Bolton and
Lemon (1999) than that in Bolton et al. (2000).
The effect on lifetime duration
Studies suggest that relationship duration is positively
related to customer satisfaction (e.g. Bolton, 1998;
Mittal, Katrichis, & Kumar, 2001). However, this does
not mean that newly acquired customers are relatively
dissatisfied with firms’ services; rather, customers who
stay active for longer are likely to accumulate more
positive firm experiences. Hence, long-tenure custom-
ers are less likely to defect compared with new cus-
tomers. Verhoef (2003) provided support for this
argument by empirically showing that relationship
duration has a positive effect on customer retention.
Further, Yeh, Wang, Hsu, and Swanson (2017) found
that relationship duration moderates the effect of rela-
tional benefits on switching barriers, where the effect
tend to be higher for long tenure than for short ten-
ure customers.
The effect on spending
Early relationship marketing studies provide some
important premises concerning the association
between relationship duration and customer profit-
ability (e.g. Reichheld, 1996; Reichheld & Sasser,
1990). This stream of research asserted that customers
with longer membership periods are more profitable
because they spend more money and are more toler-
ant of higher prices. However, the validity of this con-
tention was questioned by East, Hammond, and
Gendall (2006), who found only weak associations
between tenure and customer spending. Furthermore,
the authors were also skeptical about the argument
that long-tenure customers are less sensitive to price
hikes. Citing the work by Reinartz and Kumar (2002),
which found that long-term customers did not pay
more than short-term customers for the same goods,
they argued that further investigation is needed to elu-
cidate the true association between relationship dur-
ation and price sensitivity. More recently, however,
Dawes (2009) revealed that tenure significantly
reduces consumer elasticity to price changes. He inter-
preted that long-tenure customers have opportunities
to develop interpersonal bonds with or dependence
on service providers. Accordingly, we predict a weak
JOURNAL OF MARKETING CHANNELS 9
positive association between relationship duration and
customer spending. Hence,
Hypothesis 3: Relationship duration is positively
associated with (a) purchase rate, (b) lifetime
duration, and (c) spending.
Interaction between cross-buying and store loyalty
In this study, we address whether and how the effects
of cross-buying on behavioral traits can be altered by
store loyalty. Customers who cross-buy from familiar
stores may perceive themselves as taking less risk
(Stranahan & Kosiel, 2007). When customers attach
such favorable beliefs about a store, cross-buying can
become more intense (Ngobo, 2004), eventually rais-
ing the purchase frequency of loyal customers who
engage in cross-buying. Moreover, as loyal customers
are less price-sensitive when they make purchases
from different product categories at a focal store (e.g.
Ailawadi et al., 2008; Krishnamurthi & Papatla, 2003),
it can be predicted that they spend more when they
purchase additional product categories at focal stores.
This is so because loyal customers are less responsive
to deal promotions and thus more likely to buy prod-
ucts at regular prices. In addition, we expect the posi-
tive association between cross-buying and lifetime
duration to be stronger for customers loyal to some
stores. Customers who cross-buy at one or a few
stores have greater cumulative satisfaction toward and
trust in each store visited than those who cross-buy at
many different stores. This in turn results in higher
attitudinal loyalty to the stores (Kamran-Disfani et al.,
2017), and eventually raises their commitment to
maintain a relationship with the shopping mall
(Rabbanee et al., 2012). Therefore, given the same
degree of cross-buying, loyal customers are predicted
to remain for a longer time than those who are not
loyal. Hence,
Hypothesis 4: Store loyalty enhances the positive
associations between cross-buying and (a) purchase
rate, (b) lifetime duration, and (c) spending.
Interaction between cross-buying and
relationship duration
To test the moderating role of relationship duration
on the behavioral impacts of cross-buying, we exam-
ine whether the association between cross-buying and
the behavioral traits depends on the length of the rela-
tionship. The study by Bolton (1998) provides a basis
for developing the relevant hypotheses. According to
10 W. D. DAHANA ET AL.
this study, customers who have many months of
experience with an organization weighed prior cumu-
lative satisfaction more heavily and new information
less heavily. By using data taken from a cellular tele-
phone company, the author empirically showed that
the effect of past satisfaction is larger and the effect of
new information is smaller on the retention rate of
long-tenure customers. This finding is consistent with
those of Boulding, Kalra, and Staelin (1999) in the
context of customers’ assessments of service quality.
Analogously, recent cross-buying experiences may be
less influential for the long-tenure customers of an
online shopping mall because their decisions largely
rely on cumulative cross-buying experiences.
Accordingly, the effects of cross-buying are predicted
to be smaller for long-tenure customers than newly
acquired customers, ceteris paribus. Hence,
Hypothesis 5: Relationship duration weakens the
positive associations between cross-buying and (a)
purchase rate, (b) lifetime duration, and (c) spending.
Interactions among cross-buying, store loyalty,
and relationship duration
According to Mittal et al. (2001), the way in which
customers evaluate the quality of their relationship
with a firm depends on relationship duration. Further,
long-tenure customers should develop stronger trust
in a firm than new customers because they have better
knowledge about the firm’s services or richer experi-
ences with the firm (Bejou, Wray, & Ingram, 1996;
Dawes, 2009). Although long relationship duration
may be an artifact of inertia or risk aversion on the
part of customers (i.e. spurious loyalty), we expect the
argument to hold in general. Consequently, customers
who have patronized a shopping mall for a longer
period have positive beliefs about the mall as well as
its tenants in delivering high-quality products or serv-
ices. As a result, whether to cross-buy in a familiar
store or in unfamiliar stores within a shopping mall is
not a problem for long-tenure customers, suggesting
that the moderating role of store loyalty is smaller for
these customers. Hence,
Hypothesis 6: Relationship duration diminishes the
moderating effects of store loyalty on the associations
between cross-buying and (a) purchase rate, (b)
lifetime duration, and (c) spending.
In the next section we describe our methodology to
examine the hypothesized associations among the var-
iables. In particular, we employ a hierarchical Bayes
version of Pareto/NBD model and apply it to pur-
chase history data to obtain the estimates of individual
level purchase rate, defection rate, and spending
parameters. Subsequently, we attach a link between
these parameters and the independent variables to test
the hypotheses.
Model
As described in the previous section, in this study we
aim to examine the main effects as well as the inter-
action effects of cross-buying, store loyalty, and rela-
tionship duration on three behavioral traits: purchase
rate, lifetime duration, and spending. By definition, all
these behavioral traits are latent constructs and thus
unobservable. Our approach is thus to treat the indi-
vidual-level purchase rate, lifetime duration, and
spending as parameters that characterize the distribu-
tions of purchase frequency, defection time, and pur-
chase amount, respectively, which are estimated from
data. We then treat the estimates of these parameters
as dependent variables and subsequently link them
with the explanatory variables (i.e. cross-buying, store
loyalty, and relationship duration) by imposing prior
distribution structures within a hierarchical Bayes
framework (Rossi & Allenby, 2003). Here, we use the
same assumptions imposed in the Pareto/NBD model
(Schmittlein, Morrison, & Colombo, 1987) for pur-
chase frequency and customer defection4 (lifetime
duration). That is, we assume that purchase frequency
and defection time follow a Poisson and an exponen-
tial distribution which depend, respectively, on pur-
chase rate and defection rate parameters.
Furthermore, we assume that purchase amounts fol-
low a log-normal distribution where the mean is
regarded as the spending of an individual customer.
To estimate the individual-level parameters, we
employ a hierarchical Bayes extension to the Pareto/
NBD model proposed by Abe (2009).
First, we describe the model for defection time. As
in other non-contractual settings, we can observe the
last time a customer made a purchase from purchase
history data, but we do not know when the customer
actually defects or becomes inactive. Let si ði ¼
1; 2; :::; IÞ denote the time elapsed since customer i’s
last purchase until their relationship terminates with
the firm (which is unobservable). Following the
Pareto/NBD model, we assume that si follows an
exponential distribution with a defection rate li :
4
For convenience, we use the defection rate as the dependent variable
instead of lifetime duration in our model. The relation between both
constructs is straightforward because the reciprocal of the defection rate
equals expected lifetime duration.

