Where you live matters: The impact of offline retail density on mobile shopping app usage

Abstract

Consumers residing in different areas have varying levels of access to local retail stores. In contrast, with the prevalence of mobile internet, consumers have gained widespread access to mobile shopping. This research examines the impact of local offline retail density on consumers’ mobile shopping app usage and heterogeneity across consumer segments and different types of shopping apps. We use a unique dataset of individual-level mobile app usage with real-time location information across 1622 counties in China and employ the control function approach to address the endogenous retail density. Overall, the findings show that local offline retail density has a negative effect on mobile shopping app usage frequency and duration, indicating that consumers in areas with lower offline retail density engage more in mobile shopping app usage. This negative effect is weaker for consumers with higher mobility. Also, we find that this negative effect is weaker for shopping apps selling more technically complex products such as electronics than for those selling less technically complex products such as clothing and cosmetics. These results offer managerial implications for online retailers to launch targeting strategies to enhance consumer engagement with their shopping apps.