Abstract: Pure-play online retailers have created pressure on traditional bricks-and-mortar retailers forcing many of them to move to a multi-channel business model to provide customers online storefronts in addition to local physical stores. Conventional wisdom suggests that online prices be lower than in-store prices. This study investigates whether multi-channel retailers follow such clear-cut pricing strategies based on the sampling of both their online and in-store prices. The results from three national retailers of office supplies in the USA indicate that their online prices are not necessarily lower than in-store prices. In addition, they suggest that the retailers apply different pricing strategies across different product categories. The finding reveals that multi-channel retailers use differential strategies for online and in-store pricing. It calls for further investigation of the interaction between consumer behavior and pricing strategies in hybrid e-commerce environment.
Keywords: Bricks-and-mortar retailers, Multi-channel retailers, Price differentiation, Pure-play online retailers
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Recommended Citation: Flores, J., Sun, J. (2014). Online versus In-Store: Price Differentiation for Multi-Channel Retailers. Journal of Information Systems Applied Research, 7(4) pp 4-13. http://jisar.org/2014-7/ ISSN: 1946-1836. (A preliminary version appears in The Proceedings of CONISAR 2013)