pðsi jli Þ ¼ li eli si :
Next, let Ti be the length of the data period, which
is one year in the current study for all i: Again, from
the Pareto/NBD assumption, the number of repeat
purchases made by customer i during period Ti ;
denoted by xi ; is assumed to follow a Poisson distri-
bution with a purchase rate ki :
8 tribution with mean vector Yi ¼ b0 zi and covariance
>
> ðki Ti Þxi ki Ti
>
> e if si >Ti
< xi !
pðxi jki Þ ¼ ; (2)
>
> ðki si Þxi ki si
> 6 log l 7
>
: x! e if si  Ti
i 4
As previously mentioned, we do not observe the
dropout time si : However, from Equations (1) and
(2), we can derive a probability statement about its
occurrence conditional on the model parameters and
the value of Ti and ti ; the time when the last purchase
was made. Let zi be an indicator function that equals
one if the customer is still active at Ti and zero other-
wise. The probability a customer is still active at Ti
(i.e. zi ¼ 1Þ is given by the following equation:
pðzi ¼ 1jki ; li ; Ti ; ti Þ
1 CBUY  SLOY  RDUR
¼   :
1 þ li =ðki þ li Þ ½eðki þli ÞðTi ti Þ  1
(3)
Thus, the likelihood function for purchase rate ki
and defection rate li can be derived as follows:
kxi i txi 1 1zi ðki þli Þðzi Ti þð1zi Þyi Þ
lðki ; li jxi ; Ti ; ti Þ ¼ l e
Cðxi Þ i
(4)
where yi ðti  yi  Ti Þ denotes the dropout time
given that the customer become inactive before Ti ;
which follows an exponential distribution with param-
eter ki þ li (Abe, 2009). We need to know the value
of zi and yi to evaluate the likelihood function.
However, since neither of the variables is observable,
we use a data augmentation procedure (Tanner &
Wong, 1987) to generate their values from the
respective distribution function.
Next, we describe the model for customer spend-
ing. We denote the log of the purchase amount on
the t-th purchase occasion by mit ðt ¼ 1; 2; :::; xi Þ: We
assume that mit is normally distributed with mean
logðgi Þ and variance x2i as follows:
 
mit  N logðgi Þ; x2i : (5)
Here, gi denotes the spending parameter of cus-
tomer i: Then, the linkages between the purchase
rate, defection rate, and spending parameters
JOURNAL OF MARKETING CHANNELS 11
(1) (ki ; li ; gi Þ with some of the dependent variables
can be obtained in a straightforward way. This is
done by imposing a joint prior distribution for
parameters ki ; li ; and gi and let the hyper-parame-
ters be a function of the dependent variables under
consideration. Specifically, we assume that the loga-
rithm of (ki ; li ; gi Þ follow a multivariate normal dis-
matrix R is given as follows:
2 3
logðki Þ
6 7
6 ð i Þ 7 ¼ b0 zi þ ei ; where ei  MVN ð0; RÞ: (6)
5
logðgi Þ
Here, zi is an M  1 column vector whose compo-
nents are M dependent variables pertaining to cus-
tomer i: In our full model, M is equal to 15 and zi is
given by
2 30
CON; AGE2; :::; AGE6; MALE; DEV;
6 7
6 DPRONE; CBUY; SLOY; RDUR; 7
zi ¼ 6
6 CBUY  SLOY; CBUY  RDUR;
7
7
4 5
i
(7)
where AGE2; :::; AGE6 are the dummy variables for
customers of different ages. For example, AGE2 takes
one if the customer is aged between 20 and 24 years
;
old and zero otherwise. Furthermore, MALE and DEV
represent dummy variables for male and the type of
device usage. DPRONE represents customers’ sensitiv-
ity to price promotions. CBUY; SLOY; and RDUR
represent the cross-buying, store loyalty, and relation-
ship duration variables, respectively. The remainder
are the interaction elements of the three variables.
 
Further, b ¼ bh;zik denotes an M  3 matrix of the
regression coefficients, where hi 2 fki ; li ; gi g and zik
refers to the k-th element of zi : We set a prior distri-
bution for b as a multivariate normal distribution b 
MVNðb0 ; C0 Þ: Finally, ei denotes a 3  1 vector of the
error terms. We do not impose any restriction on the
elements of R to allow for a correlation between
the parameters.
All parameters in our model are estimated by using
the Markov Chain Monte Carlo (MCMC) method.
We employ the estimation procedure as proposed in
Abe (2011, 2009, p.544). The set of parameter to be
estimated is fki ; li ; gi ; zi ; yi ; 8i ; b; Rg: The esti-
mation of these parameters involves the evaluation of
their joint posterior density which is done by
12 W. D. DAHANA ET AL.

