Online Versus In-Store: Price Differentiation for Multi-Channel Retailers

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 paper 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.

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