How retailers launch IT-based strategies to win new and loyal customers in O2O commerce

Abstract

Online-to-offline (O2O) commerce has gained increasing momentum due to its advantages in integrating both online and offline channels. By and large, prior studies have predominantly explored third-party-based O2O commerce (e.g., Groupon and Meituan) and suggested challenges in retaining customers acquired with trial offerings. However, little is known about another emergent business model—self-developed O2O commerce, powered by a range of IT-based strategies pivoted on branded mobile apps and big data analytics—despite its superiority in winning new and loyal customers. To fill this gap, this study aims to investigate how and why new and returning customers are developed in this context. Based on the try-before-you-buy model, this study extends O2O commerce into an online-to-offline-to-online (O2O2O) mode to simultaneously explore first-time consumption (i.e., online trial purchase and offline pickup) and repurchases (i.e., online repurchase) in a single research model. Transaction utility theory (TUT) is then applied to elucidate the effects of acquisition utility (i.e., free trial, e-coupon, and product quality) and transaction utility (i.e., location convenience, pick-up speed, and mobile app quality) on customer trial consumption and retention. A total of 260 survey data were analyzed using structural equation modeling to examine the model. The results reveal positive relationships between first-time consumption and repurchases and that acquisition utility and transaction utility exert significant, albeit distinct, impacts on consumer behavior in different online and offline scenarios. For researchers, the proposed model sheds light on the role of salient factors in self-developed O2O commerce via the lens of TUT. For practitioners, our findings offer new insights to aspirational retailers for launching self-developed O2O commerce strategies.