generating a sequence of random draws of each par-
ameter from its full conditional distribution. We
describe the procedure as follows:
ð Þ ð0Þ ð0Þ
1. Set the initial value fki 0 ; li ; gi ; zi ; yi ;
8i ; bð0Þ ; Rð0Þ g:
2. For each i; generate fzi jki ; li g according to
Equation (3).
3. If zi ¼ 0; generate fyi jzi ; ki ; li g from an exponen-
tial distribution with parameter ki þ li truncated
at ðti ; Ti Þ:
4. Generate ki and li using Equations (4) and (6).
5. Generate gi using Equations (5) and (6).
6. Generate x2i from an Inverted-Gamma
distribution.
7. Generate fb; Rjki ; li ; gi ; 8i g using a standard
multivariate normal regression update (e.g.
Congdon, 2001; Gelman, Carlin, Stern, &
Rubin, 1995).
8. Iterate step (2)  (7) until the chain converge to
the target distribution.
Data
The data used in the analysis were provided by an
online shopping mall company through a data analysis
competition organized by the Joint Association Study
Group of Management Science in Japan. The associ-
ation annually holds the event where various data are
offered by the sponsoring companies. Hundreds of
participants take part in this event to compete their
analysis outcomes. The data used in this study are the
one offered in 2017 competition. We withhold the
company’s name for confidentiality purposes. It is one
of the leading e-commerce firms selling fashion-
related products such as apparel and accessories.
More than 900 independent tenant shops sell their
products on the mall’s website. Most of them sell ori-
ginally branded products, meaning that no two shops
sell the same items. The mall owner supports the
businesses of its tenants by providing online informa-
ð0Þ ð0Þ
tion that helps customers find the products they wish
to buy. In addition, the mall owner sends emails to its
customers to cross-sell products or to provide
price promotions.
The data contain a record of customers’ purchases
for one year. A total of 1,009,609 purchases were
made by 101,480 customers during this period. The
number of orders placed by each customer ranged
from 1 to 1717. Those customers with a very high
number of purchases are likely to be business rather
than individual customers. Since the focus of this
study is on individual customer behavior, we decided
to exclude business customers from our sample. To
identify business customers, we considered extremely
high purchase frequency data as outliers and used the
Smirnov–Grubbs test to detect these outliers (Grubbs,
1950). The test resulted in the exclusion of customers
who made 43 or more purchases. Further, to compare
purchase frequency across customers, we dropped
those who signed up for membership during the study
period (i.e. from April 1, 2016 to March 31, 2017).
The final sample retained for the analysis was 67,965.
Table 1 shows the summary statistics of the cus-
tomers in our sample. On average, customers made
five to six purchases during the year. About half made
no more than three purchases. Average recency,
defined as the time elapsed since the last purchase
until the end of the data window, was 3.5 months.
The maximum was 364 days, which means that at
least one customer who placed an order at the begin-
ning of data period never repurchased. Average cus-
tomer spending per transaction ranged from 833 to

Table 1. Summary statistics of data.

Variable Number of customers (%) Mean Min Max SD
Frequency 5.79 1.00 42.00 6.59
Recency (days) 105.34 0 364 97.66
Monetary (yen) 11,180 833 255,000 8107
Age (years)
Age < 20 1272 (1.87)
20  age  25 9615 (14.15)
26  age  30 13,762 (20.25)
31  age  35 14,895 (21.92)
36  age  40 13,568 (19.96)
Age > 40 14,853 (21.85)
Male 23,202 (34.14)
Mobile device usage1 50,906 (74.90)
Purchase on deal (%)2 52.75 0.00 100.00 0.38
Relationship period (months) 34.05 13 192 29.96
Number of store shopped in 5.59 1 31 6.17
Number of category purchased 6.58 1 21 5.57
1
The number of customers who mainly use smart phones or hand phones to get an access to the website.
2
Individual-level percentage of products purchased on sale.
 JOURNAL OF MARKETING CHANNELS 13

255,000 yen, indicating a high degree of heterogeneity.
Customers spent about 8000 yen per order on average.
The data on age were provided in categorical for-
mat: teens, early twenties, late twenties, and so on. In
the sample used for the analysis, teen customers
accounted for only 1.87%, while the proportions of
the other groups ranged from about 15% to 20%.
Further, male and mobile device users accounted for
about 34% and 75% of the sample, respectively. We
also observed considerable heterogeneity in the use of
price promotions. Average customers filled half of
their shopping baskets with products on promotion.
The minimum and maximum percentages of pur-
chases made on promotion were 0% and 100%,
respectively, meaning that some customers never
bought a product on sale, while others are completely
deal-prone customers. Customers’ relationships with
the mall ranged between one year and about 16 years.
Some customers shopped in only one store, while
others visited as many as 31 to make purchases. In
addition, the number of product categories ranged
from 1 to 21. Average customers bought from six to
seven different categories during the study period.
Variable operationalization
Table 2 describes the operationalization of the relevant
variables. Recall that the dependent variables are the
individual-level estimates of the purchase rate, defec-
tion rate, and average spending. We used dummy var-
iables for age because the original data were
categorical. We treated the group of customers under
20 years old as the baseline. Likewise, we also used a
dummy variable for sex. Further, we regarded a cus-
tomer as a mobile device user if more than half of
her/his access to the mall’s website were made from
mobile devices. Deal proneness was measured as the
percentage of products bought on promotion. This
variable was readily available from the data because all
product purchases were coded as whether they were
on sale. Cross-buying was measured as the number of
product categories bought by each consumer.
Furthermore, we operationalized store loyalty as a
function of the ratio of the number of visited stores to
the number of transactions made in the study period.
This variable took a value between zero and one, with
a higher value associated with higher store loyalty. We
used this specification rather than commonly used
measurements such as share of wallet or visit fre-
quency in a particular store because it better describes
the patronage of customers in online shopping malls.
For example, a new customer who purchased only
once from a store has a share of wallet of one (high
store loyalty), whereas our specification assigns a value
of zero (low store loyalty). This is consistent with pre-
vious studies suggesting that store loyalty depends on
customers’ commitment, trust, and satisfaction toward
a focal store which are generally developed through
multiple purchase or consumption experiences (e.g.
Beatty & Kahle, 1988; Garbarino & Johnson, 1999).
Finally, relationship duration was operationalized as
the number of days elapsed since customers signed up
for membership until the first date of the observation
period. As aforementioned, the customers in the sam-
ple are those who joined the mall’s membership
before April 1, 2016. Thus, we calculated the number
of days elapsed since the first day of the membership,
which is available in the database, until April 1, 2016.
Note that we standardized the values of cross-buying,
store loyalty, and relationship duration to allow the
estimates of their coefficients to be comparable.
Additionally, Table 3 shows the correlation between
the independent variables along with the RFM varia-
bles. The correlation coefficients between the inde-
pendent variables are less than 0.6; therefore, there is
no serious multicollinearity problem in our data.

Table 2. Variable operationalization.

Dependent variables Operationalization
Purchase rate Individual-level estimate of purchase frequency parameter
Defection rate Individual-level estimate of lifetime parameter
Spending Individual-level estimate of purchase amount parameter
Independent variables Operationalization
Age AGE2 ¼ 1 if a customer is aged between 20 and 25 years old, 0 otherwise.
AGE3 ¼ 1 if a customer is aged between 26 and 30 years old, 0 otherwise.
AGE4 ¼ 1 if a customer is aged between 31 and 35 years old, 0 otherwise.
AGE5 ¼ 1 if a customer is aged between 36 and 40 years old, 0 otherwise.
AGE6 ¼ 1 if a customer is aged 41 years old or more, 0 otherwise.
Gender MALE ¼ 1 if a customer is a male, 0 otherwise.
Device usage DEV ¼ 1 if a customer mainly use mobile devices to get an access to the mall, 0 otherwise.
Deal proneness DPRONE ¼ Percentage of products bought on deal promotion.
Cross-buying CBUY ¼ Number of product categories bought during the year.
Store loyalty SLOY ¼ 1  (number of store shopped in/number of order placed)
Relationship duration RDUR ¼ Number of days elapsed since membership registration to the first date of observation period.
The values of CBUY, SLOY, and RDUR are standardized.
 14 W. D. DAHANA ET AL.

