Does Integration of Bricks With Clicks Affect Online-Offline Price Dispersion?

Abstract

The technological advancements in mobile computing and augmented reality have given rise to omnichannel retailing. This paper studies the effect of increasing omnichannel- ness on online-offline price dispersion. I construct a measure of omnichannelness — omnichannel index — using detailed omnichannel data from Digital Commerce 360’s omnichannel reports. Using the omnichannel index, I find a negative association between omnichannelness of retailers and online-offline price dispersion: more omnichannel retailers present lower price differences across channels. This finding is robust across three measures of price difference — binary indicator for price difference, relative price difference, and absolute relative price difference. Among the omnichannel variables, integration features and in-store features have a negative relationship with price dispersion, while geographical variables are positively associated with price dispersion. I also find that an increase in omnichannelness is associated with increased likelihood of having synchronized sales across the channels.