Assessing Shopper's Penalty Reward Calculus in Online versus Instore Shopping

ABSTRACT:In this study we assess the various values—utilitarian, hedonic and social—provided by online and instore shopping outlets and their impact on shopper outcomes such as the choice of outlets, loyalty to the outlet and purchase behavior. Building on existing literature in the domain we propose the characteristic aspects of values derived by shoppers in online versus instore shopping formats and their distinctive impacts on the psychology and behavior of shoppers. We test the hypotheses with data from actual online and instore shoppers and find that as expected online shopping provided higher utilitarian value to shoppers and instore shopping provided higher hedonic and social values. Further, as expected, these values impacted shopper behavioral and psychological outcomes in complex ways. While in general shoppers preferred online outlets, they demonstrated greater loyalty for instore outlets. Further, the purchase to visit ratio was found to be higher in instore than in online shopping. These findings have useful implications for retail outlets—online as well as instore.