Product categories

0.57
(16)

To define the product categories, which are critical to

operationalize the cross-buying variable, we referred

0.34
0.40
(15)

to the categorization used by the firm. Table 4 shows

the category list along with related information. There

0.56
0.34
0.38
(14)

were 25 product categories. About 70% of sales were

accounted for by the top five categories: tops, jackets,
shoes, pants, and bags. All product categories are fash-

0.49
0.34
0.08
0.17
(13)

ion-related items except music, books, and magazines,

0.12 which is a minor online shopping category (its vol-
0.27
0.19
0.15
0.34
(12)

ume share is less than 1%). The purchases of high-

share categories were made in hundreds of stores,
indicating fragmented customer preferences toward
0.02
0.12
0.10
0.05
0.01
0.01
(11)

these categories.
0.01
0.03
0.02
0.12
0.08
0.04
0.03

Results
(10)

Model validity and convergence

Prior to model estimation, we check the validity of
0.15
0.06
0.04
0.03
0.10
0.08
0.06
0.04
(9)

the assumption that purchase frequency follows a

Poisson distribution. The assumption is rejected if the
mean of the distribution is significantly different from
0.02
0.24
0.05
0.03
0.06
0.01
0.02
0.01
0.01
(8)

its variance. For this purpose, we randomly chose

1000 customers from the sample and then created
weekly purchase frequency data for each of them.
0.25
0.02
0.03
0.02
0.12
0.05
0.05
0.04
0.03
0.06
(7)

Subsequently, we conducted a regression-based test

for over dispersion (e.g. Cameron & Trivedi, 1990).
The results suggested that in about 87% cases, the
0.24
0.26
0.02
0.06
0.01
0.10
0.02
0.05
0.03
0.01
0.03
(6)

Poisson assumption could not be rejected; thus, we

concluded that the assumption is by and large valid.
To estimate the model, we ran the aforementioned
0.25
0.23
0.26
0.02
0.09
0.03
0.01
0.03
0.01
0.02
0.03
0.02
(5)

MCMC procedure with 10,000 iterations. The last

5000 iterations were retained to make an inference of
the posterior means of the parameters. The conver-
0.22
0.22
0.21
0.23
0.04
0.11
0.05
0.18
0.09
0.07
0.05
0.03
0.06
(4)

gence of the simulated distributions was diagnosed by

using within and between chain variance test (Gelman
& Rubin, 1992) and means difference test (Geweke,
0.01
0.02
0.01
0.00
0.00
0.12
0.07
0.18
0.02
0.11
0.09
0.06
0.00
0.02
(3)

1992). In the first test, we ran the MCMC procedure

with different initial values and then computed the
Gelman–Rubin R statistics which has average value of
0.02
0.04
0.02
0.02
0.03
0.01
0.06
0.15
0.17
0.08
0.25
0.44
0.30
0.12
0.12
(2)

1.03. In the second test, we split the retained draws

into two subsequences and compared their means. We
found no significant difference between the two
0.42
0.02
0.08
0.03
0.03
0.06
0.05
0.05
0.11
0.05
0.26
0.45
0.87
0.78
0.33
0.36
(1)
Table 3. Correlation matrix.

means. Consequently, the tests suggested the conver-

gence of the chain.
(17) CBUYSLOYRDUR

Model comparison
(16) CBUYRDUR
(15) CBUYSLOY
(1) Frequency

(11) DPRONE
(3) Monetary
(2) Recency

We estimated three models and compared their good-

(12) RDUR

(14) CBUY
(13) SLOY
(9) MALE
(4) AGE2
(5) AGE3
(6) AGE4
(7) AGE5
(8) AGE6

(10) DEV

ness of fit to examine the significance of the main and

interaction effects. Model 1 includes only the control
 JOURNAL OF MARKETING CHANNELS 15

Table 4. Product categorization, number of store, volume share, and value share.
Product category Number of store Volume share Value share
Tops 734 33.64% 27.91%
Jacket/outerwear 644 6.70% 14.25%
Shoes 641 9.80% 13.26%
Pants 662 10.16% 10.64%
Bags 712 5.46% 7.56%
Dress 539 5.61% 6.00%
Skirts 513 3.42% 3.13%
Accessories 555 3.82% 2.77%
Fashion accessories 599 2.87% 2.21%
Wallet/accessory 532 1.87% 1.90%
Hats 549 2.58% 1.71%
Underwear 184 3.48% 1.62%
Watch 178 0.47% 1.02%
All-in-one/overalls 301 0.74% 0.98%
Miscellaneous goods/hobby/sports 354 1.28% 0.78%
Others 335 0.45% 0.77%
Leg wears 402 2.67% 0.70%
Interior goods 231 1.12% 0.63%
Suits/ties 149 0.36% 0.51%
Hair accessories 318 1.37% 0.44%
Swimwear/Kimono/Yukata 139 0.34% 0.39%
Tableware/kitchen 145 0.86% 0.33%
Maternity/baby goods 77 0.44% 0.31%
Cosmetics/perfumes 114 0.32% 0.14%
Music/books/magazines 30 0.16% 0.04%

Table 5. Parameter estimates of hierarchical Bayes multivariate regression coefficients.

Model 1 Model 2 Model 3
Purchase rate Defection rate Spending Purchase rate Defection rate Spending Purchase rate Defection rate Spending
Control variables
CONS 0.78 20.33 6.58 0.73 20.35 6.69 0.85 -0.48 6.74
AGE2 0.11 0.04 0.09 0.03 0.01 0.08 0.01 0.02 0.07
AGE3 0.19 0.07 0.13 0.03 0.02 0.12 0.01 0.03 0.10
AGE4 0.28 20.12 0.10 0.06 0.01 0.09 0.04 0.02 0.08
AGE5 0.35 20.15 0.11 0.08 0.00 0.08 0.07 0.00 0.07
AGE6 0.38 20.14 0.09 0.14 0.02 0.06 0.13 0.01 0.06
MALE 20.08 0.04 0.09 20.07 0.01 0.11 20.07 0.01 0.10
DEV 0.17 20.17 20.04 0.10 20.10 20.06 0.09 20.10 20.07
DPRONE 20.11 20.18 20.33 20.04 20.11 20.31 20.06 20.10 20.29
Main effects
CBUY 0.83 20.46 0.14 0.62 20.37 0.18
SLOY 0.34 20.09 0.21 0.22 0.01 0.17
RDUR 0.14 20.07 0.01 0.13 -0.08 20.04
Interaction effects
CBUY  SLOY 0.16 -0.07 20.11
CBUY  RDUR 20.08 0.00 20.06
CBUY  SLOY  RDUR 20.04 0.02 0.01
Correlation
Purchase rate 1.00 1.00 1.00
Defection rate 20.50 1.00 20.48 1.00 20.49 1.00
Spending 0.04 0.03 1.00 0.02 0.03 1.00 0.04 0.03 1.00
Log of marginal likelihood LML1 ¼ 140,702 LML2 ¼ 131,431 LML3 ¼ 124,909
Bayes factor BF21 ¼ 2.54 BF32 ¼ 2.59
Note: Bold fonts indicate significant estimates (i.e., their 95% HPD intervals do not include 0). The correlation coefficients are calculated from the esti-
mates of covariance matrix R. BFij pertains to Bayes factor of model i relative to model j.

