Date of Award

June 2018

Degree Type


Degree Name

Doctor of Philosophy (PhD)




Eunkyu Lee


Distribution Channel, Multi-Channel, Product Assortment, Showrooming

Subject Categories



The primary objective of this study is to understand the underlying forces driving retailers’ strategic decisions and customers’ shopping behaviors in a multi-channel retailing environment. To this end, we develop theoretical models that capture important characteristics of customers as well as offline and online retailers. This study consists of two chapters. The first chapter investigates strategic product assortment decisions for a multi-channel retailer in a competitive market. More specifically, we investigate a multi-channel retailer’s coordinated product assortment decision between its online and offline outlets by analyzing a game-theoretic model. Intrigued by the practice of online- and offline-exclusive offerings by many multi-channel retailers, we compare equilibrium prices and profits across four alternative product assortment strategies (full, separate, offline-exclusive, and online-exclusive) within a model of a multi- channel distribution system. The results provide insights into the economic incentives and underlying strategic forces for such practices. We find that online-exclusive or offline-exclusive strategies can be an equilibrium policy for a multi-channel retailer in a competitive retail market and that its effectiveness depends on the degree and type of retail competition (against an e-tailer or a brick-and-mortar retailer) as well as the level of product differentiation. The asymmetry resulting from such exclusive assortment strategies leads to asymmetric prices across the individual product offerings, reflecting their different strategic roles in the multi-channel retailer’s effort to achieve the optimal balance of economic incentives such as market coverage, price discrimination, double marginalization, and protection from price competition.

The second chapter investigates the impact of consumers’ opportunistic behavior in a multi-channel retail market such as showrooming and webrooming as well as how the emergence of mobile technology (e.g., smartphones) affects consumer search behavior and online vs. offline retail competition. We develop a dynamic consumer decision model, which captures customers’ channel switching and additional information search at offline and online retailers to deal with uncertainties regarding product fit and quality. The analysis of the model allows us to explore the impact of customers’ showrooming and webrooming behavior on the equilibrium prices and the

profitability of the retailers in a multi-channel environment, and assess how such impact is moderated by the degree of fit uncertainty, quality uncertainty, return cost, search cost, and other costs related to online and offline purchase. Considering the proliferation of smartphone- equipped shoppers and the resultant increase in the ease of online information search, this paper studies how such a trend affects a brick-and-mortar retailer and an online retailer in different ways. The results suggest that, despite the widely known concerns of offline retailers, the rapid penetration of smartphones can increase physical stores’ profits under certain conditions. Moreover, the growth of mobile search and shopping can negatively affect the Internet retailer’s profit, depending on the costs of online search and purchase, as well as the degrees of fit and quality uncertainties.


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