variables in the multivariate regression structure (basic
model). Model 2 additionally includes the main effects
of cross-buying, store loyalty, and relationship dur-
ation as additional variables (extended model). Model
3 includes the interaction effect variables in addition
to the control and main effect variables (full model).
Table 5 provides the criteria used to assess model
accuracy. First, we computed the log of the marginal
likelihood of each model and found that model fit
significantly improved when the main effect variables
were incorporated into the basic model (LML1 ¼
140,702 vs. LML2 ¼ 131,431). Model accuracy was
further improved when the interaction terms were
added into Model 2 (LML3 ¼ 124,909). To compare
the differences in goodness of fit more rigorously, we
calculated the Bayes factors of the competing models
(Kass & Raftery, 1995). The Bayes factor for Models 1
and 2 suggested that the data fairly support the latter
16 W. D. DAHANA ET AL.
(BF21 ¼ 2.54). Further, the full model (Model 3) is
substantially supported over Model 2 (BF32 ¼ 2.59).
These results reveal that cross-buying, store loyalty,
and relationship duration, along with their interac-
tions, play a significant role in explaining the variation
in behavioral traits across customers. Hence, the fail-
ure to account for these interactions would lead to the
over- or underestimation of the cross-buying effects.
Significance of the main effects
Now we describe the hypotheses testing results. The
significance of the estimates is determined by using
the highest posterior density (HPD) intervals (Box &
Tiao, 2011). Here, we considered the parameters that
exclude 0 in the respective 95% HPD intervals as sig-
nificant. As shown in Table 5, the parameter estimates
of the cross-buying effects on the behavioral traits are
all significant. The association between cross-buying
and the purchase rate is positive (bk;CBUY ¼ 0:62),
providing support for Hypothesis 1(a). Likewise, we
also confirmed that Hypothesis 1(b) is supported,
given that the parameters associated with the effect of
cross-buying on the defection rate exhibit the
expected sign (bl;CBUY ¼ 0:37). A significant result
was also found for the effect of cross-buying on
spending, showing a positive association between the
variables (bg;CBUY ¼ 0:18). Thus, Hypothesis 1(c) is
also supported. Accordingly, we conclude that cus-
tomers who engage in cross-buying more intensely
tend to purchase more frequently, are less likely to
defect, and spend more money in online shop-
ping malls.
The main effects of store loyalty appear to signifi-
cantly influence the purchase rate (bk;SLOY ¼ 0:22)
and spending (bg;SLOY ¼ 0:17), thereby supporting
Hypothesis 2(a) and Hypothesis 2(c). However, the
defection rate estimate is insignificant
(bl;SLOY ¼ 0:01); thus, we reject Hypothesis 2(b).
These results indicate that while customers who
exhibit higher behavioral loyalties toward some stores
tend to purchase more frequently and spend more
money in the mall, their expected lifetime duration is
no more than those who are less loyal.
For the main effects of relationship duration, the
results are significant for its association with the pur-
chase rate (bg;RDUR ¼ 0:13) and defection rate
(bl;RDUR ¼ 0:08), with the expected signs. Thus,
Hypothesis 3(a) and 3(b) are supported. For the asso-
ciation between relationship duration and spending,
although significant, the estimate has a negative sign
(bg;RDUR ¼ 0:04), resulting in the rejection of
Hypothesis 3(c). The results suggest that long-tenure
customers of online shopping malls are also frequent
or committed shoppers; however, they appear to
spend less per order than those who recently joined
the mall.
Note that the results also reveal some variety in the
magnitude of the main effects across the variables,
with the effects of cross-buying greater than those of
store loyalty and relationship duration5. This finding
implies that the behavioral traits are sensitive to a
change in cross-buying relative to a change in store
loyalty and relationship duration. We revisit this issue
in the Discussion section by examining the elasticity
of CLV with respect to these variables.
Significance of the interaction effects
The estimates of the interaction effects between cross-
buying and store loyalty are all significant and the
signs associated with the purchase rate
(bk;CBUYSLOY ¼ 0:16) and defection rate
(bl;CBUYSLOY ¼ 0:07) conform to our previous pre-
dictions. These results provide support for Hypothesis
4(a) and 4(b). That is, store loyalty moderates the
effects of cross-buying such that the incremental
changes in purchase frequency and lifetime duration
due to an increase in cross-buying are greater for cus-
tomers loyal toward specific stores. By contrast, the
estimate for spending has a negative sign
(bg;CBUYSLOY ¼ 0:11), leading to the rejection of
Hypothesis 3(c). This result suggests that while cross-
buying can increase customers’ spending per order,
the incremental amount is less prominent for those
with higher store loyalty.
For the moderating effects of relationship duration,
we find significant results for the parameters associ-
ated with the purchase rate and spending. Since both
parameters have negative signs, the results provide
support for Hypothesis 5(a) and 5(c). However, the
association between cross-buying and lifetime dur-
ation appears to be unaffected by relationship dur-
ation, provided that its estimate is statistically
insignificant (bl;CBUYRDUR ¼ 0:00). Therefore, we
reject Hypothesis 5(b). We conclude that for long-ten-
ure customers, recent cross-buying experiences are
less influential in rendering behavioral change with
respect to purchase frequency and amount.
Finally, the interaction effect among cross-buying,
store loyalty, and relationship duration is significant
only for the purchase rate (only Hypothesis 6(a) is
5
The estimates of the main effects are comparable because all of the
corresponding variables are standardized.
 JOURNAL OF MARKETING CHANNELS 17

supported). The magnitude of the effect is marginal,
revealing that the moderating effect of store loyalty on
the cross-buying–purchase rate linkage is slightly
weakened by relationship duration. We conjectured
that it would not matter for long-tenure customers
whether to cross-buy from familiar or unfamiliar
stores because they would have already established
trust in the shopping mall. These results provide par-
tial support for this argument.
Correlations among the independent variables
Prior studies have reported mixed results regarding
the correlations among purchase frequency, recency,
and purchase amount. Reinartz and Kumar (2003)
shoppers in line with the results of Borle et al. (2008)
and Reinartz, Thomas, and Kumar (2005). The results
of other correlation coefficients are insignificant.
Behavioral trait parameters
Table 6 shows the individual-level estimates of pur-
chase rate ki ; defection rate li ; and spending gi : To
ease interpretation, we only show the top 10 and bot-
tom 10 customers ranked according to CLV. We then
use the individual-level estimates of the behavioral
trait parameters to calculate the CLV for each cus-
tomer, using the following equation (e.g. Abe, 2011;
Fader et al., 2005):
ð1
ki gi exi =2
2

found that lifetime duration is positively correlated CLV i ¼ V ðtÞRðtÞDðt Þ ¼ ; (8)

with average purchase amount. By contrast, Borle,
Singh, and Jain (2008) showed no significant correl-
ation between the two, although they did find a posi-
tive correlation between purchase frequency and
lifetime duration. Furthermore, Singh, Borle, and Jain
(2009) reported that purchase frequency is negatively
correlated with lifetime duration and purchase
amount as well as that lifetime duration is positively
correlated with purchase amount.
In this study, we allowed the behavioral traits to be
correlated to capture all possible relationships among
the parameters. By using the estimate of covariance
matrix R, we calculated the correlations of the behav-
ioral traits, finding that the correlation between the
purchase rate and defection rate is significant and
negative. This result indicates that frequent shoppers
tend to have longer lifetime duration than infrequent
0 li þ d
Here, V ðt Þ; Rðt Þ; and Dðt Þ represent the expected
customer revenue for a given period, survival func-
tion, and discount factor, respectively. Further, d ¼
logð1 þ dÞ; where d denotes the discount rate (10%).
Note that since the formula does not include market-
ing costs, it should be regarded as the expected total
revenue contributed by a single customer from her/his
last purchase until she/he drops out.
As shown by the estimates of the purchase rate and
spending, the top 10 customers are those who made
frequent shopping trips to the mall and spent a con-
siderable amount in each transaction. Moreover, these
profitable customers are predicted to have longer life-
time duration (2.16 years on average) than other cus-
tomers. They also appear to be heavy cross-buyers
given that they purchased from 11–21 product

Table 6. Behavioral trait parameter estimates and customer lifetime value.

Expected Average Number of Number of Relationship
Customer Purchase Defection Purchase lifetime purchase category store duration CLV
rank rate k rate l Spending log(g) frequency (years) amount purchased shopped in (months) (1000 yen)
1 14.11 0.44 11.31 27 2.26 84,667 17 9 90 2.375
2 12.62 0.52 11.41 21 1.92 93,000 15 11 36 2.022
3 17.33 0.51 10.77 33 1.97 49,212 18 11 59 1.498
4 16.02 0.45 10.62 30 2.22 42,900 20 10 64 1.341
5 18.54 0.42 10.38 34 2.40 33,324 20 9 48 1.297
6 18.53 0.43 10.39 35 2.30 33,857 15 11 19 1.268
7 11.25 0.47 10.95 20 2.15 58,850 13 12 26 1.256
8 17.17 0.49 10.50 33 2.03 37,697 21 11 60 1.162
9 16.27 0.46 10.46 30 2.19 35,967 11 8 78 1.137
10 19.01 0.46 10.30 35 2.18 31,086 13 9 25 1.124
… … … … … … … … … … …
67956 1.51 1.72 6.89 1 0.58 1000 1 1 49 0.837
67957 2.21 2.58 6.88 1 0.39 1000 1 1 41 0.824
67958 2.29 2.73 6.89 1 0.37 1000 1 1 38 0.809
67959 1.83 2.17 6.88 1 0.46 1000 1 1 58 0.808
67960 1.94 2.27 6.87 1 0.44 1000 1 1 38 0.806
67961 1.60 1.91 6.87 1 0.52 1000 1 1 60 0.790
67962 1.83 2.23 6.89 1 0.45 1000 1 1 59 0.790
67963 2.50 3.30 6.89 1 0.30 1000 1 1 38 0.738
67964 1.91 2.51 6.87 1 0.40 1000 1 1 59 0.723
67965 1.80 2.58 6.89 1 0.39 1000 1 1 46 0.672
18 W. D. DAHANA ET AL.

categories, considerably more than average customers
(5.59 categories). Further, these customers shopped in
8–12 stores during the study period. Although it is
not obvious from the table, relative to purchase fre-
quency, the calculation of the store loyalty variable
revealed that they are more loyal to one or a few
stores than average customers (0.65 vs. 0.37 of average
customers). Further, the variability in the behavioral
trait parameters is less able to be explained by rela-
tionship duration, which has marginal significant
effects only on the purchase rate and defection rate.
Additionally, the bottom 10 customers are those who
made only a single purchase during the observation
period. Most of them are predicted to defect within
the next 6 months.
Discussion and implications
In this study, we investigated the impacts of cross-
buying on three important behavioral traits of online
shopping mall customers. The distinguishing charac-
teristic of shopping malls is that customers can engage
in cross-buying from the various stores hosted by the
same mall owner. In such a retail environment, we
postulated that store loyalty and relationship duration
would influence the association between cross-buying
and the behavioral trait variables. Based on the litera-
ture, we then built testable hypotheses concerning the
main and interaction effects of these variables and
examined the hypotheses by using purchase history
data. Table 7 summarizes the results.
We found that the results supported all the hypoth-
eses concerning the main effects of cross-buying. That
is, customers who cross-buy more intensely purchase
more frequently, stay active for a longer time, and
spend higher amounts on each purchase occasion.
These findings are consistent with the results reported
in prior studies for the customers of different markets
(e.g. Garland, 2004; Reinartz et al., 2008; Reinartz &
Kumar, 2003). In this regard, the findings of this
study extended the generalizability of previous find-
ings about the positive impacts of cross-buying by
providing new evidence from online shopping mall
customers. We also found the significant effects of
store loyalty on the purchase rate and spending. As
we presumed, the positive association between store
loyalty and purchase frequency may arise because
store loyalty is associated with favorable attitudes
toward focal stores, which eventually lead to an
increase in mall visits (Darley & Lim, 1993;
Korgaonkar et al., 1985). Furthermore, the contention
that loyal customers are less price-conscious (Ailawadi
et al., 2008; Lichtenstein et al., 1993) seems to apply
to online shopping mall customers as well, underpin-
ning the positive linkage between store loyalty and
spending. On the contrary, the results revealed that
lifetime duration is unlikely to be affected by store
loyalty, perhaps because our store loyalty measure
does not reflect customers’ commitment. Thus, some
loyal customers are suspected of making purchases
because of inertia and are vulnerable to competi-
tor offerings.
In addition to cross-buying and store loyalty, we
found that relationship duration has a positive associ-
ation with the purchase rate and lifetime duration.
This finding supports those of Verhoef (2003) and
Bolton and Lemon (1999). Long-tenure customers are
likely to have greater cumulative positive experiences
and/or higher satisfaction with the mall. By contrast,
the results indicated that customer spending is lower
for customers with longer relationships with the mall
than for new customers. Although this finding is
counterintuitive, the marginal effect of relationship

Table 7. Summary of hypothesis testing results.

Hypothesis Independent variable Dependent variable Expected direction Result
Hypothesis 1a CBUY Purchase rate ðþÞ Supported
Hypothesis 1b CBUY Lifetime ðþÞ Supported
Hypothesis 1c CBUY Spending ðþÞ Supported
Hypothesis 2a SLOY Purchase rate ðþÞ Supported
Hypothesis 2b SLOY Lifetime ðþÞ Not supported
Hypothesis 2c SLOY Spending ðþÞ Supported
Hypothesis 3a RDUR Purchase rate ðþÞ Supported
Hypothesis 3b RDUR Lifetime ðþÞ Supported
Hypothesis 3c RDUR Spending ðþÞ Not supported
Hypothesis 4a CBUYSLOY Purchase rate ðþÞ Supported
Hypothesis 4b CBUYSLOY Lifetime ðþÞ Supported
Hypothesis 4c CBUYSLOY Spending ðþÞ Not supported
Hypothesis 5a CBUYRDUR Purchase rate ðÞ Supported
Hypothesis 5b CBUYRDUR Lifetime ðÞ Not supported
Hypothesis 5c CBUYRDUR Spending ðÞ Supported
Hypothesis 6a CBUYSLOYRDUR Purchase rate ðÞ Supported
Hypothesis 6b CBUYSLOYRDUR Lifetime ðÞ Not supported
Hypothesis 6c CBUYSLOYRDUR Spending ðÞ Not supported

duration on spending is relatively small. Similarly,
East et al. (2006) showed an insignificant correlation
between tenure and spending for fashion
store customers.
Of particular interest, we found that the cross-
buying effects on the purchase rate and lifetime dur-
ation are stronger for customers with higher store loy-
alty, supporting our expectation that customers who
cross-buy in familiar stores are less risk-taking
(Stranahan & Kosiel, 2007) and thus less reluctant to
purchase many product categories from the same
stores. As a result, they tend to make purchases more
frequently than less loyal customers. The results also
indicated that cross-buying from a few familiar stores
is likely to result in higher satisfaction toward each
store visited, which subsequently translates into
increasing satisfaction toward the mall. Thus, for loyal
customers, cross-buying is associated more positively
with lifetime duration. Nevertheless, the results also
revealed that the effect of cross-buying on spending
decreases with store loyalty. This finding might have
stemmed from the “stickiness” of customers’ budgets.
Research studies on mental accounting suggest that
consumers often allocate budgets for certain categories
and track past expenses to avoid overspending on the
categories (Cheema & Soman, 2006; Heath & Soll,
1996). As a result, they tend to set a maximum
amount to spend in each transaction so that the total
spending does not exceed the allocated budget in the
future (Prelec & Loewenstein, 1998). With the other
variables fixed, loyal customers may allocate consider-
able budget for clothing category in the first place and
spend more than disloyal customers. According to
mental accounting theory, this implies that loyal cus-
tomers should have stickier budget for the category
than do disloyal customers because it would be diffi-
cult for them to increase the budget as it already
accounts for a large portion of their overall expendi-
tures. Consequently, since cross-buying induces cus-
tomers to purchase more frequently, loyal customers
who engage in cross-buying intensely are compelled
to balance their spending in each transaction to com-
pensate the increase in purchase frequency.
Furthermore, we confirmed that the effects of
cross-buying on the purchase rate and spending are
weakened by relationship duration, but to a lesser
extent. That is, the positive association between cross-
buying and the purchase rate is smaller for long-
tenure customers. The same result applies to the
cross-buying–spending linkage. We interpret this find-
ing as that the weight attached by long-tenure cus-
tomers to recent cross-buying experiences is smaller
JOURNAL OF MARKETING CHANNELS 19
than in prior experiences, as pointed out by Bolton
(1998). As a result, recent cross-buying behavior is
less influential in determining the purchase frequency
and spending of long-tenure customers.
In addition, we found that relationship duration
affects the interaction effects of cross-buying and store
loyalty, but only for the purchase rate. Specifically,
while the effect of cross-buying on purchase frequency
is higher for loyal than for disloyal customers, the dif-
ference is less prominent for long-tenure customers.
Our interpretation is that long-tenure customers build
stronger trust in the mall such that it is irrelevant
whether they shop at familiar or unfamiliar stores.
Theoretical implications
Cross-buying, store loyalty, and relationship duration
are all critical in determining the purchase behaviors
of online shopping mall customers and thus long-
term firm-level profitability. These variables can there-
fore affect CLV by altering the purchase rate, lifetime
duration, and spending parameters. From the CLV
equation, we can calculate the elasticity of CLV with
respect to a change in one of these variables. In add-
ition, we can decompose the total effect of each vari-
able on CLV into its “indirect” effects passed through
the behavioral traits to compare the effectiveness of
these variables on customer value as well as the ways
in which these effects are delivered.
We write the equation for CLV elasticity
with respect to a change in an independent variable as
follows:
@CLVi =CLVi
zik ¼
eCLV
 ∂zik =zik
@CLVi ∂ki ∂CLVi ∂li ∂CLVi ∂gi zik
¼ þ þ
" @ki ∂zik ∂li ∂zik ∂gi ∂zik #CLVi
∂ log ðki Þ ∂ log ðli Þ li ∂ log ðgi Þ
¼ − þ zik
∂zik ∂zik li þ d ∂zik
¼ ek;zik þ el;zik þ eg;zik
(9)
where zik 2 fCBUY i ; SLOY i ; RDURi g; ek;zik ; el;zik ; and
eg;zik represent the elements of CLV elasticity decom-
position attributed to changes in the purchase rate,
lifetime duration, and spending due to a change in
cross-buying, store loyalty, or relationship duration.
We calculate the elasticity of each customer with
respect to all of these variables (Table 8).
First, as shown in the right-hand column of
Table 8, the cross-buying elasticity of CLV is 0.96,
meaning that an increase of 1% in cross-buying causes
CLV to rise by 0.96% for average customers. Likewise,
the elasticities of CLV for store loyalty and
20 W. D. DAHANA ET AL.
Table 8. Decomposition of CLV elasticity.
Purchase rate ek Lifetime el Spending eg Total eCLV
Cross-buying 0.65 0.21 0.10
Store loyalty 0.31 0.02 0.12
Relationship duration 0.13 0.04 0.08
relationship duration are 0.45 and 0.09, respectively.
Thus, among the effects of these variables, CLV
appears to be sensitive to a change in cross-buying,
followed by its sensitivity to store loyalty in second
place. For relationship duration, although this posi-
tively affects CLV, the magnitude of the impact is
smaller than that of the remainder.
The decomposition values show that cross-buying
is more influential than store loyalty and
relationship duration because its impacts via the pur-
chase rate and lifetime duration are large
(ek;CBUY ¼ 0:65; el; CBUY ¼ 0:21). However, the con-
tribution to total elasticity through spending is smaller
than that of store loyalty, perhaps because of the
negative moderating effects of relationship duration
on the association between cross-buying and spend-
ing. In general, the effects passed through the pur-
chase rate to the total elasticities are higher than those
through the other routes. Moreover, while the effect
of cross-buying through lifetime duration is signifi-
cantly large, this is not the case for the effects of store
loyalty (el;SLOY ¼ 0:02) and relationship duration
(el;RDUR ¼ 0:04). Furthermore, the effect of store loy-
alty on CLV through spending is 0.12, which is higher
than that of cross-buying and relationship duration
because of the positive main effect of store loyalty on
spending. In addition, the effect of relationship dur-
ation through spending is negative (eg;RDUR ¼ 0:08),
leading to a reduction in the corresponding total elas-
ticity. This looks obvious because the main and mod-
erating effects of relationship duration on spending
are negative.
To visualize the ultimate impacts of cross-buying,
store loyalty, and relationship duration, Figure 4 plots
the effects of these variables on the behavioral traits
along with CLV. The left-hand panels illustrate the
effects generated by the interactions between cross-
buying and store loyalty. The bottom-left panel shows
that customers who engage in cross-buying more
intensely contribute greater CLV to the firm. The
upper panels explain this phenomenon: higher cross-
buying leads to a higher purchase rate, a lower
defection rate, and higher spending. Furthermore, the
positive associations between cross-buying CLV are
even more prominent for customers with higher store
loyalty. Again from the upper panels, we can interpret
this finding as having resulted from the moderating
effects of store loyalty with respect to the purchase
rate and defection rate. Note that the moderating
0.96 effect of store loyalty with respect to spending is nega-
0.45
0.09 tive. However, the moderating effect appears to be
overwhelmed by the former two moderating effects.
The right-hand panels of Figure 4 depict the effects
that result from the associations between cross-buying
and relationship duration. The bottom-right panel
shows that relationship duration moderates the effect
of cross-buying on CLV such that the effect is weak-
ened as relationship duration increases. The upper
panels suggest that this is the case because relation-
ship duration negatively moderates the effects of
cross-buying on the purchase rate and spending. In
particular, among high cross-buying customers, long-
tenure customers are shown to spend less in each
transaction than other customers. However, despite
these negative moderating effects, long-tenure custom-
ers typically contribute higher CLV than new custom-
ers regardless of the level of cross-buying because they
have a higher purchase rate and longer expected life-
time duration.
Managerial implications
The notion that cross-buying can raise customer value
has been widely acknowledged in the literature
(Blattberg et al., 2009). In fact, many online shopping
mall owners, having realized the importance of cross-
buying, strive to entice customers to purchase from
various product categories from different stores on
their e-commerce sites. The personalized product rec-
ommendation by Amazon is a good example of these
practices (Hendershott et al., 2001). The present study
provides important insights for mall owners to
address how to encourage cross-buying behavior by
their customers from both familiar and unfamiliar
stores. Our results suggest that purchases concentrated
in a few stores lead to higher store loyalty, which in
turn raises CLV. This finding implies that encourag-
ing customers to cross-buy in those stores toward
which they exhibit a high degree of loyalty will result
in higher customer value. Therefore, the effectiveness
of cross-selling is enhanced if targeted toward loyal
customers buying additional products in focal stores.
In addition, the findings of this study suggest that
mall owners should consider the influences of rela-
tionship duration when establishing their cross-selling
programs. Previous studies show that cross-buying
increases with relationship duration (Lemon &
Wangenheim, 2009; Verhoef et al., 2001).
Accordingly, long-tenure customers can be expected
 JOURNAL OF MARKETING CHANNELS 21

Figure 4. Cross-buying, behavioral traits, and customer lifetime value.

to be more responsive to the offering of related prod- mall. However, when cross-buying is high, its effects
ucts or services. Put another way, cross-selling would on CLV are similar for long- and short-tenure cus-
be more efficient if targeted toward customers who tomers. By contrast, when the cross-buying level is
have a longer relationship with an online shopping low, an increase in cross-buying would lead to higher
22 W. D. DAHANA ET AL.
CLV for long-tenure customers than for short-tenure
customers. In sum, it would be appropriate to target
cross-selling initiatives toward customers who have
longer relationship duration but narrower relationship
breadth (i.e. low cross-buying) because they seem to
be more responsive and this tends to raise CLV.
Conclusions
This study confirmed previous findings on the effects
of cross-buying in an online shopping mall.
Consistent with the conclusions of prior studies, the
results showed that cross-buying is positively associ-
ated with customers’ purchase rate, lifetime duration,
and spending. For customers shopping online, these
behavioral traits were also shown to be affected by
store loyalty and relationship duration. More import-
antly, the effects of cross-buying on these behavioral
traits appeared to be dependent on the extent of store
loyalty and relationship duration. Specifically, store
loyalty was shown to strengthen the association
between cross-buying and the purchase rate and
lifetime duration, but weaken its association with
spending. Furthermore, the associations between
cross-buying and the purchase rate as well as between
cross-buying and spending were shown to diminish as
relationship duration increases. These findings provide
important insights into how cross-buying interplays
with store loyalty and relationship duration to deter-
mine CLV. In addition, our findings are useful for
mall owners trying to conduct cross-selling programs
efficiently. The analysis suggested to cross-sell related
products or services sold by stores toward which tar-
get customers are loyal. It is also recommended to tar-
get cross-selling activities toward long-tenure
customers who cross-buy less intensely.
Despite its important contributions to the body of
knowledge on this topic, we note some of the limita-
tions of this study. First, since we applied our analysis
to data on one online shopping mall, the results may
lack generalizability. Further examination by using
data from different companies selling different types
of products or services is needed to check whether
our findings hold in general. Second, we used a model
that originated from the Pareto/NBD model that
imposes strong assumptions on purchase frequency
and defection. In this model, customers are consid-
ered to defect permanently after a certain point of
time in the future. However, in the online shopping
environment, frequent customers may not make a
purchase for a long period but then repurchase from
the firm (Romero, Van der Lans, & Wierenga, 2013).
Thus, the model would be more realistic if it
accounted for customer revival, at the cost of com-
plexity. Finally, the main part of our analysis is cross-
sectional in nature. It focused on how the differences
in cross-buying, store loyalty, and relationship dur-
ation explain the heterogeneity in the behavioral traits
across customers. Therefore, the processes through
which these variables evolve and interplay in driving
the behavioral traits remain unclear. Future research
could address this issue by treating these variables in
a dynamic manner by using longitudinal data.
Acknowledgments
We are indebted to two anonymous JMC reviewers for their
thoughtful comments and suggestions. We also thank
Masao Nakanishi, Makoto Abe, Akihiro Inoue, Sotaro
Katsumata, Yuji Nakayama, and Akihiro Nishimoto for
their valuable comments in the seminar held by the
Japanese Institute of Marketing Science. The dedication of
Takashi Namatame in making the data available is greatly
appreciated.
Funding
This research was supported by Japan Society for the
Promotion of Science (JSPS KAKENHI)
[A26285095a, 17H02573].
ORCID
Wirawan Dony Dahana http://orcid.org/0000-0002-
1786-9824
Yukihiro Miwa http://orcid.org/0000-0002-2284-9019
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